Traditional micro-credit scheme helps Senegalese women do business

Access to financing has over the years remained a major hurdle female entrepreneurs across Africa have had to try to overcome.

In spite of several discussions on the matter, channels are yet to be made readily available for women to have easy access to financing for their businesses in many countries.

But in the Medina area of Grand-Mbao, a neighbourhood on the tip of Africa’s west coast on the outskirts of Senegal’s capital Dakar, some women have found a way to finance their projects and ensure their businesses stay afloat.

They are part of a traditional cooperative savings scheme known as ‘tontine’ where each woman contributes money and collects the pooled sum in turns.

The system helps borrowers overcome difficulties accessing credit as well as avoid prohibitively high interest rates.

Mame Ngone Cisse, a poultry farmer and member of the ‘tontine’ group said the scheme helped her purchase chicks for her poultry farm.

She explained the scheme is helpful as unlike the commercial banks, there is no interest to be paid on the loan members receive.

The micro-credit scheme also has a family atmosphere with the about 250 women in the group belonging to different generations.

With some seated on chairs and others on the ground, the women put their monies into a calabash with each member contributing about 3 euros.

A winner for the day is named who then takes the prize pool of about 760 euros.

The members though are careful not to abuse the money they are given.

“There is trust among the women because if you do not contribute, there are fines. And since we are villagers, we dare not spend the money from the tontine without paying. You will pay back and probably your grand children will end up paying as well”, said Awa Cisse, another tontine participant.

Specific measures such as sanctions regime have been instituted to instill confidence and also ensure transparency.

“Anyone accused of being late pays a fine of 200 CFA francs (less than a euro). If they continue to be late, the person gets pushed down the list of future winners. Sometimes we won’t even grant the loan until the person’s contributions get back on track,” said Mane Niang, one of a select few, responsible for keeping records for the tontine.

Whereas the contributions are often made in cash, there is room for participants to also contribute via mobile money which is widely popular in Senegal.