The last two posts addressed savings preferences for skewed returns; some savers would rather take a chance to win a high payout over one that promises a steady rate of interest. Turns out this passion for chance has Happy Winner of Mother’s Day Raffleexploded into the savings group scene in Latin America. One must look hard to find groups that do not incorporate at least a few elements of a micro-casino, as they often call their social activity, regardless of which non-profit or church organization inspired them. For example, consider a group in Nicaragua called Hope for the Future whose membership resided in Cerro De La Mina (Mine Hill).

Across old flip chart paper using stubbed markers, the promoter and the secretary had written, “Savings, Fines, Raffle Income, Loan Principal, Interest.”

These would become columns that stood for the received cash portion of their records. Members reported that each deposited identical amounts every two weeks, but had agreed to vary the amount according to harvests and livestock sales. In lean periods, each member deposited roughly a dollar and in flush times, each doubled that amount. After about nine months, the group had accumulated $332 in savings deposits. It also had earned $4 in fines from members for various lapses, $45 in interest on loans, and $65 in raffle profits. Raffle profits included revenue from ticket sales less the cost of the prize and were clearly the winning contributor to group earnings, producing well over 50% of net profits. During the meeting, the group was awarding a nylon knapsack to the winner. Previous prizes included a flashlight, a watch or packets of shampoo. 

A similar group nearby, but with a destitute membership, was saving about half the amount of Hope for the Future. Their raffle prize – a package of beans - reflected the day-to-day struggle for survival.  In both groups, members reported giving their prizes to poorer members.

The idea of raffling prizes as a source of group income is appealing. The machinery of the raffles differs from group to group. In some communities, groups award small livestock such as egg-laying hens during the year and goats or sheep at Christmas. In others, they raffle items for immediate household consumption like soap or food, and in others still, the prizes include clothes. Eligibility to purchase raffle tickets varies, too. In the example of Hope for the Future, only group members can purchase tickets. But, a group in Agua Fria tells a different story.

There, a group of ten wanted to generate money from beyond the group. “The savings of the group comes at a great sacrifice,” claimed Nora Garcia Rivas its promoter. “If we have access to twenty cordobas (about $1 US), we set aside three for savings.” They have invested nearly all of their group funds in a pig nursery. To round up the extra $450 they needed to complete the nursery, the group got creative.

Nora works without pay. An elementary school teacher in her twenties with a teaching degree, she has slipped through the cracks in the government payroll system. Her brothers-in-law herd cattle for a living and tell her she is crazy to continue in this way, that her education is useless and that teaching children is more useless still. “Look at you, they say, you are the only one of us who went to school and you work for nothing. We never went to school but at least earn something.” Despite these well intended chides, the men help Nora financially when they can, but clearly, her financial resources are limited. “We needed to find a way to boost our fund without increasing our savings rate because we have no more to save,” she said.  Holding raffles, which she heard about from another savings group, seemed a good way to involve other members of the community in larger gatherings.

On the day we visited Agua Fria, Hope for the Future was holding a special Mother’s Day raffle. The group conducted its savings and loan business in full view of members and non-members alike, which itself generated an air of excitement from the sixty or so in attendance. Nora had tasked each member of her group with selling ten tickets. A hundred tickets had been issued, all folded and placed inside a clear, plastic sack. Instead of choosing the winner on the first draw, Nora, an expert at creating a sense of theatre, maintained the suspense of raffle for a least an hour. Each drawn ticket was a losing ticket. The winning ticket was the 100thticket, the last bit of paper in the bottom of the sack. By the time it was opened everyone knew who the winner was and the spellbound crowd sent up a cheer. Local musicians broke out their instruments - a guitar, a guitarrón, and an accordion. Dressed in a red tank top and tight jeans, Nora began singing as she motioned the winner to come forward. A child emerged from the crowd to receive the prize – a set of yellow infant clothes - on behalf of her mother. Tickets each sold for two cordobas or about ten cents apiece generating $10. The cost of the prize was $5, the profit adding 10% to the group’s balance. As Nora said, “we earned some money and everyone had a good time.”

While the idea of raffle, which by 2010 had spread across many groups in Nicaragua, created entertainment, it also brought confusion. Said one woman in Cerro De La Mina, “the registers are mystical. We don’t know how much we have really saved. Is the raffle money ours?”

This leads to a larger set of questions: Are raffles ingrained in Latin American savings group programs? Can groups easily opt out or is there gentle pressure to embed raffles into the general approach?

Raffles are not the only form of thrill conjured up by savings groups. Take El Mojón, an isolated agricultural community about an hour from Jinotega, Nicaragua.  Here farmers produce corn and beans, and grow potatoes and vegetables.  Most of the fourteen members of Our Lady of Perpetual Help are single mothers, and many live in provisional homes made of wood and plastic.  Most do not have latrines. 

Members plan to spend their savings on improving their housing or covering an unexpected medical expense. Silvia, the group’s president, hopes to invest in a small dry goods store in her home where she hosts the local preschool. Gladys del Carmen Mendes, the group’s promoter, plans to improve her house, but she’ll buy a bed first. Since her bed broke, she has been sleeping on wooden boards laid across cement blocks.

Every two weeks, the women each save between $1-$5.  In order to gather the cash they need for their deposit, most sell chickens and eggs or set money aside from their wage labor, typically $2.50 per day.  Gladys explains that she has stopped buying snacks and soda in order to save.  She says, “If I spend 10 cordobas ($.50) on a soda, I enjoy it for ten minutes and then I have nothing.  When I save, I know that my savings are safe for when I really need them.  They also earn interest. ” 

“The ten cordobas saved are worth more in the box than in my house,” says Gladys.

Group meetings are private and formal.  While the group is saving, the women close and lock the doors. Not even the home’s owner, a 76-year-old man, is allowed to enter.  Several men sit outside, guarding the meeting.  When the women finish saving, they open the doors to the loan clients, usually men.  The clients enter the house one by one to solicit loans of 7% monthly interest.

This group has also experimented with a different way to magnify their funds, beyond joint farming activities, an idea which is transplanting itself across Nicaragua.

In June, Our Lady of Perpetual Help organized a dance charging men an entrance fee and selling food, cigarettes and beer. In the next month, the group arranged dances on three of four Sundays, promoting them on the local radio and placing fliers throughout nearby communities. The group invited the police to monitor the events.  At one dance more than 120 people arrived including sixty-five men. Our Lady of Perpetual Help sold beer and cigarettes on credit.  Reports one member, “Women can enter with a smile but men must pay.” The group earned more than $100 that day, or approximately $7.50 per member; well over the $2.50 earned in local daily wages.  One woman commented, “The men are shocked that we, a group of women without formal work or land, now manage the majority of the capital in our community. They know we are making a profit from their loans and the dances, but they need the loans and they want the dances.”

Parts of the post were excerpted from a paper called Saving the Farm written by Kim Wilson, Suzanne Andrews, Jose Angel Cruz and Gaye Burpee

Reader Comments (1) 

One word for this....fascinating!

Sat, July 9, 2011 | Jill Thompson