Community savings groups in rural southwest Bangladesh are helping to revive local economies devastated by the double impacts of COVID-19 and cyclone Amphan. Saeqah Kabir reports. This is the thirteenth in the series of stories from Voices from the Frontline initiative by ICCCAD and CDKN.

Community savings groups in southwest Bangladesh have been providing economic support to their members, who are predominantly women working in the informal sector. Since 2015, they have reached some 2,700 groups in number, with almost 57,000 women members. The welfare of the members has been tested during the past months, first by the evolving COVID-19 pandemic and then by the aftermath of cyclone Amphan; but the savings groups have quickly adapted and shown that they are resilient, resourceful and at the frontlines of local responses to the crisis. Group leaders have changed meeting processes, scaled up health and hygiene awareness, created social funds for COVID-19 and revised lending methods to cope with the lockdown restrictions.

The challenge

In parts of southwest Bangladesh, between 25 and 34 percent of households live below the poverty line of US$ 1.90 a day. Community savings groups known as Village Savings and Lending Associations enable the rural poor, particularly women, to invest savings, take out loans, and start small enterprises to support their families. In southwest Bangladesh, the creation of the savings groups has been enabled by USAID and World Vision Bangladesh since 2015 via a project known as Nobo Jatra.

A COVID-19 impact assessment conducted by World Vision in June 2020 found that 84.9 percent of households participating in the Village Savings and Lending Associations had suffered reduced incomes in the previous month.

Women are especially vulnerable to crises. In Bangladesh, 93.3 percent of women hold jobs in the informal sector, which is less secure than formal waged employment. The decline in purchasing power for women, during the current crisis, is already leading them to use up savings, acquire high interest loans or even sell assets. These are all actions that erode their ability to cope with shocks and stresses for the longer term.

To make matters worse, the southwest coast is frequently hit by cyclones - the most recent being cyclone Amphan which made landfall in May 2020 – causing floods and damages to communities, already weakened by the impacts of COVID-19.

Savings for resilience

The concept of Village Savings and Lending Associations is simple, easy to manage and tailored to the financial realities of members. Groups comprise 20-25 members, usually all neighbors who meet regularly, and are a catalyst for enhanced social capital, improved gender relations, women’s leadership, and economic development.

Moyna (above) is an entrepreneur and member of a community savings group in Koyra, a sub-district in the division of Khulna, southern region of Bangladesh, with assets including three goats, a fish farm and a small business selling puffed rice, a popular local snack. Being a member of a savings group has been life changing for Moyna as she was able to take out loans to meet her daughters’ education expenses and also invest in a vegetable garden.

As per Moyna, women working in the informal economy struggle with access to loans. “We do not have access to banks and local lenders ask for higher interest. Savings groups are accessible and meet our needs. I am able to pay for all three of my daughters’ educations by taking loans. I have also taken a loan to grow my vegetable garden.”

Hanifa (above) runs a village grocery shop and is the president of the Bamia Village Savings and Lending Association, of which Moyna is also a part. Hanifa describes savings groups as an information hub and a source of social solidarity. “Not only do we get access to loans to expand our livelihoods but we get information on hygiene practices. We learn new things like how child marriage is harmful and illegal. We build relationships with other members and many of us have become confident speakers”, she said.

Until now, 22,554 women, like Moyna and Hanifa, have taken loans. Eighty percent have used these loans to support livelihoods and meet household needs.

Adapting to the ‘new normal’

The government of Bangladesh initiated lockdown measures in March 2020 to contain the pandemic. This affected community savings groups as mobility was restricted and gatherings were scaled back. In an unprecedented situation, over 2,000 savings groups had funds in savings boxes, but were unable to meet and follow procedures for granting loans to their members. Faced with this conundrum for two months - until Government restrictions on gatherings were relaxed in June - the groups had to pivot and find alternative ways to operate.

Hanifa recounts the difficult circumstances, “I first heard about COVID-19 through Nobo Jatra public announcements in our village. I also got messages about COVID-19 on my mobile phone. Shortly after, all savings group activities were stopped, as instructed by the local government. Then cyclone Amphan came along. We were badly affected; homes were damaged, livestock were lost and agricultural lands flooded with saline water. We needed money to survive. After discussions with the group members, in June, we decided to continue the provision of loans – but with strict health and hygiene rules.”

To start, leaders like Hanifa consulted with Moyna and other members to decide how to reorganise groups. Members of the Bamia savings group voted to reduce the frequency of meetings from weekly to fortnightly meetings and chose to limit physical attendance at meetings, and scale up awareness on health and hygiene.

Given the high rates of poverty in southwest Bangladesh, child marriage is a big challenge. Prolonged school closures, coupled with loss of incomes for families, place girls at higher risk of early marriage as families seek to alleviate economic burdens. The Bamia group communicated the risk of spikes in child marriage to the community and urged them to guard against this. Other changes to savings groups activities include revising or shortening lending cycles (so that members can access loans for urgent household needs) and creating COVID-19 social funds for members worst affected.

Hanifa is determined to ensure the group functions safely during the pandemic. “Now we use gloves when counting money, we wash hands with soap before and after meetings. We arrange meetings in an open place, and only eight members stay for the duration of the meeting. Others do transactions and leave – like in a bank. We use mobile phones to inform members about the time and venue for meetings”.

Nobo Jatra have partnered with the private sector to train local entrepreneurs known as Village Agents to promote and sell hygiene products during savings group meetings and other community gatherings. Since resuming in June, Village Agents have continued to sell health and hygiene products during the group meetings and have also provided messaging on the importance of using these products to stay healthy - especially during a pandemic. All activities were undertaken with safety protocols in mind.

Early results

Since resuming activities in June, over 1,077 savings groups have started savings cycles. Given the reduced incomes during COVID-19 and losses from cyclone Amphan, 11 percent of members have already taken loans to meet immediate household consumption needs, repair homes and revive livelihoods.

Moyna expresses relief that the savings group is operating again: “I feel safe having access to my savings group. I can take out loans and meet other group members – even if it is for a short while.’

Interviewer’s perspective

In southwest Bangladesh, the community savings approach is proving to be a consistent and sustainable method to provide the rural poor with access to finances, act as a safety net and a source of social solidarity – even during an unprecedented health and economic crisis. Leaders and community mobilisers like Hanifa are catalysts who are making sure the groups survive and grow. As Hanifa reflects; “Having savings is very important. Also having different livelihoods, as that way, we are not dependent on one source of income. And we need the savings groups to grow our livelihoods, stay strong and not fall back into poverty.” This story presents findings from USAID’s ‘Nobo Jatra – New Beginning’ project, implemented by World Vision Bangladesh in partnership with the Government of Bangladesh.

The interviewer

Saeqah Kabir is the Senior Manager for Knowledge Management and Communications, Nobo Jatra, World Vision Bangladesh. Saeqah is a graduate of the School of Oriental and African Studies (SOAS) having read for an MA in Social Anthropology and a BA in Anthropology and Sociology. Saeqah would like to thank Nobo Jatra team members Mohammed Asaduzzaman, Ajnabi Sultana and Shrabanti Debnath for their contribution to this blog.  

Images: Nobo Jatra (World Vision Bangladesh).