Day 8- Tamale Rural Banks, Microfinance, Savings, and Susus
Today was another great fact-finding day but it was also the most inspiring. I was very emotional at the end of the day when we met with the Baobab Thrift and Susu. I have seen a number of great activities that are going on to help alleviate poverty, but this one seemed to be the most sustainable and have the greatest impact. It was hard to keep our eyes dry. I met two great organizations, but the second organization,Baobab Savings and Susu which provides a savings and microcredit facility for women who have table-top market operations was one of the most inspiringof all the many activities I have observed, and I think has the greatest impact and most sustainable concept. If I had money, I would use it to help these kind of operations.I think that a lot of governments and NGO's are realizing this and supporting those activities.
Today was another great fact-finding day but it was also the most inspiring. I was very emotional at the end of the day when we met with the Baobab Thrift and Susu. I have seen a number of great activities that are going on to help alleviate poverty, but this one seemed to be the most sustainable and have the greatest impact. It was hard to keep our eyes dry. I met two great organizations, but the second organization,Baobab Savings and Susu which provides a savings and microcredit facility for women who have table-top market operations was one of the most inspiringof all the many activities I have observed, and I think has the greatest impact and most sustainable concept. If I had money, I would use it to help these kind of operations.I think that a lot of governments and NGO's are realizing this and supporting those activities.
I got some great video footage of the actual operation. (You can see this on You Tube at:
They made disbursements to the women today by chance (one of only three times each year) and we got to witness it. The photos on this blog show the women receiving their money. Instead of signatures they use thumb prints. You can see them placing their thumb prints on the papers to accept their money. I found the best Internet Cafe in Ghana, the Kalong Cafe just around the corner from the hotel. Very fast. I uploaded a video of market scene to Day 6. Added a bunch of photos and did two posts. Did some Internet surfing to find out what organizations are here in Tamale in case we have some time on Friday.
Day 8
First Meeting:Bonzali Rural Bank Ltd. Kumbungu
We met with Paul Atsu Fiawoo Deputry Director and Head of Credit and Mike Tizaaee managing director .
They provide loans to rural groups both agricultural and commercial. Mostly commercial (only 15 percent agricultural) because the risk is too high with that agric. sector. Their typical loan is 18 months. They charge a little over the prime rate. They can loan money at a lower rate if they get grants for specific sectors, like farmers. For example they got a grant from Community Bank Rural Development and the used this to offer loans to farmers at a lower percentage than market rate. The current project related to farmers and loans is resulting from a US AID Millenium Challenge grant. The Millennium Challenge development grant goes to the main bank overseeing the rural banks. They in turn make loans to the rural banks to provide loans to registered groups of farmers (small farmers who have an average of 5 acres). The Ag Extension officers identify the groups to give loans to. They are typically in areas where poverty is endemic. The grant also provides for development of business plans for those groups.
The Bonzali Bank also assesses the group. They give loans to existing customers who have savings accounts for at least six month. Another role of the extension officer is to train farmers to move from traditional subsistence farming to commercial farming. If they have a 100 percent repayment then they get the grant from the Millenium Challenge.This could eventually lower rates charged to farmers in the future.
What do they do with bad loans?. They usualy reschedule. Usually A 4 month extension. They work through the chiefs whenever they are organizing groups. The chief becomes the de facto "underwriter" in identifying the best risks.
Microinsurance Initiative
Bonzali is just now getting into microinsurance following some training by GTZ, a German Technical Organization , with ILO as partner (the organization that funded us for this trip) , introduced training for microinsurance for people who have loans with the banks. Paul has gone to Accra and went through training on microinsurance at Ghana Insurance College. His instructor was Michael McCord, President of Microinsurance Centre (in Wisconsin). Michael must have done a good job as Paul was very enthuiastic about the potential to do this. The two products they offered by rural bank, through State Insurance Company (SIC), was credit life insurance and invalidity (disability) insurance if person is hospitalized for more than one month.
They affirmed that people NEED to be educated about insurance. They also endorsed the idea of starting with Best Farmers, and then getting smaller farmers to buy in later. Thinks it would be a good idea to have a training facility up north. Consider University for Development Studies here in Tamale. Potential partner for student for student involvement.
