Small is Beautiful

Blake (Omista Credit Union, Moncton NB) and I spent our first week with Fodya SACCO, a small employee SACCO attached to Alliance One Tobacco processing. The tiny branch (probably the size of a typical North American boardroom) is located right next to security at the entrance to the Alliance One “campus”. There are 2 fantastic staff, Rita & Brian, to serve the 500 members, and a 5 member board… they truly are the little engine that could!

Fodya means tobacco and the tobacco industry is a big part of the Malawian economy. Alliance One is 1 of 3 large tobacco companies in the industrial park we’re in and it alone staffs 1200 labourers, not including management or other support staff. These labourers are often poor and uneducated, and therefore receive no service from the banks; Fodya becomes their access point for funds to build their lives. Most of the members we spoke with used the loans to build their houses, which they do one brick at a time, quite literally, over many years.

The SACCO offers a payroll advance loan and a long term loan. The rates are exorbitant, 3% per month or 36% a year, plus and admin fee of 2.5%. Payments are deducted directly from the members Alliance One payroll, and there is an informal info sharing relationship between HR and Fodya that gives the SACCO the ability to verify the member has the income to support their payment.

The staff spend most of their time on administration, having to update member account records and all central ledger books by hand with every transaction. But even with so much work they are delighted to have us; they make every effort to make us comfortable and help with any part of the review they can.

I was so nervous before leaving that I would come all this way and not have anything smart to say. But the final presentation we had with the board on Friday went so well I can’t help but feel like we were able to find recommendations that worked for them. The advice we gave ranged from simple things like “get a sign for your building” and “keep your files in a locked file cabinet”, to more detailed explanations of how to diversify their lending products and how to set up an MOU with Alliance One. Much of the report complimented them on the things they were doing right, and they seemed to appreciate the encouragement. I guess no matter who you are and what you do, a fresh set of eyes is always appreciated. But as cliché as it sounds, I probably learned more than I taught… thanks again to my new friends at Fodya Sacco!