The Village Savings and Loans Association Concept
The VSLA-Plus model is a village banking methodology, which offers the productive poor, Extremely Vulnerable Individuals and Care Givers of Persons with Special Needs in the rural communities. VSLA plus gives an opportunity to group members to purchase shares and lend to themselves on an agreed interest rate on group basis. In addition, members also contribute money to a pull called an EVI fund which is used to support the Extremely Vulnerable Individuals who do not pay back the amount given. It is a zero-interest grant given to members within the group and sometimes non-members depending on how the group agrees to utilize the fund. In the case of Kyangwali, for instance the price of shares ranges from 500 – 2000/= and EVI fund range of 500-1000/=. The capacity of the groups was built by KRC through continuous trainings on visioning, self-realization, money management, investment and the linkage between Financial Inclusion and Protection with a major emphasis on GBV. Each time the group meets, each of the members purchase shares and also contributes to the EVI fund.
The Kyangwali VSLA is made up of 50 groups and a total of 1500 people from 5 Villages of Maratatu, Kavule, Mombasa and Host villages of Kyangwali and Bukinda. Each of the groups save together and take small loans from the money to invest in small businesses of trading and other income generating activities. Besides they often have group discussions on issues that affect the communities such as child protection, GBV
“I was finding it difficult to manage my retail business but through the VSLA, I was able to get the business skills which have helped me a lot. Now I get more customers and can now pay for my children’s basic needs”, Mrs. MAVE Espera, a 25- year- old business Woman said.
“We used to travel to Bukinda and Kyangwali to do menial jobs to enable us take good care of our children’s’ needs particularly their education needs, food and sometimes health,” says Miss. Jane Mandesi She said: “But since the introduction of Village Savings Loans Association PLUS (VSLA-PLUS) model, we no longer go since we’re are able to take loans from the groups to help us undertake our economic activities which bring us money to cover the limited-service gap.
and Corvid-19. This has helped empower and create a spirit of resilience among the VSLA group members.
The activities of the VSLA run in cycles of about one year, after which the accumulated savings and the loan profits are shared among the members according to the amount they saved.
For example, the use of money boxes for savings is an old practice. The idea is to use a box to collect money preferably coins over time and use the amount later. The same applies to the VSLA. At the group level, the savings made in the box are used as loans among members and repayments made at specific periods.
Although the VSLAs may not be formally registered, they have a considerably higher degree of formality. It has clear and formalized systems of governance, enshrined in written constitutions, policies and procedures related to savings, credit and the operations of a social insurance fund. Transparent procedures are effective and have very simple systems of record-keeping, equitable distribution of assets on regular basis and effective security of records and cash.
At the close of 2020, Kyangwali VLSA for instance, which was then made up of 50 groups from 5 communities inclusive of the two host community Villages pooled savings of over 48 million shillings. Whilst some of the women in these groups have been able to establish new businesses, others expanded theirs and some engaged in buying foodstuff during the harvesting seasons to store and retail during the lean season in order to make profit.
Many of the women have confirmed that the intervention had improved their living conditions, particularly the wellbeing of their children. The trainings and discussions especially on the linkage between VSLA and protection has empowered women to take up what society attributes as “men responsibilities” with confidence. Women now have opportunity to share ideas with their spouses on how money is spent in their households. There is reported reduction in GBV cases, and more women have taken up leadership positions and household resilience has been strengthened.