What is the Village Savings and Loan Association (VSLA)
It is a microfinance system is sometimes inaccessible for some of the poorest communities in rural Africa. Lack of infrastructure, poor road conditions, low population density and high labor costs for qualified employees are all factors explaining the high cost of microfinance services in Africa, much higher than that observed in Asia. or in Latin America. Microfinance institutions (MFIs) tend to impose rigid credit conditions, which significantly reduce the demand for loans. In addition, the average amount of loans requested for an income-generating activity carried out at the village level is less than 20 dollars, an amount less than approximately 40% of the minimum amount of loans granted.
Finally, few MFIs offer savings services, which are often the most requested in rural Africa. To address these shortcomings, a savings-driven model called Village Savings and Loan Association (VSLA) was developed. VSLAs are intended for poor populations with irregular incomes, which represent a high risk for MFIs. They offer their members low-cost financial services, based on the principle of pooling funds. As such, they make a decisive contribution to meeting the needs of men and women who wish to access financial services to manage their household liquidity, cope with life events, or invest in activities that generate income. limited income. In addition, VSLAs allow their members, regardless of their geographic or financial situation, to mobilize small local capital, under flexible conditions, at low cost and with very limited risk.
VSLAs were created by CARE International in Maradi, Niger, in 1991. Initially aimed at illiterate and extremely poor women in rural areas, this methodology has evolved over the years; it is now implemented in literate and illiterate populations in rural areas, towns and peri-urban camps, and urban slums. The primary objective of a VSLA is to provide simple savings and credit opportunities to communities deprived of formal financial services.
In regions where MFIs exist, VSLAs can be extremely complementary. VSLA members can also be clients of an MFI and vice versa, and choose different services to meet different needs. VSLA members can potentially be of interest to MFIs, since they have solid experience in savings, financial management and investment. Often, as VSLAs grow and begin to engage in more profitable activities, they need funds that the VSLA cannot provide. MFIs therefore represent a natural transition towards greater financing.
Today we have four VSLA groups composed with 25 persons each.
The first Village Savings And loan association named «Pamoja na Mungu» which means Together with God. The group is growing step by step.
The second Village Savings And loan association named «Umoja» which means Unity. The group is growing up step by step.
The firth Village Savings And loan association named «Matumaïni» which means Hope. The group is growing up step by step.
Our assistance: To summarize:
- We teach to the different VSLA members how to keep save, loan and assist each others with their raised money and how to initiate selves our small business in order to remove from the poverty and create business for others;
2. We do the monitoring to see how it works before we give advice;
3. We provide to each team the using necessary materials;
4. Our forth step will be support by providing to them additional assistance to initiate the incomes generating activities;