Sparking growth for 10K Ethiopian farmers, weavers

 
$6,285
$1,715
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Feb 19, 2013

How YOU united Ethiopian rice farmers to succeed

Addis Alem VSLA
Addis Alem VSLA

In the rural areas of Amhara, rice farmers live a hand-to-mouth existence. Having enough money to afford needed supplies for farming and school and household expenditures, particularly before harvest time, is a big challenge. Farmers are often forced to sell rice during harvest season when prices are low, which endangers their livelihood and hinders their income potential.

As many farmers had not learned good savings habits, any surplus income earned from their harvest was often squandered at the local Saturday market. This was the previous experience of one group of 13 rice farmers who, with the assistance of Mennonite Economic Development Associates (MEDA) and the support of generous donors like you, formed a group known as Addis Alem Village Savings and Loan Association (VSLA).

How MEDA helped
Gizaw (first member on the right), a rice farmer, received MEDA's training on the benefits of saving and how to form a VSLA within his community. The training covered topics on saving, credit, managing risk, and resolving conflict. MEDA also provided Gizaw with the necessary materials to start saving, which included a savings box with two locks, 13 passbooks, four plastic plates, and a bookkeeping ledger.

Addis Alem VSLA
Gizaw recognized that his lack of savings made he and his family vulnerable – and that others in his community could benefit from saving, too, so he established the Addis Alem VSLA. In Amharic, Addis Alem means "new world," or "appreciating what new thing you have," which reflects Gizaw's change in mindset towards saving. He shared with members what he had learned about saving and VSLA practices. They agreed to each save three birr weekly (about 16 cents), plus one birr a week for their social fund. Their savings provides small loans to members and investment, while the social fund is used for emergency purposes. After one year of weekly saving, Addis Alem accumulated 2000 birr in regular savings and 547 birr in the social fund.

Unlocking Entrepreneurship
The savings group decided to invest 2000 birr from their savings into two plots of land. They planted rice and expect the harvest to earn 15,000 birr, including next year's collected savings. Addis Alem plans to store the rice for up to six months and sell the crop when rice prices have risen. These farmers are confident theycan store their rice because the risk is shared by the group and this venture offers an additional stream of income. Previously, members never stored rice because they required cash for monthly expenses. Addis Alem's investment overcomes the frequent need for cash by using regular group savings to support costs. In addition, members have realized other benefits from group saving. They have seen a reduction in community disputes, better social life, and a renewed interest in microfinance institutions.

Members say…

"We care for each other. If a member gives birth or is sick, we will use money from the social fund."
– Addisie, VSLA Secretary

"We benefited remarkably from Addis Alem. We understand that our livelihood is dependent on agriculture and there are risks associated with nature such as hail and flood. In such cases, we can take out our savings and use it for household consumption. Without VSLA, there would be no way for us to pay for our living expenses."
 
– Alamrew, VSLA Member (third member from the right)

Building Resilient Livelihoods
The most enduring impact of Addis Alem is how it has changed the group’s perception of saving. Before VSLA, members never saved, but now each member understands the importance and necessity of saving. The farmers have seen  how saving positively affects their farm, family and future, so the group plans to continue saving and investing in the coming years, for the benefit of future generations:

"In the future, we hope to increase our rice production and own milling equipment so that when our children grow up, they will have something to develop our business with. Our children will see how we saved and they will learn from our experiences and be able to expand our business further."

Sustainable and Replicable Impact
Addis Alem demonstrates how Ethiopian farmers can build group trust and combine resources to save and invest productively. Since Addis Alem is self-managed, members will continue to save and invest in the years to come, long after MEDA’s work there is done. MEDA has replicated the VSLA model by forming 50 VSLAs in one year. The rapid establishment of VSLAs can be attributed to MEDA's simple, non-bureaucratic and low cost approach to forming savings groups. MEDA's involvement ends after one year, and 98% of VSLAs have agreed to continue saving autonomously, ensuring sustainable impact. Through MEDA's intervention, VSLAs can form quickly, establish trust, build savings habits, and ultimately strengthen income potential and develop resilient livelihoods.

***

From all of us at MEDA, THANK YOU for your continued support of the EDGET project (Ethiopians Driving Growth through Entrepreneurship and Trade). Through your generosity, 10,000 farmers and weavers like Gisaw and the members of the Addis Alem VSLA can access growing urban markets, use new technologies and advanced production techniques to improve their product, and receive affordable financial support services to participate in Ethiopia’s economy.

If you’d like more information, visit our website www.meda.org or email meda@meda.org. To renew your support, you can donate by giving us a call at 1-800-665-7026

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You’ve made a huge impact in the lives of Ethiopian entrepreneurs wanting to create a stronger future for their families. We are so thankful to you for choosing to help fulfill their dreams!

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Project Leader

Linda Whitmore

Waterloo, ON Canada

Where is this project located?

Map of Sparking growth for 10K Ethiopian farmers, weavers