Baobab Thrift and Susu
Called and then met with Managing Director Manisu Sulemona. He arranged an entire impromtu meeting with all of this team. He was really proud of what they had accomplished, and with good reason wanted to share. He introduced us to his team of nine workers (up from three a year ago) and head of Director of Microfinance Zakaria Abukasi Sadiq. Not only did they accommodate us with a meeting of all their employees, they opened up their books(quite literally) and showed us the progress the women have made over the year. They have photos of each of the women next to their accounts. They use thumb prints in lieu of signatures. They work with 85 Community Credit Associations. Each of these has 25 women.
This was without a doubt the most inspiring or all of visits. We actually got to see the women get their money. We lucked out and came on payment distribution day. This was not a bank. It was a credit and susu (small savings and loan) that was established by two individuals. They work almost exclusively with women. They provide three things.
1. Facility (mechanism) for microsavings and susu accounts
2. Facility for microcredit
3. Education to women on financial literacy and health education
(Note: A susu account is a very interesting concept. But is prevalent throughout Ghana. I have not seen it in other countries. The way it works is that a group all throw money together at periodic time. They then choose one person to get all the proceeds. They then rotate to the next person until everyone gets a chance to get the payoff. I am not sure how the rotation is chosen, maybe randomly, but it seems to provide an incentive to pool funds. The person, usually a woman, can then do what she wants with the proceeds. Maybe start a bank account or buy goods to start her own tabletop operation.
Baobab brings everything to the village. Women set up their susu and thrift accounts in the village near their homes. Baobab sends out people to make the collections and make the disbursements in the village/neighborhood.
They make small loans to women ranging from Ghc300 to Ghc600 to women ($225 to $400). They charge . One percent of the loan goes back to the group that they can use for any purpose. However, they will often use the fund to pay for a member that is struggling and in risk of default. The way it works is that five women form a solidarity group. They then merge with four other solidarity groups to from a Community Credit Assoc. Loans are made to the group and are the responsibility of the group, and individuals members can receive up to Ghc600 ($400) each. If a member defaults then the other four in the group must make up the difference. (So this affects who you pick and who you keep in your group).
Currently they do not see a need for credit life insurance to protect them against risk of default. They don’t have defaults, so they don’t see a need for the product.
An observation made is the unintentional consequences. In fact, they are quite skeptical of the value because it could create a moral hazard. Women would get the impression that if they don’t repay their loan, some insurance fund will take care of it. They are concerned about this creating a counterproductive mindset.
Day 8
First Meeting:Bonzali Rural Bank Ltd. Kumbungu
We met with Paul Atsu Fiawoo Deputry Director and Head of Credit and Mike Tizaaee managing director .
They provide loans to rural groups both agricultural and commercial. Mostly commercial (only 15 percent agricultural) because the risk is too high with that agric. sector. Their typical loan is 18 months. They charge a little over the prime rate. They can loan money at a lower rate if they get grants for specific sectors, like farmers. For example they got a grant from Community Bank Rural Development and the used this to offer loans to farmers at a lower percentage than market rate. The current project related to farmers and loans is resulting from a US AID Millenium Challenge grant. The Millennium Challenge development grant goes to the main bank overseeing the rural banks. They in turn make loans to the rural banks to provide loans to registered groups of farmers (small farmers who have an average of 5 acres). The Ag Extension officers identify the groups to give loans to. They are typically in areas where poverty is endemic. The grant also provides for development of business plans for those groups.
The Bonzali Bank also assesses the group. They give loans to existing customers who have savings accounts for at least six month. Another role of the extension officer is to train farmers to move from traditional subsistence farming to commercial farming. If they have a 100 percent repayment then they get the grant from the Millenium Challenge.This could eventually lower rates charged to farmers in the future.
What do they do with bad loans?. They usualy reschedule. Usually A 4 month extension. They work through the chiefs whenever they are organizing groups. The chief becomes the de facto "underwriter" in identifying the best risks.
