Starting a savings group: the first twelve weeks
A new savings group spends its first three or four meetings agreeing rules and choosing a committee, and only then starts buying shares. Lending waits longer still, usually a month or more, until the box holds enough to be worth borrowing from. Almost every group that collapses inside its first cycle collapsed because it skipped the agreeing and went straight to the money.
- Members should choose each other. A list drawn up by a chairperson or a visitor rarely holds together past month four.
- Set the share value at what the poorest member can find in her worst week, not what the average member can find in a good one.
- Nothing goes in the box until the constitution has been read aloud and every member has signed or thumb-printed it.
- Do not lend in the first weeks. A group needs to learn counting and closing before it learns repayment.
- By month three you can tell whether a group will survive, and the sign is attendance, not the size of the fund.
Who to invite, and who to leave out
Fifteen to thirty people is the working range. Below fifteen the fund grows too slowly to be worth borrowing from and one absence wrecks a meeting. Above thirty the meeting cannot be finished in an hour, and once it runs long people begin to arrive late and then not at all.
Invite people who can walk to the meeting place, in the dark, in the rain, without paying a boda. A group spread across three villages looks impressive on the first day and is down to the nearest village by month four.
Members should pick each other. If a field officer or a village chairperson fills the list, the group is that person's group, and when they move on it goes with them. The invitation is not a favour handed out. It is people agreeing to carry each other's risk for a year.
- People who already know each other well enough to knock on a door and ask a difficult question.
- People whose week has a predictable hour in it, so the meeting time is genuinely possible for them.
- Not a group built around one wealthy member, whose leaving would take the fund's confidence with her.
- Not somebody who already lends money at a charge to half the intended members. Her interest and the group's pull in opposite directions.
- Two members from one household only if the group has agreed in advance how one household's default is handled.
What has to be agreed before any money moves
The constitution is not paperwork. It is the group deciding, while everyone is calm and nothing has gone wrong yet, what it will do on the day something does. Write it in the language the group actually speaks at the meeting, read it aloud line by line, and let people argue about it. An hour of arguing in week three saves a broken group in month seven.
Every member signs or thumb-prints it and one copy lives in the box. If a member cannot read, another member she chose herself reads it to her before she marks it.
- The share value, and the most and fewest shares a member may buy in one meeting.
- The social fund contribution, and exactly which situations it pays out for.
- How long a loan runs, what the service charge is, and the biggest loan anyone may take against her own savings.
- Fines: lateness, absence, arriving without a passbook, arguing.
- What happens when a member cannot repay, and what happens if a member dies or moves away.
- The cycle length and the date of the share-out, fixed now and written down.
- How a member leaves mid-cycle and what she takes with her.
- Who counts, who signs, who holds keys, who keeps the box, and how the committee is changed.
- How the constitution itself can be amended, and by what majority.
How to set a share value people can still afford in a bad week
This single decision decides whether the group survives. Set the share at the amount the poorest member can find in her worst week of the year, which for most households is the lean weeks before a harvest rather than the week the group is meeting.
Groups that set it high look strong for two months. Then the lean season arrives, a third of the members stop buying, then stop attending because they are ashamed to arrive with nothing, and the group is down to a core of the better-off with a fund nobody else has a stake in.
The member who can afford more is not being held back. She buys more shares in the same meeting, up to the ceiling the group agreed, and takes proportionally more at share-out.
How to choose the committee, and why the chairperson should not hold a key
A group needs a chairperson to run the meeting, a secretary to write, a box keeper, two money counters, and three key holders. That is up to eight roles, and the reason it is spread so wide is that no single person should be able to move money without others present.
The chairperson runs the meeting and therefore should not also hold money or a key. The box keeper keeps the box and holds no key. The three key holders do not keep the box. It seems fussy at week four and it is the reason the group is still trusted at month nine.
If only one member can write, that is the group's biggest risk and not a small inconvenience. Choose a second person and start teaching her from the first meeting, slowly, in front of everyone. A group whose books only one woman can read is not a savings group. It is trust in one woman with a ledger attached.
What the first twelve weeks look like
The shape below is not sacred, but the order is. Talk first, rules second, money third, lending last. Groups that reverse it end up making rules in response to a problem, which always feels like an accusation of somebody.
- 01Weeks one and two: meet and talk only. Who we are, what we each want out of this, and whether everyone can genuinely come at this hour for a year.
