The Sweet Taste of Savings in Nicaragua

This January I had the opportunity to visit the communities of Mata de Caña and Paz de Centro in Nicaragua and speak with two groups of women who were three months in to the Trickle Up program.  I was especially interested to speak with the women about their experience in their savings groups, as this past summer Trickle Up Central America switched to a new method for forming savings groups, called Village Savings and Loan (VSL), which comes with a sizeable operating manual, a number of required processes and rules, and a concerted initial training effort.

The women of the VSL groups make beautiful cookies like this from dulce de leche.

Trickle Up asks that participants join savings groups in order to provide a tool for asset accumulation and to build financial skills. The VSL method in particular is very well designed to support savings and loan groups that operate with a high degree of autonomy and transparency, without requiring a high degree of literacy or numeracy. This is quite an advantage, as it means the group doesn’t need to depend on outsiders for accounting assistance, for example, and therefore is more likely to sustain itself in the future.

The two savings groups I visited had been in operation for three months, with the women of Mata de Caña just beginning to extend loans. As a large number of the women produced and sold cajetas (or dulce de leche), a common refrain was that the money was used for “more milk, and more sugar.” A small loan provided the working capital necessary to sell 300 rather than 150 cajetas a day, which amounts to doubling a day’s profits from approximately $2.30 to $4.60.

As one staff member put it, “The access to fair credit provided through VSL groups motivates participants to continue to manage their small businesses without having to pay high interest rates for small amounts.”

Beyond seeing firsthand that the women in these two savings groups knew the rules inside and out (to the degree that they knew the ID number used to track their savings by the field officer), I asked if they would want to continue the group after the year ends and the collected savings are distributed. The enthusiasm and self-confidence in their conviction that they would continue the following year was impressive. The goal of the VSL method is to provide initial training that will allow for self-sustaining savings and loans groups: while it is early to tell whether this will prove true in Mata de Caña and Paz de Centro, the early results were certainly encouraging.

As the sky began to darken, and my time with the women of Paz de Centro drew to a close, I tried to tease out whether any of the VSL rules were leading to any problems. In particular, I asked whether the women were using a system of fines, and what they thought of it. Support for the rules appeared unanimous as various members noted the actions that merited a 10 córdoba fine, such as talking during meetings and tardiness. The discussion came to close with an eruption of laughter as it was recalled that I had indeed arrived late to the meeting, and, yes, I did owe 10 córdobas.