Dublin, 20th November 2014 – Poor women in Ghana are benefiting from their first exposure to the credit union movement in the rural community of Duakur, close to the University of Cape Coast. Sarah Quagraine is a board member of both the Ghana credit union apex CUA and Oguaa Teachers Credit Union.
Last year in Ghana, Sarah received training on graduation microfinance from SEND, a partner of the ILCU Foundation in the implementation of the EU-funded West Africa Credit Unions Against Poverty Programme, which aims to reduce poverty across four countries in the region by providing technical and financial assistance to credit unions and their representative bodies.The graduation microfinance model is premised on the fact that the poorest of the poor often need extra support to develop the wherewithal and confidence to participate in projects designed to encourage saving and sensible borrowing. The credit union does this by advancing small loans early to the borrower and by enabling him or her to join a group which meets regularly to save, repay loans and receive training on financial literacy and other topics.
The idea is to provide the poor with an opportunity to start thinking of savings and investment, so that they have a safety net to fall back on in times of need.After receiving the training provided by the Foundation, Sarah approached the board of Oguaa Teachers Credit Union to discuss the possibility of piloting a graduation microfinance programme for a women’s group in their community. Initially there was resistance to the idea. “I had to convince the board as we would be taking member savings to try it”, she said.
However, after some discussions the board agreed to pilot the initiative.In the first disbursement, ten people received 500 cedis each (€125) for six months. After this time, every member had repaid in full and it was decided that the scheme would continue and expand, with more members and double the amount of credit. “The interest they pay is 2.5% per month on a reducing balance, rather than the standard 3%. It’s short term so we get the money back quickly”, Sarah explained. A year later and 17 of the 30 women who took part in the project have now joined the credit union, having ‘graduated’ from the pilot scheme.As with all good ideas, the pilot needed to be fully resourced. This included assigning someone to collect the loans.
It was agreed that two volunteers would jointly collect the repayments, one volunteer from the Supervisory Committee and another from the Loans Committee. The board came up with a clever incentive to reward the volunteers based on how many members ‘graduated’ to become full credit union members. “The membership fee for joining the credit union is 10 cedis (€2.50) and this was divided in two: half for the credit union and half for the two people who volunteered to collect the loan repayments”, Sarah explained.The money was mainly used by the women to fund food production. They invested in making gari, a type of flour made from cassava and a staple food in Ghana.
The women’s group attached a great value to the project.As well as the obvious benefits that access to credit can bring including increased livelihood opportunities, the pilot project also gave many of the women the confidence to realise that they could become members of a credit union, something before seemed beyond their reach. As the scheme has brought new members to the movement, Oguaa Teachers Credit Union plan to continue.