- 02Week three: draft the constitution aloud, and let it take the whole meeting.
- 03Week four: elect the committee, fix the share value, sign the constitution, buy the box and the three padlocks.
- 04Week five: the first share purchase. No lending, no exceptions.
- 05Weeks six to eight: shares and social fund only, practising the count and the close until it is quick.
- 06Week nine: the first loans, small and short, to members with clean attendance.
- 07Weeks ten to twelve: normal running, with the first repayments coming back and the group seeing the fund grow by itself.
When should a new group start lending?
When there is something worth lending, and not before. In week two the box holds a few weeks of small savings, and a loan out of it leaves nothing for a member with an emergency.
Make the first loans small and short and give them to members whose attendance has been clean. This is deliberate. The group is learning what a repayment looks like, and it should learn that before it learns what a default looks like.
Expect pressure to lend earlier. Somebody will have a real need in week two, and turning her down will feel hard. Point at the constitution rather than at her, and offer what the group can actually do, which is usually the social fund.
What the group needs before the first meeting
The kit is small and most of it lasts several cycles. Seeds of Hope trains savings groups in Wakiso, Kamuli and Napak, and where our team trains a group we supply the lockbox and the ledger. Everything else a group can buy between them for less than the fines it will collect in a month.
- A lockbox with three separate padlocks, and three sets of keys that do not open each other.
- A passbook for every member, and a stamp with an ink pad.
- A ledger for shares, a book for loans, a book for the social fund, and an attendance register.
- Two bowls or basins for counting, so the counted and uncounted money never mix.
- Pens that work, a ruler, and a strong polythene bag to keep the books dry inside the box.
What mistakes break a new group?
None of these are dramatic. Every one of them starts as a small kindness or a small convenience, which is exactly why they are hard to refuse in the moment.
- Lending in the first weeks, before the fund or the habits exist.
- Setting the share value at what the best-off member suggested, because nobody wanted to look poor by objecting.
- Letting a member buy shares on credit, and writing down money that was never on the mat.
- Letting the box go home with one of the key holders, once, for a good reason.
- Letting one person be secretary, counter and key holder because she is the only one who can write.
- Allowing the meeting to start fifteen minutes later each week until it has no fixed hour at all.
- Suspending meetings for harvest or for Christmas. Groups that pause for a month rarely resume properly.
- Adding new members in the middle of a cycle without first agreeing how their shares count at share-out.
How to tell in month three whether the group will survive
Not by the size of the fund. A group can have a healthy box and be finished, and a small box and be solid. The signs to look at are dull ones.
Attendance is holding. The count agrees with the ledger every week without a long search. At least two members can read the books. No loan has gone past its date without the group discussing it in the meeting rather than in the trading centre afterwards.
If those four are true at month three, the group will almost certainly reach its share-out. If two of them are not, fix them in month three. It is much harder in month six and it is not possible in month nine.
This guide describes what generally happens, not what will happen at your facility or your school. Costs, timetables and rules differ between districts and they change. Check anything that matters with your health worker, the head teacher, or your district office. If something here is wrong or out of date, tell us and we will correct it.
Questions people ask
- Can we start with fewer than fifteen members?
- You can, and small groups do work, but understand the trade. The fund grows slowly, so the first loans are small and the share-out is modest, and two absences in one week can stop a meeting. If you start small, agree in the constitution how and when new members may join.
- Do we need money to start?
- Very little. The box, three padlocks, passbooks and the books are the whole cost, and a group can raise it between them in the first weeks. Where we train a group we supply the lockbox and the ledger, so ask your field officer before buying those two.
- Members want to start borrowing straight away. What do we tell them?
- Tell them the box is theirs and it is nearly empty, which is true and is easier to hear than a rule. Agree the lending start date in the constitution in week three, so when the request comes it is answered by a decision everyone made together rather than by one person saying no.
- Should the group open a bank account or use mobile money?
- Most groups run entirely on cash in the box, because the box is what everybody can see. Some groups hold larger balances by other means as the fund grows towards share-out. Whichever way, no arrangement should ever put group money under one member's name alone.
- Can two small groups merge?
- It is possible but rarely worth it mid-cycle, because the two sets of shares, loans and rules have to be reconciled and someone always feels short-changed. If two groups want to join, finish both cycles, share out both boxes, and start one new group with one new constitution.