Which Came First the Hen or the Egg?

Inspired and conflicting conversations can be so interesting, yet often leave me at the end of a group discussion feeling like we all still walk away with our own opinions and without any enlightenment or consensus. Saturday FSD hosted a Micro Enterprise Financing in Uganda talk with presentations from GESI interns from Northwestern University and a paper presentation by a Mr. Fred Muwaya, a professor from Busoga University.

The group discussion that followed consisted mostly of remarks, concerns and comments from Busoga University students with a few FSD intern comments here and there with a question, clarification, or observation. My favorite clarification was the GESI intern who claimed that Uganda should not look to America's saving culture as an example, considering how America does not have a culture for saving... To which, our moderator commented, "So they aren't better than us... " I thought it was so hilarious.

Anyways, the conversation topic focused around closing the gap between microfinance institutions and the micro enterprises they offer services too. Enter the circular philosophical question; which comes first savings or financing? The hen or the egg? Several people claimed the financing comes first, in order to receive capital to begin saving regularly.

I disagree. From my experiences, (and according to many banks and MFI policies) members need to achieve a certain level of savings before taking out loans. At Marusacco, members can take loans up to three times that of their savings. In addition for providing the MFI with capital to access loans at a better rate, I think it trains members in long term business planning strategies. They need to learn how to assess risks and set goals for future growth. But I also do not claim that that is the only or right answer.

Cultural changes take time, and need to be decided by the people of said cultural community. Similarly, I do not think that asking short term American interns how we can address these challenges is very efficient or sustainable. Someone needs to lead the change - and a sustainable change for Uganda will come from Ugandans who accept responsibility, refuse corruption, and welcome the challenges and costs in pursuit of long term prosperity.

So wait why am I here again? Well, that is a philosophical train of jumbled thoughts for another blog.

Wait - I Actually Have to Work Too?

Amid the excitement of being in a foreign country, have no fear: implementing my project for the SACCO is underway!

All the interns in our program have to create a workplan to address a problem in their organization and community. When I first got to my SACCO, I began my needs assessment/asset mapping of the organization, during which I would identify the problem that my work plan would address.

What I found is that my SACCO can't make loans sometimes because it has very little working capital; and the members have very little savings culture. They not only distrust the SACCO, but they also think that a person has to be rich to save effectively. Lack of working capital is really harming the SACCO, and forcing them to take out a loan from another lending organization to stay afloat. Most of the time, the loan repayment to that organization exceeds their operational costs - and my "little bank" hasn't made a profit the entire year.

My work plan is hopefully going to kill two birds with one stone: giving the SACCO more working capital and building savings culture for the members. We are going to make simple wooden boxes with padlocks and slits in the top. These boxes will be distributed to a pilot group of members, groups, and schools. Members will deposit their savings in the boxes, and at the end of every week, the loan officer will come with a key to the households and collect the savings. Before members can get the boxes, we will have two training sessions to educate the participants on savings importance and other financial literacy skills. If the pilot program takes off, the SACCO should have savings deposits of at least USH 6 million at the end of the month.

There are definitely some kinks in the program that we need to work out - mainly being the costs of the boxes. We need 325 boxes; my supervisor and FSD supervisor feel that any number lower won't be profitable. We can't have the members buy their own boxes; since this is a pilot program, the members won't be willing to pay to try it out. Another kink is simply the poor savings culture here in Uganda. People simply won't trust that their money is safe with our organization.

Finally, it's definitely been an experience working in an African office. We have to contact the 300 individuals, 10 schools, and 5 organizations before next Saturday when we have our training. Trying to get my SACCO mobilized has been like pulling teeth; but my hopes are high that we'll develop a sense of urgency soon!

Sorry for the business-y blog post: more fun later on!