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community entrepreneurship Archives - SASDI Alliance

Stories from FEDUP’s Income Generation Programme (FIGP)

By FEDUP, uTshani Fund No Comments

By Yolande Hendler (on behalf of CORC)

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Elisa Ramboda

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.

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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

Sophie Mofokeng's tuckshop

Sophie Mofokeng’s tuckshop

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.”

FEDUP launches livelihood programs: solar lights, funeral scheme & income generation

By FEDUP, uTshani Fund No Comments

By Walter Monyela and Yolande Hendler (on behalf of CORC)

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Sarah Makgopela of Aganang savings scheme in Legonyane (North West province) has started a small business selling hats, water boilers, sweets and other small goods through the income generation program

 

If about 25% of South Africans are unemployed, this percentage is even higher for communities living in informal settlements – a reality that is no different for the members of the South African Federation of the Urban and Rural Poor (FEDUP). Since the early 1990s, FEDUP members have identified their own development needs especially around accessing well-located land, security of tenure, improved shelter, housing and basic services. Through the practice of daily savings and other community organisation tools, FEDUP has built partnerships with government on all tiers and has negotiated access to many of these needs. Yet the lack of income generation has posed continuous instability and hardship on a day-to-day basis.

Over the last years, therefore, FEDUP has identified the need to strengthen the income generation opportunities of its members and in 2014 launched several livelihood programs. While these programs assist members to start their own small businesses and the movement as a whole to generate its own income and build its own assets, they are at the same time initiatives that reinforce the importance of the rituals of Shack/ Slum Dwellers International, such as daily savings.

The livelihoods programs underway are

  • Total Solar Lamps by Awango
  • Funeral Policy known as South African FEDUP Funeral Scheme (SAFFS)
  • Loan Program known as the Federation Income Generation Program (FIGP)

Total Solar Lamps by Awango

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A member of Aganang savings scheme in Legonyane (North West) reselling Awango solar lights by Total South Africa

Total South Africa (TSL) introduced solar lamps by Awango and entered a contractual partnership with uTshani Fund to provide FEDUP members with economic opportunities of buying Awango solar lights from uTshani Fund and selling them to potential buyers e.g informal settlement communities and businesses. Although the emphasis is on FEDUP members this opportunity is also open to non-FEDUP members who are keen to do sales. This year a total of 314 people (307 FEDUP members) in seven provinces were trained as resellers.

Training includes a presentation on the available products, how they operate, durability and logistical aspects of the business. After training each reseller ideally buys at least one of each type of solar light (3 in total). The solar lights business is aimed at members who already run an income generation initiative and are seeking to diversify their products – this would provide the financial platform for securing the first stock.

Amidst successes, the program experienced challenges in terms of sellers lacking sufficient start-up capital as well as insufficient sales experience. In response FEDUP members are devising strategies to support the growth of businesses and sellers’ capacities such as exposing sellers to more in-depth training in sales skills and exploring the potential of connecting with the Small Enterprise Finance Agency (SEFA) around increased support for start-up loans.

Funeral Policy (SAFFS)

The South African FEDUP Funeral Scheme (SAFFS) grew out of a desire expressed by FEDUP to bury its members with dignity and honour. SAFFS started its full operations in March 2014 and operates as an understudy to Imbalenhle Burial Society (IBS). It is underwritten by TransAfrica Life Funeral Policies, who are registered with the Financial Services Board of South Africa (FSB).SAFFS currently works in association with IBS to learn how to administer a funeral scheme with the intention of going solo. FEDUP members sell the funeral scheme to own members as well as the public and have sold an estimated 600 schemes to date. Sellers are compensated per policy sold.

Loan Program (Federation Income Generation Program – FIGP)

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“I have used the Federation Income Generation Program to sew graduation gowns as a business. This helps me support my family”

 

The loan program is a formalisation of the loans that FEDUP members access at individual savings scheme level. While this practice will continue, the FIGP is an initiative to expand the scope of these loans to support FEDUP members in income generation activities of their choice.

FEDUP has therefore registered with the relevant financial bodies (via uTshani Fund) and has 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.The criteria for accessing a loan is:

  • Formal FEDUP membership (complete UPF payment)
  • 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 support 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.

In this way FEDUP broadens the scope of its livelihood programs, strengthens its membership base and positions itself toward financial sustainability within the next five years. The year 2015 will definitely mark FEDUP as another recognised, fully registered and compliant microfinance in South Africa. Through this initiative FEDUP will also be able to approach funders and private organisations to leverage further resources.

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” I have used the FIGP to buy shwe shwe material and sew dresses” – Elizabeth Motaung, FEDUP members in Orange Farm Gauteng

At the heart of the matter

What lies behind these varying income generation initiatives? On the one hand, FEDUP’s step towards financial sustainability to ensure continued existence in the case of decreased donor-funding. On the other hand, and at the heart of the matter, lies savings, the engine of FEDUP that enables poor women to come together, share their experiences – struggles and triumphs – and find solutions.

Sarah Mulaudzi, North West co-ordinator for FEDUP recently shared that

“In our savings groups we have R300 000 worth of savings from our members who are doing income generation programs. Through the income generation program our savings are really growing!”

As the income generation programs require savings and start up capital they strengthen FEDUP’s savings practices. Strong savings in turn build a strong group and a strong community, which widens opportunities within the income generation programs themselves.

The small business of Sarah Makgopela and Elizabeth Moletese of Aganang savings scheme in Legonyane, North West province.

The small business of Sarah Makgopela and Elizabeth Moletese of Aganang savings scheme in Legonyane, North West province.