Staying ahead in the savings race

As part of the MicroLead project, MEDA worked with UGAFODE Microfinance in Uganda to provide a safe and regulated savings environment for their clients.

Kagadi Boda SG Best pic2 smallKagadi United, a group of 22 boda boda (motorcycle) drivers in Uganda, was created when it joined UGAFODE Microfinance two years ago. For many members, UGAFODE has been the first bank they have ever interacted with. The group has been dedicated to saving as a group, meeting weekly, and transferring the money to their joint account.

After a year of saving in their GroupSave account, the group divides the money and begins its next cycle. They have taken their savings practices further, with some participating in secondary savings groups intended to solve “quick problems.” The group shows it’s possible to save big no matter what your job or circumstances, with some setting aside as much as 10,000 shillings per week (about $2.75 US) for their GroupSave account, 20,000 per month in an ordinary savings account, and 20,000 per month in another informal savings group.

Kagadi United is led by Sunday, 23, a boda driver. He leads the group in building strong financial habits because he knows “boda drivers are often scatterbrained when it comes to money.”

Faridah, 47, the treasurer and only woman in the group, is a great example of how happy customers can be the gateway to more customers. UGAFODE became her bank of choice after she received positive customer service accompanied with a loan for her second-hand clothing shop (mivumba). She became a strong advocate for UGAFODE and convinced Kagadi United to bank there.

For boda drivers, Vincent, 27, the group secretary, and Frank, 20, the newest member, UGAFODE has been their first experience with a bank. Beyond their GroupSave account, all four have individual savings accounts to keep additional savings for emergencies.

Before forming Kagadi United, some members managed finances on their own, while others participated in other savings groups that collected weekly deposits in a box kept members on a rotating basis. They were happy to save large amounts, which presented great opportunities for growth and for stability – a “certainty of money.”

They also experienced a growth in solidarity in their groups, and developed a greater appreciation for combined efforts, shared ideas, and group-generated discipline. But because the money was kept in a box, there were instances of theft. People set out to find a safer way to save.

Kagadi United decided to bank with UGAFODE in part due to Faridah’s recommendation, but also for UGAFODE’s group-specific account, convenient location, and low transaction fees.

UGAFODE helped Kagadi United establish a constitution that specified group conduct and signatory responsibilities. Restrictions on who could make withdrawals from GroupSave meant members’ money would be protected and have a chance to grow.

GroupSave has given Kagadi United peace of mind about the safety of their money, with no fear of theft hindering the group’s trust in each other.

With their money in the bank, members aren’t tempted to waste it. As the savings pot continues to grow, year-end dividends become much more significant than what they could save individually.

Group members are proud of their savings abilities and often compete to save more. When people heard how Kagadi United members were a step ahead in the savings race, they were inspired and motivated to join the group.

GroupSave has been instrumental in generating enough savings for members to invest in various areas of their lives. Faridah invested in her mivumba shop and has sent her two children to school. Now they have more opportunities to prosper, with one graduated and one in the last year of secondary school.

Sunday has bought his own boda and invested in land to plant trees and coffee. He has purchased real estate in the trading centre to open a store. “GroupSave helped us grow businesses now because there are savings. I couldn’t do it without the group. And I like being able to share my business ideas in the group, too!”

Vincent, too, has bought a boda and saved enough to build a permanent house for his family.

Frank has bought a plot of land to build a house, and is hoping that, through the savings group, he can buy his own boda one day. With the help of UGAFODE and GroupSave, the future looks bright for Kagadi United members and their community.

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