Savings Groups in Hard Times: Report from Tajikistan

Joanna Ledgerwood of Aga Khan Foundation was recently in Tajikistan, along with Savings Revolution’s own Kim Wilson. Joanna shared a note from her colleague Erin Markel about how Community Based Savings Groups (Aga Khan’s brand of savings group) are providing financial services there not only in good times, but crucially during very hard times. 

First, some background: In the early morning of 24th July 2012, Tajik government forces launched a military operation in Khorugh city in Eastern Tajikistan. The population was seriously affected, and according to reports, 50% of the Khorugh population had to relocate into nearby villages. Homes and public buildings in some locations were heavily damaged. At least 30 civilians were killed during the fighting. All means of communication including transport and mass media were blocked in the region and electricity was cut off. 

The economy is particularly fragile in that remote region, and in fact many people live on cash sent from family members working elsewhere. Erin reports that anecdotal evidence suggests that about half of all funds deposited in the CBSGs come from remittances.

That’s why, Erin writes, it was particularly worrisome that during the civli unrest…

…banks were not operating, so transferring funds to local people (remittances) was temporarily stopped. People faced serious problems with procuring food stuffs due to the limited amount of cash available. To overcome this problem, members of CBSGs applied for loans within their local groups to meet their cash flow needs during the crisis. The number of loans taken out increased immensely during the conflict as there were no alternatives. For example, in Ishkashim district 797 CBSG members (out of a total of 1,622) took out loans totaling 330,722 TJS which is around US$ 70,000.

It’s just a reminder of the value of decentralized savings-led groups. They might get you through hard times a lot better than top-down credit-led institutions. 

Thanks, Joanna and Erin, for sharing that news. That’s twice that we’ve heard of savings groups helping people get through civil unrest. (Compare with this earlier post from Côte d’Ivoire).