SNAP CHANGES VSLA

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Introducing access to financial services is a decisive factor in eliminating poverty and generating local development. The Village Savings and Loan Association (VSLA) is successful micro-finance model under which savings groups are formed at the community level in order to reduce poverty through the financial and social empowerment of poor and vulnerable people. CARE’s experience around the world in establishing VSLAs in vulnerable communities has demonstrated their success and value beyond generating savings and loans. A VSLA is a self-managed group of 15 – 25 people who save together and take small loans from those savings. A VSLA does not receive any external funding but instead provides its members with a safe place to save their money, so as to access loans and to obtain emergency insurance. The activities of a VSLA run in cycles of about one year, after which the accumulated savings and profits are shared out among the members according to the amount they have saved. During the cycle, members can take out loans to cover expenses such as school fees and medical bills without selling productive assets, or they can use the loans to invest in income generating activities to raise household income. As a result of this access to financial services, VSLA members experience significant improvements in household health and wellbeing, and an overall improved quality of life.

Koos Cige is a 40-year-old mother of 6 children (three daughters and three sons) who lives with her family in Yufle village, located approximately 30 kilometers south of Erigavo town. The village is home to between 800 - 1000 households. “Before VSLA, life was hard. We women totally depended on our husbands because we had no money of our own. When we needed money for something they would say they had no money even when they did. They would not help when our relatives were sick. 

Since joining the VSLA, I have been able to save and take loans which have helped me to revive my shop, which was collapsing. I also started selling vegetables. With the income from my business I am able to buy food for my household and small things for my son and daughter. I feel very free being able to do this without having to go to my husband for money. The VSLA has helped me to change my view about myself. I now believe in myself. I believe that I am able to achieve anything. I am full of confidence and no longer fear standing in front of people to provide my opinion on an issue.  I can take loans because I do not fear that I will be unable to repay. Even if I face difficulties, I will pay the money back.

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