Saturday, October 6, 2012

On the Road Week 2 Ghana: Unanticipated Outcomes

VSL group Adom
It's 7 am on a Thursday morning, and the third Village Savings and Loan group called Adom (meaning Grace) is preparing to meet.  That's right, the third group already and it's only 7 am.  They gather their chairs, all engraved with the name of their group, and sit themselves in their preassigned numerical order. Kate, the chairperson for the group of 25 women and men, calls the meeting to order and they quickly get to their business:  recalling the balance in the box, payments of social fund, new savings added, payments of loans.  As the meeting is in progress, Kate frequently glances over to her left, where her water business is in full progress:  water delivery truck after water delivery truck roll up to load water from her water storage, for delivery to various residents in need of water.  It's a good business and remains noisily steady during the meeting.

This VSL (which you've heard me address numerous times in my blog; go here for more info) is on their third round.  Each round takes 9-12 months: the first three months are for savings, the next six months they loan out their savings to each other, with all interest and dividends held by the group; the last three months, no new loans given; and the final week is the share-out, where everyone gets their savings back, all dividends are divided, and there is usually a big celebration.   This particular group has grown from a share value of one Ghana cedi (about $0.50 US) per share, to five Ghana cedi (about $2.50 US) per share.  That is pretty remarkable growth.  The total savings accumulated from their first share out was 6800 Gh, the second was 10,400 Gh, and the third looks like it will be over 15,000 Gh.

Nesto (right) speaking to a VSL group
The Field Relationship Officer for this group, Nesto, has seen tremendous growth in their individual relationships, in their businesses, and in the community over the three years.  "It's amazing how these groups encourage each other to save and to grow their business." said Nesto.  "As one member watches another member bring savings, week after week, it challenges them to try harder to save.  As one member watches other members get loans, pay them back, and the business grows right before their eyes, it challenges all to try harder to grow their own business."  The unexpected outcome here is positive peer pressure to save, to work hard, and to grow a business.  In a region where community is valued over individual, this is a very positive outcome. 

Because of the growth of these businesses, Hopeline Institute has had to be creative on how to lend their support to these groups.  With over 235 VSLs scattered over many villages and communities, this has not been easy.  The VSLs pay nothing to Hopeline for the service that is rendered; in fact, the funding for this program ended this past July.  But Hopeline loves these groups and sees the impacts that they are making so they are determined to carry on.

One of the repeated requests of the VSLs is to have their savings "topped up" by Hopeline, in order to be able to make more loans and bigger loans to their business owners.  So this past June, Hopeline began to do this, as a result of some generous investors with the Solomon Funds who have invested some money for a year, with an expected return of 5%.  The groups are required to save 20% toward the loan amount, which is then matched times three.  This VSL group, Adom, receive a "top up" of 3000 Gh cedis after their first three months; they paid it off, and then received an additional 5000 Gh cedis, which will be paid off at the end of this cycle.  The risk is very small for Hopeline, as the loan is paid before savings are returned.  The group pays a small interest rate to Hopeline for the use of their funds, which helps to pay some of the overhead for Hopeline's staff who run this program.

Another of the unanticipated outcomes of this program has been chair businesses.  Each group is required to save toward a social fund (often just 20 or 30 cents per week, per person).  The constitution created by each group guides how this social fund can be used (most often for emergencies in the group), but surprisingly, most social funds remain untouched until the share out time, at the end of the cycle.  By this time, often 200-300 Gh cedis have been accumulated.  Most groups decided to buy chairs for the group for the future meetings.  In one larger community, Nesto shared, there are seven VSLs, all of whom have purchased chairs.  The seven groups together have 270 chairs!  This community is now working together to start a chair rental business for weddings, funerals, etc, and the profits will go to the VSLs!  Who would have thought that VSLs would produce chair businesses?!

Nesto is the head of the VSL program and supervisor of all seven of the Field Relationship Officers of Hopeline.  He also oversees 67 of the 235 VSL groups that are in the system, keeping him very busy.  I asked him if he enjoys his job.  He said, "I love it.  It keeps me very busy, and I am out on the field from sun-up to sun-down.  But I get to interact with so many people and see their lives, families, businesses, and communities change with this program.  When people look at me, I want them to see someone who helped their business grow!"  Amen, Nesto.  We thank God for you!
Mr. Darko with his mushrooms.

In other news, I also had a chance to meet with Mr. Darko, a pastor who does mushroom farming, whom I have had the privilege of mentoring since about February of this year.  Mr. Darko came through the Hopeline program last year and his mushroom business is really taking off.  He recently completed building a mushroom building that can hold 9000 bags of mushrooms!  Mushroom farmers are usually in three groups:  the baggers (who prepare the compost and seed for growing), the croppers (those who grow the mushrooms, which Mr. Darko is pictured doing above), and the marketers (those who bag, label and sell the mushrooms to consumers).

Being the true entrepreneur that he is, Mr. Darko is frustrated by the delay in filling his crop house with mushrooms, and so has started to become a bagger in addition to a cropper.  He just secured a loan from Hopeline to be able to bag 10,000 bags, which will allow him to fill his crop house, as well as produce some for sale in the market.  There is a lot of demand currently for baggers and they are not able to keep up, so the market looks good for Mr. Darko!  Hopeline also just completed a training specifically for mushroom growers and has given loans to 14 mushroom farmers, in the categories listed above. 
Mr. Boateng is one of the members who recently received a loan from the Global Funds of Partners Worldwide.  As shown in the picture, he produces dish soap, skin lotion, and hair pomade.  He used this loan to change the label on his products, make some changes to the products themselves to make them more competitive (i.e. changed the color of the dishsoap from blue to green in order to compete with SunLight), as well as move more from the bulk sales that he typically does to the individual consumer sizes.

Early Monday morning I will be on my way to Nigeria and report on that visit next week.

And now for some pictures of some of my favorite people in Ghana:
Juliet's son, Nhyi - what a smile!! (I showed pictures of his naming ceremony a year ago.)   Love that kid!  Love that mom! He celebrated his first birthday this week. Soon they will both be in Chicago for the PW conference! 
Doesn't matter where you are in the world, even at the age of one, kids know how to talk on a cell phone!
No, not Miss Ghana but our own Beatrice Buxton, now Beatrice Tawiah, the head of the Micro-finance Department at Hopeline. Beatrice was married on September 8. Congratulations!
The fun wedding party...if you look closely you will see Fanny and her two boys, our two interns (Emily and Kim), and a number of Hopeline staff and members!