Saving Buddies“It is not about money – it is about people”
Whether in Guatemala, Senegal, Spain or Germany: Around the globe, local and migrant communities are supporting each other through self-managed savings and loans groups. The model shows how people with very limited resources can help each other to climb a step higher on the ladder to financial security. Read More
Imagine a small box. Now imagine a group of people who regularly meet to place their individual savings into said box. These shared savings serve as a fund for those who need access to small loans, loans needed to pay for household repairs, school fees for children, unexpected bills, or even to get a small business off the ground. The fund helps members deal with small emergencies or realize economic opportunities. This simple savings model is called a “self-funded community” and has proven successful around the globe.
Abdoulaye Fall is an enthusiastic social entrepreneur from Senegal who immigrated to Barcelona, Spain 15 years ago. Like most people who leave their country of origin, he took a variety of belongings with him – and not just objects with a material value, but also things to provide comfort far from home.
Abdoulaye arrived in Spain with a valuable memory: the image of his group of friends getting together to share the most recent events in their lives, and also to pool their savings with the purpose of fulfilling a personal goal. These traditional, informal savings groups called “tontines” are very common in Senegal. Thinking about his “tontine” made Abdoulaye feel a bit closer to the home he had just left, and he decided to create his own tontine among the Senegalese community in Barcelona in 2006.
The group soon realized that a similar model – the so-called Self-Funded Community (SFC) – was practiced in Spain and decided to built upon this model. From then on, the group of 16 Senegalese migrants met once a month to pool their savings. Each put as much money as they could afford into a shared savings box. This allowed them to accumulate more money than they would have ever been able to save on their own. The group as a whole managed the savings box, and expenditures required approval from all members.
To Abdoulaye, his savings group became both a circle of friends and a support group of sorts. Any member of the group could ask for a loan from the joint savings to cover an emergency situation or special expenditures.
“When my father died, I couldn’t afford to go to Senegal,” Abdoulaye recalls. “So I asked my savings group. They gave me the money for the flight and I could attend the funeral.” Later on, his savings group even enabled him to make an important investment in his future: They paid for him to study a Master on Immigration Management at Barcelona Pompeu Fabra University.
Self-funded communities: People helping each other
Self-funded communities (SFCs) like Abdoulaye’s group in Barcelona are mostly created by persons with scant economic resources, low incomes, and limited access to the formal financial system. The simple informal system of savings and loans enables them to access products and services (e.g. deposits, micro-loans or even micro-insurance) that help them get ahead financially and make choices that improve their lives.
Groups are typically composed of ten to thirty people. Only members can invest in the group and there is no influx of money from the outside. The savings belong to every member and together they are responsible for what they do with them. They also decide on the specific rules, such as interest rates and conditions for granting a loan. Members usually receive a share of the interest earned on loans, for example. Every individual group has full sovereignty and the members treat each other as equals.
Migrants from Burkina Faso used their savings group to create a village bank in their home country.
These self-managed groups have already created a variety of different services. Immigrant groups in Barcelona for example, set up their own “emergency insurance fund” which is used to cover part of the expenses related to the death or illness of a close relative back home. The lack of such a fund can leave a person mired in debt for years.
In Barcelona, one group of Senegalese and another of Paraguayans have managed to double and even triple their initial investment in their first year of existence, thus showing that people with low incomes can build up significant assets through small savings, regardless of the unfavourable circumstances they may live in. In Naples, Italy, migrants from Burkina Faso even used their savings group to create a village bank in their home country.
SCF is less about a financial community, and more about a group of friends and acquaintances.
Trust is the key element that makes the SFC system work. Members of savings and loan groups not only counsel each other on money matters; they may even help each other in finding a job or realizing economic opportunities. The communities often play an important role in providing a relational network for immigrants who have had to leave their social ties behind and face difficulties settling into a new financial and economic system.
People are usually attracted to SFCs because they offer access to flexible financing, but it is this community and solidarity spirit that keeps them committed as members. Experience shows that each group acts as a powerful network of contacts, job opportunities, and access to services and products that would otherwise be practically inaccessible. In the end, a SCF is less about a financial community, and more about a group of friends and acquaintances.
supporting refugees in Germany
For centuries, self-funded groups have existed all over the globe in very different cultural settings. An estimated six million people use some form of community savings worldwide today.
An estimated six million people use some form of community savings today.
Spanish social entrepreneur Jean Claude Rodríguez-Ferrera initiated a unique self-funded community concept in 2004. After learning about the Guatemalan bankomunales model, Jean Claude set up the Asociación de Comunidades Autofinanciadas (ACAF) to promote the creation of migrant communities in Spain. He started the first SFC himself with a couple of friends to gather some first-hand experience of a system he planned to propose to others. This first SFC is still in operation.
ACAF has since grown into an international non-profit organization that has launched the self-funded communities model in Spain, Portugal, Hungary, Italy and the Netherlands. The organization provides a framework and guidelines for developing and managing savings groups based on democratic participation, transparent structures and good governance. The main objective is to promote community empowerment through improving the financial skills and capabilities of the groups’ members.
Abdoulaye Fall – the entrepreneur from Senegal – is a prolific backer of self-funded communities. He served as Head of Communications at ACAF, where he is now a program manager while pursuing his PhD in demography at the Autonomous University of Barcelona.
In 2014, after spending an afternoon with Abdoulaye talking about the SFC methodology, a group of young people working on sustainable development in Berlin decided to introduce the model to Germany as a support system for refugees. This is how the German ACAF partner organization SavingBuddies was born.
SavingBuddies was founded by people from different countries, many with migrant backgrounds themselves. These include Korede Amojo from Nigeria, Julia Pérez from the Dominican Republic, Jaime Fernández from Paraguay and Johanna Klein, Marietta Feddersen and Verena Burger from Germany. The organization supports refugees who want to launch savings and loan groups, and organises financial trainings and counselling.
Although the savings objective represents the entry point, successful asset creation cannot be achieved without a dedicated and trusting community. The SFC approach is not just about the financial end alone – it is about people helping each other to climb one step higher financially. It is not about business, but about fostering solidarity, social cohesion and learning (learning by doing as well as learning by sharing). It is not about constraints; it is about capabilities, potential, and taking control of one’s (financial) life.