Kyeradeso Community Improves Households Income Through Community Savings and Loans Associations (CSLAs)

By Nana Ama Nketia-Quaidoo

In the last three years, the people of Kyeredeso Community in Ghana’s Nkoranza South Municipality have become savers with the resources to invest in their own future.

For years, most people in Kyeredeso have lived a ‘hand-to-mouth’ existence, focusing mostly on surviving the present and lacking the means to plan for the future.  Many felt that, as they could barely feed themselves, there was no possibility of saving a portion of the little income they earned. Others distrusted savings initiatives, having had the bitter experience of losing their investments to unscrupulous and fraudulent financial schemes in the past.

Since 2017, however, ACA has worked with the people of Kyeredeso to implement the Facilitated Collective Action Process (FCAP), an approach to community-driven development that helps people unify around a collective vision and roadmap for the future.  The community has, in fact, adopted the teachings of the FCAP so enthusiastically that they have built their own medical center to improve health outcomes for themselves and surrounding villages.  As a result, Kyeredeso enjoys a level of cohesion, capacity, trust, leadership, and above all ownership that enables them to manage their affairs peacefully and profitably.

This confidence and unity can be seen in another bold self-help initiative to improve household income: the Community Savings and Loans Association (CSLA) project.  Since 2019, CSLA participants have helped each other manage their finances and achieve their individual household goals effectively through weekly savings activities. 

The groups hold meetings on a weekly basis, during which they make contributions to the group’s “savings box” based on an agreed group Constitution. When each group was formed, the members were required to set personal household goals and decide how much they wanted to save. Based on their different sources of income, and to avoid over-promising and under-delivering, most chose to set aside weekly savings of between 5 and 10 Ghana cedis (approximately 1 to 2  USD).

(Savings group used their proceeds to purchase plastic chairs for hiring to raise additional funds to improve house hold income)

These savings are kept safely in the savings box over a period of one year, after which the box is opened, and the proceeds are disbursed accordingly. Each member receives the amount he or she has saved over the year, plus a share of any additional contributions, fees assessed for violation of group rules, or interest charged for loans taken.

When the program began, Kyeredeso had just one CSLA group, but that number has now grown to five savings groups – total membership of 150 community members – as people have seen the benefits.  “Having the ability to save is as important as being able to raise funds to deal with life circumstances,” said Nana Ama Nketia-Quaidoo, ACA’s Community Development Director. “These savings groups are helping to reduce financial stress and provide people with a greater sense of financial freedom.”

The use of the CSLA to secure a lump-sum repayment of savings at the end of the year enables members to plan for seasonal purchases, important investments, or life-cycle events. For example, Puokuum Sumariinga is a widow with four children who has been struggling to feed her family and provide basic supports to her children’s needs since her husband’s demise. When she was introduced to the savings group, she made a pledge of GHS10 a week, although she was unsure whether she would be able to honor the commitment. Working menial jobs on other people’s farms, she managed to earn enough short-term income to save weekly. To date, Sumariinga has saved a total of 1,400 Ghana cedis, making her eligible for a low-interest loan from her CSLA. She used the loan proceeds to buy farm inputs to resuscitate her late husband’s farm, which will enable her to gain much more income and save more for her children’s education. 

(One community member who used his savings to purchase agriculture inputs to improve his livelihood)

Mr. Amos Salensor, a Kyeredeso farmer, has also set his goals for savings – which currently total 2,550 Ghana cedis – based on his family’s needs. “My overall vision is to save enough to get a decent accommodation for my family and to be able to meet the educational needs of my children,” he explained.  “I hope to painlessly pay school fees and at least buy land to begin building in my next phase from the proceeds of the savings.”  Other CSLA group members report using the proceeds of their savings to venture into small businesses such as hiring out plastic chairs and petty trading, or to deal with unexpected downturns, for which they would have sought support from friends in the past.