Microinsurance Initiative
Bonzali is just now getting into microinsurance following some training by GTZ, a German Technical Organization , with ILO as partner (the organization that funded us for this trip) , introduced training for microinsurance for people who have loans with the banks. Paul has gone to Accra and went through training on microinsurance at Ghana Insurance College. His instructor was Michael McCord, President of Microinsurance Centre (in Wisconsin). Michael must have done a good job as Paul was very enthuiastic about the potential to do this. The two products they offered by rural bank, through State Insurance Company (SIC), was credit life insurance and invalidity (disability) insurance if person is hospitalized for more than one month.
They affirmed that people NEED to be educated about insurance. They also endorsed the idea of starting with Best Farmers, and then getting smaller farmers to buy in later. Thinks it would be a good idea to have a training facility up north. Consider University for Development Studies here in Tamale. Potential partner for student for student involvement.
Baobab Thrift and Susu
Called and then met with Managing Director Manisu Sulemona. He arranged an entire impromtu meeting with all of this team. He was really proud of what they had accomplished, and with good reason wanted to share. He introduced us to his team of nine workers (up from three a year ago) and head of Director of Microfinance Zakaria Abukasi Sadiq. Not only did they accommodate us with a meeting of all their employees, they opened up their books(quite literally) and showed us the progress the women have made over the year. They have photos of each of the women next to their accounts. They use thumb prints in lieu of signatures. They work with 85 Community Credit Associations. Each of these has 25 women.
This was without a doubt the most inspiring or all of visits. We actually got to see the women get their money. We lucked out and came on payment distribution day. This was not a bank. It was a credit and susu (small savings and loan) that was established by two individuals. They work almost exclusively with women. They provide three things.
1. Facility (mechanism) for microsavings and susu accounts
2. Facility for microcredit
3. Education to women on financial literacy and health education
(Note: A susu account is a very interesting concept. But is prevalent throughout Ghana. I have not seen it in other countries. The way it works is that a group all throw money together at periodic time. They then choose one person to get all the proceeds. They then rotate to the next person until everyone gets a chance to get the payoff. I am not sure how the rotation is chosen, maybe randomly, but it seems to provide an incentive to pool funds. The person, usually a woman, can then do what she wants with the proceeds. Maybe start a bank account or buy goods to start her own tabletop operation.
Baobab brings everything to the village. Women set up their susu and thrift accounts in the village near their homes. Baobab sends out people to make the collections and make the disbursements in the village/neighborhood.
They make small loans to women ranging from Ghc300 to Ghc600 to women ($225 to $400). They charge . One percent of the loan goes back to the group that they can use for any purpose. However, they will often use the fund to pay for a member that is struggling and in risk of default. The way it works is that five women form a solidarity group. They then merge with four other solidarity groups to from a Community Credit Assoc. Loans are made to the group and are the responsibility of the group, and individuals members can receive up to Ghc600 ($400) each. If a member defaults then the other four in the group must make up the difference. (So this affects who you pick and who you keep in your group).
Currently they do not see a need for credit life insurance to protect them against risk of default. They don’t have defaults, so they don’t see a need for the product.
An observation made is the unintentional consequences. In fact, they are quite skeptical of the value because it could create a moral hazard. Women would get the impression that if they don’t repay their loan, some insurance fund will take care of it. They are concerned about this creating a counterproductive mindset.
They are currently seeking a Ghc90,000 investment to expand their operation.
We went out to the village to see how the money was distributed. Got some great photos and video of interview with Mr. Sadiq of the operation. I posted to YOU TUBE my interview with him. http://www.youtube.com/watch?v=FOcIdw61j1Q
At the weekly meetings of the group they have education on health issues. For example how to prevent diarrhea so that they don’t have to spend their money on drugs resulting from drinking bad water.
According to the director of the microfinance, although this is a women’s group enterprise the men also benefit and are accepting of the concept because at the end of the day, it provides more food, certainly more nutritious food to their family. The money also pays for school fees and other items like that. The men appreciate this revenue, eventhough it does make the women more equal in terms in family decisions.
Mr. Sadiq expressed his gratitude for us stopping by. He said it was very meaningful to recieve the affirmation that they were on the right path. He quoted an African proverb to me to explain:
The one who makes the road can not tell if it is crooked or straight. But only someone watching from afar can tell. They certainly appear to be making a straight road.
In short, it was a great day.
