A component of our economic development program in Uganda is the Village Savings and Loan Association, or VSLA. We’ve found it to be a critical piece to sustainability because it provides immediate relief to our beneficiaries, by our beneficiaries!
It works much like a regular loan, except the seed fund and management of the fund is handled entirely within a community of about 30 people. In order to participate in the savings and loan program, a member’s business proposal must be approved by the community. Loans are repaid weekly, ensured by peer accountability and encouragement. It takes heavy resources that the most impoverished don’t have, to secure a regular loan from a bank. This made it impossible for our members, whereas with the VLSA they can take out a loan with only peer accountability to secure it.
Often times, we will help a community begin a cooperative business, such as animal husbandry, that takes a while to show a return. The addition of the savings and loan program allows individuals of the group to begin independent, small-scale business that will have an immediate profit return, such as selling wholesale produce at market values. One provides immediate relief while the other provides sustainability. For best results, we pair these two techniques.
Today we visited a group who is four months into their VSLA program. It was amazing to listen to the women talk about the changes in their lives. Every one of the women talked about being able to pay their school fees and feed their children balanced diets daily. Another commonly heard comment was how fat they had become, and to look at their faces and clothes to see what the VSLA had done for them. And several members bought goats with their VSLA so that they can begin their own, independent, animal husbandry businesses.
Individually, Jennifer, who has gone to tailoring school, bought a sewing machine and now tailors in the city. Julia proudly boasted about her clothes and glowing skin. She can buy detergent to wash her children’s school uniforms and said she even bought herself a set of bedsheets. What I loved the best was when she held up a singular fork that she owns, and said “I can even eat with a fork now!” The chairman of the group expressed how clean the members of the community are. The VSLA loans have allowed the members of this community to stop living hand to mouth.
The loans often have nearly 100% return after all expenses are met, allowing members to purchase much needed household items and break the cycle of poverty by creating a savings of money at the end of the month. As emergency needs have arisen, therefore, they are able to access their savings to help meet the present needs, such as payment for emergency medical treatment.
The best thing we can hear when we access the work we do is that the individuals don’t need us anymore.Where once we would have jumped in to provide medical attention, individuals have been able to provide for themselves. And possibly the sweetest result I heard today were from women who were able to buy beds for her own children!