Penn Staters Travel to Ghana on Microfinance Brigade to Help Locals Save
In May, the Penn State Global Business Brigades student organization traveled to a rural community in Ghana on a microfinance brigade. The purpose was to help residents of Ekumfi Adansi Maim, a community with a population of about 250 people, better understand and use their finances.
A previous business brigade from the University of Texas recently established a community-run bank in the town known as the community development fund. The Penn State brigade followed up by helping the community residents learn to best use the fund.
“It was our job to explain how the community development fund is run, the importance of active savings, and the positives and negatives of credit and loans,” said Karl Osis, an Actuarial Science major in the Smeal College of Business who will begin his senior year in the fall.
Upon arrival in Ghana, the nine students who traveled on the 10-day trip split up into three groups. Each group was assigned several families to meet with over the course of their stay.
“Each group was assigned nine families, and we spent our time consulting with them, looking at how much money they make and spend, and evaluating their options,” said David Williams, who will enter his sophomore year as the organization’s social chair.
“Most people didn’t know how much money they had saved, how much they were spending, or how much they were making,” added Osis.
Having a better understanding of their own financial situations and how savings can work in their favor will make the community development fund a valuable asset to local families.
The community development fund, at its current stage of development, acts as a vault where community members can save their money in zero-interest bearing accounts. The money in the community development fund is safe and can be withdrawn at any time. It provides an alternative to the complicated Su Su, an existing but more complicated form of saving money in which participation can be risky.
“It was surprisingly difficult to say goodbye when it was time to leave. We had come across happy, peaceful, and loving people in incredible poverty, and we hope we left them a little better off than when we arrived.”
“The basic model of the Su Su is that members have a weekly contribution they must give to create a pool of funds,” explained Anarug Kumar, a rising senior Finance major who traveled to Ghana with the group. “A month after inception, members are eligible for a loan of up to three times their total contribution at the time of request.” Loans, then, must be repaid in three months time at five percent interest.
One year after a Su Su begins, it “breaks up”—or, the money is divided among members, repaying each what he or she contributed plus a percentage of the interest earned on loans.
“One of the biggest risks of this system is that the money members contribute is not savings. They cannot withdraw funds if they need it; they can only take it out in the form of an interest-bearing loan,” Kumar said. “Also, if a member takes out a large loan and is unable to repay it, the pool of funds decreases.”
After meeting with as many families as possible, the group took one more chance to provide some information at the closing ceremony.
“We made three posters,” said Osis. “One poster explained the community development fund, another the Su Su, and the last one gave examples of how to actively record their finances using the basic accounting system we developed.”
They left the posters with the community in the hope that residents could reference them in the future and make educated financial decisions moving forward.
“It was surprisingly difficult to say goodbye when it was time to leave,” said Osis. “We had come across happy, peaceful, and loving people in incredible poverty, and we hope we left them a little better off than when we arrived.”
The nine students who traveled to Ghana include Osis, Kumar, Williams, Kaela Waschler, Nate Born, Minna Hyon, Grace Gao, Emily Waschenko, and Marin Merge.
Global Brigades is the world’s largest student-led global health and sustainable development organization. Global Business Brigades at Penn State is one of seven brigades at the University. This is the group’s fourth brigade. When they’re not traveling, members of the group participate in fundraising and awareness events and attend meetings featuring documentaries, speakers, and trip preparation information.