By Yolande Hendler (on behalf of CORC)
Venda Beadwork in Limpopo
“My name is Elisa Ramboda. I’ve lived here in Ramahantsha* my whole life, more than 70 years. I’m the first member of Pfano, my savings scheme, and I was the first to join when the Federation of the Urban and Rural Poor (FEDUP) was launched in Limpopo because I heard about savings. When the FEDUP income generation project started I took my first loan of R 1000 – to buy beads in town and sell Venda beadwork here at my house and at paying points where people get their grants. Even when there is a wedding, people come and place orders with me to make them traditional decorations.
I sell headbands for R150, armbands for R90, belts are R150 and necklaces cost R40. I make good profits and I have already taken and repaid three loans! This helps me to pay my grandchildren’s school fees. I also support my daughter-in-law and my son.”
This blog traces the stories of FEDUP members in four South African regions who use the Federation Income Generation Programme (FIGP) to start businesses, support family members, and secure their livelihoods.
(*near Makhado / Louis Trichardt in Limpopo)
FEDUP is built on daily savings
As a network of saving schemes, FEDUP’s core practice centres on daily savings collections that establish a space for individuals to share daily struggles and for savings group to identify solutions. Most often members’ needs pertain to accessing well-located land, security of tenure, improved shelter, housing and basic services. Through daily collections and other community organisation tools FEDUP has built partnerships with government on all tiers, negotiating access to many of these needs.
FIGP draws on FEDUPS’s Urban Poor Fund
Amidst successful negotiations, the lack of income generation continued to cause instability and hardship. FEDUP therefore launched the FIGP in 2014 to assist members in starting small businesses, enabling the movement to generate its own income through reinforcing the significance of daily savings itself. FEDUP (via uTshani Fund) registered with the relevant financial bodies and started up a legal and formalised microfinance institution through which members can access group loans from their own Urban Poor Fund instead of external financial institutions.
Taking loans to start a business
The criteria for accessing a FIGP loan are:
- Formal FEDUP membership (complete once-off UPF payment of R750)
- Active member of a FEDUP savings scheme
- Experience as small business entrepreneur for at least 6 months
- Be part of a group of 5 to access a loan
These criteria ensure that members continue saving and supporting one another in the development of their respective businesses because individuals can only receive loans when they are in a group of five. The whole group must also make repayments as one overall sum. Therefore individual success depends on group success.
Sophie’s Tuckshop in Bethal, Mpumalanga
As Sophie Mofokeng attends to a customer in her well-stocked tuck shop, in the front section of her house, she says that she has been a FEDUP member since 2013.
“I started my shop in 2009. But after a while I got stuck because I did not make enough profits because I did not increase my prices enough from the wholesaler prices. But now I am good at it. FEDUP has helped me a lot, especially through savings and the FIGP loan, which supports me with my shop. I have taken and repaid three loans so far: R500, R1600 and R1000. They have helped me because I don’t have to pay high interest. I have many customers especially on weekends and month end. I count my profits every day when I close and put them in my account.
Saving is good for me because I can’t always draw the money when I want it. It helps me to support my children after school, maybe through varsity (university). I want to grow the shop and buy a chips machine and a double fridge so I can stock more colddrinks.”
In Standerton (Mpumalanga), Dolly Moleme, Emelina Hlabati and Beauty Nkosi (both over 70), speak about the poultry project they started through FIGP.
“The Gogos and I are members of Masakane savings scheme. We used to be many members – now we are about 30 people. Many of us received houses but we wanted to do more to support ourselves. The Gogos and I started a chicken income generation project because many people like to eat chickens: we buy small chickens , grow them and then we sell them.”
(Dolly Moleme, FEDUP member, Mpumalanga).
Dolly has also used FIGP to make her own Achar (condiment) and sell at a public vending area in Standerton’s town centre. Other FEDUP members in Bethal have set up their FIGP businesses, selling uniforms, clothing and household items in public areas where people gather to collect their monthly grants.
FEDUP seamstresses in North West Province and Gauteng
In Legonyane (North West) and Orange Farm (Gauteng) FEDUP savings scheme members are making use of FIGP loans to expand their sewing businesses. Both members are experienced seamstresses and use the loans to buy material to make graduation gowns and shwe-shwe dresses.
In reflecting on the impact of the loan system within the FIGP, Rose Molokoane, FEDUP National Co-ordinator said,
“As FEDUP, we initially got together in saving schemes so we could save towards houses. Some people began dropping out when they didn’t see houses. But our work is not about houses only – it’s about the future. We are building a future, not a house. We are building a home, not a house. In a home there are many needs. We are using this loan programme (based on our savings) to do something about them.”