Empowering Slum Dwellers Through Saving Groups

Mobilising and empowering slum dwellers is a core objective of Cities Alliance Country Programmes, and one of the most effective ways to do so is through community saving groups.
Mobilising and empowering slum dwellers is one of the core objectives of the Cities Alliance Country Programmes, and one of the most effective ways to do so is through community saving groups.
Despite their successes, these groups are often not well known or poorly understood. Do they finance community projects, or individual savers’ household needs? Are borrowers charged interest or do they provide capital? How exactly do these groups help involve slum dwellers in strategic urban development?
To provide some clarity on this issue, we turned to Skye Dobson, a programme officer for Shack/Slum Dwellers International (SDI) based in Uganda. Skye provided an excellent overview of saving groups and how they are working in Uganda, one of our Country Programme partners.  While groups vary from country to country, many of the fundamental principles and structure apply to saving groups worldwide.

A Powerful Development Mechanism
Saving groups form the basis of collective action in urban poor communities. Each saving or credit group consists of slum dwellers living on the same street. Leaders walk door to door gathering small change from neighbours and conducting daily community needs assessments. This process is designed to maximise the contact that people have with each other, enabling strong bonds to form within a community and increase its organisational capacity.
In Uganda, the saving groups are self managed and self capitalised. Members save at least 100 shillings per day to this group and they loan to members, generally with interest but no collateral. These loans are usually for household and livelihood needs such as school fees, health care, and small business support.
Each group has a collector responsible for door-to-door collection of daily savings from members, and a treasurer who records all transactions in a designated book and banks the savings each day.
Groups also have an auditing committee to reconcile the books on a weekly basis, and a loans committee that evaluates loan approvals made by the group and monitors repayments. Members of the group determine the interest rate and repayment period, and they are free to withdraw their savings as needed.

Connecting Communities and Building a Federation 
The development of the city-level federation is inextricably linked to the federating of the savings groups. Issue based committees are established around particular issues – such as health and hygiene, loaning, auditing and eviction – that form the structure of the savings group and are replicated at the network, regional, and national level of federation governance.
The voices of the poor are taken from savings group level meetings to network-level meetings, and from there inform the city agenda as these voices are brought to the regional meetings. Thus, the city federation is driven from the bottom, not the top. Network, regional and national level meetings are critical to maintaining this bottom-driven process. These, rather than projects, are what make the savings groups feel part of a larger process, a larger agenda; a movement.
Positioning Slum Dwellers to Negotiate with the City
In Uganda, settlement forums initiated by the federation have proven to be an effective way for the communities to mobilise, organise and later send their issues to city authorities for consideration.
These forums bring together all stakeholders – such as opinion leaders, savers, women’s groups, the disabled, religious leaders and local politicians – within a particular locality to discuss and agree on the pressing issues that should be pushed to the authorities, the community’s strategies for addressing them, and the partnerships they seek.
For example, a settlement forum in Mbale identified malaria due to poor drainage as a critical issue. The settlement committee took the issue to a municipal forum, where it was subsequently incorporated into the municipal budget.
Representatives of the communities who engage directly with the city have the support of a broad base of residents, giving the federation the legitimacy to engage meaningfully with authorities. As such, the federation representatives speak on behalf of a major constituency for city authorities. The federation’s organisational capacity allows it to apply pressure on officials and strategise so that this base cannot be ignored.

Leveraging Financing Through Urban Poor Funds/Community Funds
Savings groups also save towards their community funds at the city and sometimes national level – called Urban Poor Funds or “community upgrading funds”. These funds are put in a separate pot and used to leverage external funds for collective projects. They are mostly designed to be revolving funds that allow communities to obtain collective loans for slum upgrading and housing.
These funds are a powerful development mechanism. They enable urban poor communities to organise themselves into saving groups and improve their financial and managerial capacity to manage the loans for community development activities, either on behalf of members or the community as a whole, from the fund directly.
They are also an alternative way of avoiding traditional bureaucratic mechanisms that decide development activities on behalf of communities. With urban poor funds, communities decide and design various development activities by themselves, on a large scale, and later link together into networks of learning and sharing of knowledge.
Examples of such funds in Uganda include the Suubi Development Initiative, the Kampala Community Development Fund, and the Community Upgrading Fund established with support from Cities Alliance as part of the Transforming Settlements of the Urban Poor in Uganda (TSUPU) programme.
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