Works of Mercy

A Little Goes a Long Way by John Rivera

In northern Uganda, an armed conflict between the government and a rebel group, the Lord’s Resistance Army (LRA), has raged for nearly two decades and has uprooted millions of people from their homes. Dislocated by war, people have been forced to resettle in camps for the internally displaced, like the makeshift community that has formed by the side of the highway in Karuma, south of the city of Gulu.

Here, separated from the plots of land where they used to grow food to feed and support their families, the people were in dire need of some means to generate income. Humanitarian agencies provided emergency assistance. But a system of village banking — a form of microfinance that gives small loans and encourages savings among people who otherwise do not have access to financial services — offered an alternative to dependence on outside aid.

About 30 community members in the Karuma camp organized themselves with the help of advisors. In 2000 they founded the Can Coya Savings Credit Community. Can Coya is part of HOFOKAM, a specialized microfinance institution founded by the Catholic dioceses of Fort Portal, Hoima and Kasese in western and northern Uganda, with funding and technical support from Catholic Relief Services.

HOFOKAM serves about 15,000 clients — about 65 percent of them women — organized into nearly 1,000 groups. It has a loan portfolio of more than $1.4 million. CRS is in the process of supporting HOFOKAM to expand to additional dioceses, with an eventual vision of forming a single, unified church microfinance institution.

Those original members each borrowed 100,000 Ugandan shillings (about $50) and used the funds to start family businesses, such as selling beans, grain and flour in the small community marketplace. They are required to repay the loans with interest, as is required by any bank. The members of the village bank organize themselves, create their own bylaws and meet regularly to supervise the transactions. Over the years, the community has accessed 16 loan cycles, most recently receiving the equivalent of $4,162 this past July.

'Helping Us to Live Better Lives'

One founding member, Aidah Auma, is now the chairperson of the village bank. Aidah was forced to flee from her home village in 1990 when the LRA attacked, killing her husband, two of her six children and all of her husband's brothers. Aidah managed to escape with her four surviving children to the Karuma camp, but was left without any possessions. She first began selling fruit and other food items to support herself and her family.

Eventually, Aidah helped to establish the Can Coya village bank and used her loan to begin selling bags of charcoal for use in cooking. "With the profits, I managed to put my children through school," she says. She also invested her money in constructing a building that houses several businesses along the highway and nine traditional thatch-roofed dwellings that she rents out for income.

"We are managing the loans very well," she says. "And it is helping us to live better lives."

Encouraging members to accumulate savings is an essential aspect of village banking, explains HOFOKAM loan officer Gordon Kihumuro. Before members of the village bank can access their loans, they are required to begin accumulating some savings. "This encourages them to acquire the habit of savings," he says. "Some save the amount of their loan and they say, 'Thank you, but this savings is enough,' and they don't take the loan. They come to know the importance of saving." So far, the Can Coya village bank has accumulated about $1,200 in savings.

The Can Coya Savings Credit Community has transformed the lives of these people displaced by war, providing them with a means to support their families and giving their children hope for a better future. That hope is a powerful reality for Christine Akello, who used her loan to start a small restaurant in her home, where she serves a plate of chicken with beans and sautéed greens for about 80 cents. As she proudly shows off her restaurant, she holds her hope in her arms, her 1½-year-old daughter Can Coya, who bears the name of the village bank.

John Rivera is a senior writer with CRS' media communications department. He recently traveled to Ethiopia and Uganda to observe CRS programs. He works at CRS headquarters in Baltimore.

Labels: Uganda