Cooperatives, Group Savings & Microfinance

One of the most magical things about the Glow Effect Centre is the camaraderie you find within. Despite the odds, women have defied the norms by standing up for themselves and coming together to form a group based on the desire to forge a better life for their families and their communities and break the cycle of intergenerational poverty.

These women are here for an education that will improve their lives economically but they are also here to discover their self worth and redefine what it means to be a woman in Uganda.

As a participant in our 16 week program, the women take classes in personal development which cultivate self expression, confidence and leadership skills along side capacity building in a trade and education in business management and financial literacy. We want to encourage entrepreneurship, creativity and boldness and foster an environment where it can make the greatest impact.

When speaking to the women about their goals for the center, their eyes light up and ideas start bouncing across the room faster than the class leader can write them down. They don’t see the center as a place to learn for 16 weeks and then leave, they see it as an extension of their home and a place of opportunity and continuing education. As a testament to that, more than half of the women who have already completed the program have decided to attend it again alongside our new students as mentors and learners. This shows me just how valuable not only the curriculum is, but the bond of the group and the comfort and confidence they have in it its presence and its potential.

As the ladies have increased the production and quality of their products, introduced more students to the program and engaged in new partnerships, it has become apparent that it is time to design a business and management strategy that best suits the needs of the group and the center. Though we want to see everyone thrive as an individual and make their personal dreams a reality, we don’t want the group dynamics to be destroyed by power struggles, competition and jealousy. Their strength as a group is their biggest asset, and recognizing that, they made a unanimous decision to become a cooperative.

Forming a cooperative

Becoming a cooperative will safeguard and strengthen their solidarity as a group while providing sustainable and profitable business opportunities that will equally support and invest in the development  of the center and its activities and in the individuals that make it work.

A cooperative is a group of people that come together voluntarily to meet their common needs. Each member is a part owner of the cooperative and it is controlled democratically. Membership is open to all who share the values of the cooperative and agree to participate under its guidelines. Each participant contributes economically to the cooperative enterprises and profits are divided between development of the cooperative, its activities, and its members based on democratic vote. One of the principal values of a cooperative is education and training for its members so they can effectively contribute to the development of the cooperative.

Women’s cooperatives function well and are encouraged in the developing world because of their many benefits, especially the sharing of materials, workspace, marketing and sales, access to government benefits and recognition as a legitimate enterprise. Rather than encouraging each woman to go start her own business with the investment in materials and her own office space, women can purchase materials together in bulk, share costs of renting space, and have more goods to sell together increasing market power and decreasing risk of being taken advantage of.

Group Savings

Saving as a group within a cooperative offers many of it’s own benefits that align with it’s goals of development. When the group saves together, capital is built until there is enough for a large investment. Savings is difficult in emerging markets like Uganda, for there are always various expenses and often irresponsible husbands that will spend savings on drink. When savings is done as a group, there is more responsibility and less pressure to share or spend savings when small issues arise or demands are made.

Savings for the Glow Effect Centre cooperative will be created through member contribution and through profits from the business activities the center is participating in. Each member will contribute a minimum of x shillings each month, which will be considered the shares she is purchasing. It is up to the group to decide the appropriate minimum contribution. Any member can purchase the amount of shares she pleases according to her ability and needs.

The profits of group income generating activities will also be deposited in savings. (ex. sale of hats, beaded bags, tailoring and salon services, partnership products). At the end of a certain period to be decided by the members (usually 2x a year or annually), the group will democratically decide how to distribute the savings between its members and the Glow Effect Center’s needs. Each member will receive back its original contributions in addition to profits if they are not reinvested in the development of activities. As part of our business course, members will plan how to use their savings so that she can continue investing in income generating activities when she receives back her shares and profits.

Microfinance

Microfinance has been a buzz word in international development for some time now and for good reason. Micro loans are small loans given to borrowers who typically lack collateral, steady employment and a verifiable credit history. They are designed to support entrepreneurship through allowing access to capital to start a business that one would not normally have access to. Access to micro loans can alleviate poverty, and empower women and uplift communities through the creation of new businesses.

It has been apparent that without capital, our group of women would have difficulty being able to get a firm foot on the ground to start their businesses. After doing a lot of research about micro finance and being assured by the global 98% repayment rate, it seemed like the best way to go forward with our business strategy would be to create the trifecta by offering a micro loan to the center and allowing for it to be its own micro finance institution.

Micro Loan for Entrepreneurship

We saw the massive potential in engaging in a partnership with Solar Sister for entrepreneurial opportunities for the sale and access to interesting, quality, and in demand clean energy products in the district, but understood that our members lack the capital to start the initial investment in the partnership. The Glow Effect offered a micro loan of 500,000 ($150) UGX to purchase the materials for the Glow Effect Centre to become an access point for Solar Sister and it’s members to become Solar Sister entrepreneurs. The members accepted with unequivocal enthusiasm.

The loan should be repaid as soon as possible within a year with an interest rate of 5% making the total loan repayment amount of 525,000 UGX. The interest will be an investment in their own abilities as a micro finance institution. If the repayment is successful this will allow more opportunities to take out larger loans to inject business ideas with capital until the group savings has enough investment to create its own loan scheme.

This micro loan has already allowed for the sale of products in the community and is already, after only 1 week, repaying itself. Households without power have solar lamps for the first time rather than using candles and kerosene lamps that are both dangerous and harmful to health. Fuel efficient cookstoves are saving neighbors half the amount of charcoal and eliminating half the amount of pollutants.

The ladies have more confidence in their ability to use the sale of the Solar Sister products to invest in their trade businesses, and our business class is designed to help them make tangible goals with the profits they are generating and savings they are creating in mind. The tailoring class can realistically plan to buy a sewing machine, the salon can realistically imagine purchasing necessary hair products and hair dryers, and arts and crafts can easily be sold alongside lamps and cookstoves, increasing market potential and investment in new materials.

As a cooperative with group savings and the capacity to give loans, the group will continue to grow, our education will continue to evolve, our business will thrive, and dreams will become a reality.

If you are interested in making a difference in the lives of these determined women and becoming a part of the empowerment revolution, consider donating at http://glowexchange.org/a-donate/