Village Savings and Loans Associations
Village Savings and Loans Associations are an ingenious solution to the financial needs of rural communities in the developing world. Currently operating in the Kumi and Bukedea Districts of Uganda the project is comprised of self-managed groups that do not receive any external capital since they work by pooling the savings of the group members. They provide people with a safe place to save their money, access small loans and contribute to a welfare fund that members can draw on at any time of the night or day in cases of emergency.
The sums saved and borrowed are not large but are on a scale that makes a real difference to the lives of the group members. The loans taken out may be used to help start fledgling businesses or help families meet sudden cash needs. The interest paid on the loans is shared out amongst all the group members as interest on their savings. Crucially, it has been shown that up to 95% of associations continue beyond their initial year of support.
Democratic, empowering and flexible: the scheme has social implications that are felt throughout the community. Savings groups greatly improve access to decent healthcare and provide families with better nutrition. Members can also borrow from the welfare fund interest free if they need to pay for something unexpectedly (a funeral, for example). It also has far reaching educational implications as participants are able to pay school fees, buy school uniforms and keep their children off the farm and in the classroom. Significantly, most of savers are women (in the Kumi District of Uganda, for example, 67% of the project is female): the project is raising the self-esteem and skill base of these traditionally marginalised members of society.
