Our Work
Our Development Model
As described in a Finmark Report (Finmark, 2018) and as partners of SaveAct, we apply the development model which has been adapted from the VSLA savings group model developed by CARE in Niger during the nineties and is now used by 14 million savers in Africa. SaveAct has since 2005 been developing and adapting the method to the South African context.
Savings groups are trained and mentored in:
- savings,
- lending,
- social fund management (for household emergencies),
- record keeping,
- adopting a constitution
- sharing out capital.
Share-outs occur on an annual basis. This is the anchor of the programme. A group follows an 18-month cycle of close supervision leading to independence, when if they show proven compliance with the system and their constitution graduate to light touch support from Community Based Promotors (CBPs) and Field Officers (FOs).
The relationship with Siyakhula Sonke begins with an introduction to financial services. This is followed by three half-day training sessions, where a group forms, develops rules and a constitution, determines a share value (usually between R 50 – R 200) and elects office bearers. Groups typically meet monthly – saving by investing in between 1 and 5 shares to build up a social fund to support members in distress, pooling their capital and offering loans to members.
In the first 18 months, groups are visited, mentored and assessed according to a schedule. After 18 months they are assessed for readiness to operate independently. Once a year the capital is shared out to members according to the proportion of shares (savings contributions) bought by each member. This is typically around 25% – 32% more than what is saved, due to the repayment of interest on loans. This is when members can access a large lump sum that may be used to invest in an enterprise, pay for tertiary education, invest in assets etc.
From the start of engagement with potential members, the importance of financial literacy is emphasised. There are several financial education (FE) modules embedded in the model and shared during the engagement with SGs over the 18-month training relationship. FE makes savings group members aware of the importance of managing their money, including household budgets. It equips them to anticipate and plan for bumps in expenditure, including unanticipated shocks. It emphasises the importance of saving and investing, planning for life cycle events and managing debt. FE lays a foundation, alongside the financial services of the group, for members to enter into the enterprise. The SaveAct model followed by Siyakhula Sonke follows a stepwise logic in its application so as to assist the poor to find pathways and ladders out of poverty (see Figure below).
Pillars or Operation – A stepped approach to sustainable livelihoods.
How Savings and Credit Groups are Formed
How Groups are Formed
- Siyakhula Sonke promotes the concept to communities.
- Those interested form a group of between 10 – 20 and are trained for 3-days, then the Savings and Credit Group buys a savings kit (savings box plus savings books).
- Training on the system covers the Savings and Credit Group (SCG) constitution, leadership and roles of leaders and conduct of members.
Essentials are:
- Agree a “share” value (usually a minimum of R 50. Members can buy up to 5 shares/month).
- Officials elected and trained in functions are Chair, Secretary, two Money Counters, three Key Holders and one Independent Box Keeper.
How the Groups Operate
- Members of each group meet once every month.
- All three key holders have to be present at each meeting.
- Money is counted at the start and at the end of each meeting.
- Members buy shares during the meeting.
- Members pay interest (10% per month) on loans they have taken during the meeting.
- Members borrow up to 2-times of their individual savings.
- Members are not permitted to take loans three-months prior to end of 12 months of the savings cycle.
- At year end (after 12-month) savings are shared out to members in proportion to the value of shares invested.
- Groups that choose to use a bank agree on the bank, signatories and procedures for depositing and withdrawal.
How members benefit from Savings and Credit Groups
Community members benefit from participating in Savings and Credit Groups in the following ways:
- They learn the culture of saving money on a regular basis.
- They are able to borrow money to meet their immediate or urgent needs.
- They learn the discipline of borrowing within their means.
- They learn the discipline of paying back the money they have borrowed.
- They use the money they have borrowed or saved to:
- Buy materials for building additional rooms for their households.
- Buy furniture.
- Start or expand their existing small enterprises.
- Pay for children’s school and tertiary fees.
- Buy things they require for traditional functions.
How Siyakhula Sonke supports Saving and Credit Groups
Siyakhula Sonke Field Officers (FOs) and Community Based Promoters (CBPs) provide support at each meeting.
- Field Officers (FOs) conduct audits once per quarter to ensure correct processes and corrective training is done if required.
- Savings and Credit Groups graduate to “self-managed” groups after 18 months of operating with clean audits.
- Siyakhula Sonke offers Financial Training to members of the groups.
- Siyakhula Sonke is making preparations to provide enterprise development training and support to members of Savings and Credit Groups who have small businesses or feasible business concepts.
Saving Groups are formed and supported in the outer west region of the eThekwini Metropolitan.
Total Groups
Total RANDS Saved
Total members trained in saving groups
Total participants trained in Enterprise Development
Total participants trained in Sustainable Agriculture
Joining us means fostering growth, unity, and empowerment within our community. With your partnership, we can achieve a greater impact together.” be amended to: – “Join with us as a partner so that together we can have a greater impact in fostering growth, unity, and empowerment within our community.”
Financial Education
The Financial Education that Siyakhula Sonke offers was developed by SaveAct and covers seven (7) modules (Financial Education Curriculum, 2014). While it is mandatory that Module 1 be offered during the first 3 days of the training of each Savings and Credit Group, the rest of the modules can be offered at any stage of the first 18 months of a Savings and Credit Group, based on the specific needs and circumstances of the members of each group.
Module 1: Introduction
This is an introductory module and covers the following:
- Financial needs or constraints.
- Different options that are available to people to meet their financial needs such as saving, borrowing or starting an income generating activity.
- The implications of each of the above options.
- Joining or starting a Savings and Credit Group.
- Ways to ensure that one has enough money to invest in a Savings and Credit Group such as increasing one’s income, reducing one’s expenses and being disciplined.
- Safe keeping of money.
- Keeping money in a bank account.
Module 2: Budgeting
This module aims to enable members of Savings and Credit Groups to:
- Set goals and make a money plan
- Know the difference between needs and wants.
- List money that they receive and the money that they use.
- Know what a budget is.
- Know what a budget is important.
Module 3: Lifetime planning
This module aims to enable members of Savings and Credit Groups to:
- Set long-term plans.
- Identify solutions to achieving long-term goals.
- Identify unexpected events that can divert them from their lifelong goals.
- Identify options to mitigate unforeseen events and consequences.
Module 4: Managing Debt
This module aims to enable members of Savings and Credit Groups to:
- Identify why they borrow money.
- Identity the difference between good and bad debt.
- Identify how to manage debt.
- Identify if they can afford to borrow money.
Module 5: Daily and Monthly Cash Flow
This module aims to enable members of Savings and Credit Groups to:
- Identify the principal reasons for managing their cash flow.
- Identify what they have to manage in their cash flow and keep track of.
- Practise how to manage their cash flow.
Module 6: Keep your Money Safe
This module aims to enable members of Savings and Credit Groups to:
- Display trust in banks and understand their role
- Understand the advantages of group bank accounts
- Understand and assess the risks involved in opening a bank account
- Explain how a group bank account works and highlight the different aspects that are important
- Identify the most adequate and affordable group account option for their own groups.
Module 7: Exploring Ways to Increase your Income
This module aims to enable members of Savings and Credit Groups to:
- Be inspired to start new income generating activities.
- Know that starting an income generating activity is a way of sustainably increasing their income.
- Understand some of the challenges and solutions to overcome these challenges when running an income generating activity.
- Identify some good behaviours when running an income generating activity.
- Reflect on the implications of starting an income generating activity with respect to the community, family, etc.
