LEOGANE, Haiti (AlertNet) - Under the shade of a mango tree in a rural community near Leogane, a 90-minute drive from the Haitian capital Port-au-Prince, Jean Ginette ceremoniously places a metal box with three separate padlocks on a table.
The box acts as a safe and is filled with about $300, the total sum of credit and savings of 24 women and six men who belong to a local village savings and loans association, known as a VSLA.
The savings scheme set up by charity CARE, is helping farmers and small business owners in this poor community to keep their businesses afloat, and even expand them, repair their quake-damaged homes and save for a rainy day.
“No-one used to save here before the scheme started,” said Ginette, the VSLA treasurer. “If you needed a loan, you had to go to loan sharks who would charge you 100 percent interest rate.”
Most buildings were flattened in the seaside town of Leogane, which was the epicentre of the massive earthquake that hit Haiti in January 2010.
Jean Dumond, head of the VSLA, hopes to take out a loan to rebuild his home, which he had built himself and lived in for 10 years before the quake struck.
“My home was totally destroyed in the earthquake. My dream is to get a loan by the end of this year to pay for a truck full of cement to rebuild my home,” said Dumond, a farmer.
The appeal of this savings scheme is that it is simple and low-cost - members put money in a box, lend it back out to the same people, and charge interest.
Each week members are required to save from a minimum of $1 up to $6 that goes straight into the safe cashbox. Once enough savings have accumulated, loans are offered to members. Typically loans range from $10 to $20 and are repaid with a monthly interest of five percent. Once a year the interest earned is shared among the association members, based on the amount each person has contributed.
The VLSA in Leogane is one of 86 other CARE savings groups in Haiti serving 2,143 women and 337 men, who together have saved over $72,000.
The association essentially becomes a local bank and, more importantly, it allows members to become their own bankers.
The group collectively decides the interest rate loan, who is eligible for a loan and what it is spent on, repayment schedules and fines for late payments. Part of the group’s savings is set aside for an emergency fund, allowing members to cushion the impact of unexpected events like falling ill.
Whenever money is taken out of the cash safe it is done in front of the whole group, opened simultaneously by the three people who hold the keys to the three separate padlocks.
Roughly 80 percent of Haiti’s population of 10 million lives on less than $2 a day. It means opening a bank account is prohibitive for most Haitians because banks normally require a minimum deposit and charge banking fees.
“As a poor person, I didn’t have a place to save. The banks won’t lend to poor people and let you open a bank account unless you have lots of money,” said Carline Lafontant, a member of the association who also lost her home in the quake.
“It’s better for us than a bank. We have more control over our money. We are around our own people who we trust and have grown up with,” she said.
For 65-year-old Marie Dophine, being a member of the savings scheme means she has more buying power.
“When I borrow money it allows me to buy more goods that I can sell at the market,” said Dophine, a mother of eight children.
She and other members spend their loans on buying food, bags of water, beauty products and school supplies, which are then sold for a small profit at the local market.
In recent decades, microfinance schemes providing small loans to poor people - often women - who can’t otherwise access formal banking services, have become a well-established and ever-growing practice across the developing world.
What makes VSLAs different is that they are self managed and don’t rely on external sources of money or funding.
The charity CARE pioneered the first ever VSLA project in Niger in 1991. Since then the U.S.-based non-governmental organisation has rolled out the schemes worldwide.
How successful the schemes are and how long they last vary widely. Some fizzle out when key members leave, and sometimes there are not enough funds to cater for members’ borrowing needs.
But they enable women to take charge of their own finances, which usually means a better standard of living for the whole family and a small pot of savings for their children in the future.
“Being part of this association has relieved stress knowing that I can get a loan when I need one,” said association member, Lafontant.
“I don’t waste money anymore and when I go to buy food at the market, I leave the five gourdes ($1) I need to save that week at home so that I don’t end up spending it,” she added.
In four months’ time, when this association completes its first year cycle, members will be able to receive a return on their savings from the interest generated throughout the year. Many hope they can finally start to rebuild their homes.
“We wish we could have done this before,” said Dophine. "Just think how much we could have saved if we had started this years ago.”