In 1991, CARE launched a transformative program in Niger that would change the world – at least parts of it. It harnessed the ancient practice of group savings in an innovative concept called Village Savings & Loan Associations. VSLAs offered women in particular a safe way to save money and access loans. No outside capital was needed – only a lockbox, three keys and some basic financial training.
To join the VSLA program, individuals are opt to join a group and identify their own members within the community. Members from the group trained on group governance and management. They receive the toolbox and also a passbook to record the transactions. Group establishes a constitution and bylaws, including meeting frequency, rules and regulations. They also sets the price per share and the minimum/maximum number of shares a member can purchase during a meeting. The groups usually start by meeting in a weekly basis and eventually adds lending to the routine. After 9-12 months, groups hosts “Share-Out Day,” ending the cycle and distributing savings and profits to members according to the number of shares each has purchased during the cycle.
Nowadays, there are 200,000 CARE VSLA groups in 25 countries. The project has mobilized more than 5 million members, from which 70% of them are women. The groups together has generated more than 350 million financial transactions a year and create millions of dollars in annual savings. The success of the project is demonstrated by a loan repayment rate of 99%.
Nevertheless, there are 1.1 billion “unbanked” women in the world. CARE’s experience has shown that those participating in VSLAs are more than ready for formal banking services. As VSLA groups mature, so grows their need for more diverse financial services like insurance and a more secure place to keep their savings and extra cash. Demand for larger and longer-term loans also increases, particularly at the beginning of a group’s cycle, when savings are minimal. To fill these gaps, VSLA groups increasingly need to link with formal banks. And CARE is making that happen. The payoffs can be significant. Once linked with a bank, group member savings increase between 40 percent and 100 percent, and the average profit per member doubles. It is through these linkages that CARE will map the next frontier of VSLAs.
Join us in our next steps to continue supporting the growth of VSLAs.
