The Importance of Educating Rural Communities in Financial Management

By Abdul-Hakim Al-Hassan

After I had gone through financial management course at University and underwent some training on cooperative societies (organized by ICS Cohort 2 and delivered by the Department of Cooperatives) it came to my attention that the reason why some people fail in their business activities is due to the fact that they fail to realize that it is not just how much money you make but rather how well you manage your money. People who are poor become wealthy as a result of prudent business and financial management.  The women engaged in agricultural business activities in rural areas can make money but can’t manage it well and so they are trapped in a cycle of poverty. 

Picture of the current IGG in Wayamba

As a result of financial illiteracy, they fail to distinguish assets from liabilities hence, they tend to overspend on liabilities and don't keep track of their assets or fail to count their profit/losses. In the community I am posted to, called Wayamba, there was previously an Income Generating Group (IGG) called 'Yellim' (which means salt). The group members would all contribute money to buy salt from the market and then store it in a warehouse. They had a group of people that would buy the salt at a slightly higher price. Initially, this was successful; however, there was an instance where two leaders started taking money from the group contributions to buy personal items, e.g. buying cloths to give to their daughter for her wedding, rather than investing the money into the group to improve the business. Because they were leaders, they did not pay back the money and this caused the business to collapse. The two leaders lacked financial literacy because they spent the money on things that were not related to business and did not appreciate the effect of using the business' money for their personal use.

In addition, these women fail to cultivate the habit of saving and live hand to mouth and often are unable to account for what they used it for. Through the introduction of NGOs and education into some communities, some groups have started collective saving schemes. Although these schemes can be quite successful they fail to encourage the women to collectively pool their resources together to minimize business expenditure. In some cases, they are able to form groups but again do not work collectively, rather they work individually and so carry all  the risks of a business rather than spreading it across a group. The idea of pooling resources, working collectively and sharing risk are some of the fundamental aspects of forming a cooperative and is one of the reasons why cooperatives are effective for rural income generating groups that only produce a surplus, as opposed to a profit. 

Women selling shea butter at Katinga Market

I began to think about the people in the villages and rural communities, specifically the women who have not received formal education and so are part of the vulnerable in Ghanaian society. These women work hard to take care of themselves and their children and often they have business ideas which they try to put into practice, for example by engaging themselves in farming or alternative business activities to their usual income generating activity, such as Shea nut picking or rice processing, to mention but a few. It is my impression that whilst smaller sections of them may succeed, the majority fail in the process because they can’t sustain the business as a result of lack of financial management skills, such as good record-keeping skills. From my experience working with the community I have found that the women are eager to learn new skills but lack the opportunity to do so. That is why I feel our work is so important. 
   
Some women try to organize themselves into IGGs to help each other; however, some fail because they are not cooperatives and therefore lack the knowledge and training that is given in the process of registering as a cooperative society.  For example, if the leaders in Yellim had been taught about record keeping and the responsibilities of a leader, they would have realised that they cannot use the business' money for personal use. Forming a cooperative also helps IGGs to receive financial support for their income generating activity from NGOs and the government.
 

Therefore, I decided that I would like to use the knowledge I acquired in my own financial management training to the benefit of women in rural communities so that they could gain more benefits in the income generating activities that they engage themselves in. However, the question was how I achieve this? 

 

A picture of me delivering a training session to the IGG in Wayamba on record keeping

I was able to achieve this dream by working with ICS. I was enrolled onto the programme as a volunteer in the Non-Formal Education Department (NFED) Tolon livelihood project to train women in pre-selected income generating groups on how to form cooperative societies. Part of this training involved teaching the women financial management and record keeping, which is a key requirement to become a sustainable cooperative society.

As the saying goes: “If you educate a man you simply educate an individual, but if you educate a woman, you educate a whole nation." By ensuring that our programme and the training we deliver to the communities, which is NFED inclusive, is sustainable we hope that our teachings can be used by facilitators in the communities to pass the information on, from community to community and, as a result, we hope that the communities we have started to work with on this project will go on to form cooperatives. Perhaps, by doing so they will inspire another group or even another generation in rural communities to form their own cooperative society.