Faithfully submitted,
Jim Jones
Director-Katie School of Insurance
Illinois State University
According to the director of the microfinance, although this is a women’s group enterprise the men also benefit and are accepting of the concept because at the end of the day, it provides more food, certainly more nutritious food to their family. The money also pays for school fees and other items like that. The men appreciate this revenue, eventhough it does make the women more equal in terms in family decisions.
Mr. Sadiq expressed his gratitude for us stopping by. He said it was very meaningful to recieve the affirmation that they were on the right path. He quoted an African proverb to me to explain:
The one who makes the road can not tell if it is crooked or straight. But only someone watching from afar can tell. They certainly appear to be making a straight road.
In short, it was a great day.
Faithfully submitted,
Jim Jones
Director-Katie School of Insurance
Illinois State University
I am a friend of Ed Mason and he forwarded this to me. Here is how the farmers should farm and I wish those working with farmers knew about it.
ReplyDeleteGARDENS/MINI-FARMS NETWORK
Wrokshops: USA - TX, MS, FL, CA, AR, NM; Mexico, Rep. Dominicana, Côté d’Ivoire,Nigeria, Nicaragua, Honduras, Kenya, Malawi, Mozambique, Haiti, England, India, Uzbekistan
minifarms@gmail.com
Workshops in organic, no-till, permanent bed gardening, mini-farming and mini-ranching,
using bucket drip irrigation, worldwide, in English & Español
Proven Practices for Gardening & Farming
The solution to world hunger is teaching the farmers to farm profitably and sell locally. There is a grassroots movement, around the world, for families and groups to produce their own food due to cost, flavor and chemical contamination. "There's this belief that in order to stop poverty, we have to find ways to get people to stop being farmers. What we need to do is find ways to stop them from being poor farmers." Amy Smith, MIT
These are based on the internet, US & international agriculture magazines, experiences teaching agriculture in many countries, research data and farmer experiences in those countries and a demonstration garden. They are ecologically sustainable, environmentally responsible, socially just and economically viable. There is unlimited, documented proof. There are 90,000,000 no-till hectares worldwide.
Fukaoka Farm, Japan, has been no-till [rice, small grains, vegetables] for 70 years. At the time of my visits, an Indian farmer has been no-till [vegetables] for 5 years, a Malawi farmer has been no-till [vegetables] on permanent beds for 25 years and a Honduras farmer has been no-till [vegetables & fruit] on permanent beds on the contour (73° slope] for 8 years. Ruth Stout [USA] had a no-till garden for 30 years and 7,000 people visited her garden. Free DVD available.
No technique yet devised by man has been anywhere near as effective at halting soil erosion and making food production truly sustainable as 0-tillage (Baker)
I had to delete much of this document because of length. I would like to email you all of it. Ken
Bucket drip irrigation should be used during the dry season and in areas of low rainfall: Imported bucket drip kits are US$15. A bucket drip line can be made locally from poly tubing [US$3, Nicaragua]. One will irrigate a row of crops 33 meters long using only 20 liters of water per day. A dripline can be moved to irrigate several rows per day. Water can be from a stream, pond or well. A drip kit returns $20 per month to the farmer [FAO study].
Tue, Dec 30, 2008
Dear Ken,
Thank you for all the DVD’s you sent me. Thank you for all the info. I am applying it in my own vegetable patch. It is working. Got half a pocket of potatoes off a square metre. So would imagine about 10 pounds per square yard. This off previously dead low, carbon soil. Sure next crop will be better. Got yams coming up on same spot already. Want to plant herbs and spices. I will send photos.
Your advise is so simple. People do not believe me when I tell them. I am so excited about growing things now. This coming from a commercial plum farmer. May you be blessed this holy season a thousand times more than you blessed me with you help.Jeremy Karsen, middagkrans@mwebbiz.co.za
Project room: Kyomya, Uganda
We have been working on improving farming techniques for almost a year. Unfortunately, the farmers are planting small plots of land that only feed their family. There is no other choice but to try new techniques to improve the output of their plot. Ken Hargesheimer suggested the "no till" farming techniques as well as the "drip system". Both have proven effective at increasing produc-tion by at least 5 fold. The time is now for Kyomya to become a model agricultural village. [nabuur.com]