How can microlending make a difference in someone’s life? In rural Senegal, access to money-lending associations is limited for remote communities. The external money lenders that do visit the communities often have high-interest rates. This makes it difficult for women to save their money when loans are paid back at a high rate. The right type of microlending can be the key to women lifting themselves and their families out of poverty.
Women Work to Generate Income for their Family
In rural Senegal, family income generation traditionally falls on the shoulders of the man. However, men leave their villages in search of work in cities or abroad. This leaves women tending to their families alone without any stable income. Ndeye Diop is a mother of seven in the village of Mboss. She tells us, “Many women didn’t have an occupation after the rainy season. They used to stay in their homes without any activity.”
However, through CREATE!’s community garden program, women are now able to work from their communities. They grow and sell a variety of vegetables year-round with consistent access to water thanks to solar-powered water pumps. “Since we started gardening in the village, I have the possibility to sell the extra in the market,” Diop explains. Previously, she used to purchase produce from the expensive weekly market infrequently. Now, she returns to the market to sell her own vegetables.
Meet Ndeye Diop, a mother of seven from the village of Mboss and a member of her community’s VSLA program.
Microlending in Rural Senegal
Now that women are generating income from their villages, there are more financial possibilities. With training from CREATE!, women will form a Voluntary Savings & Lending Association (VSLA). An association is made up of 10-25 women who save together and take small loans from their savings over a one-year cycle. Association members save small amounts of money each week for future use. For instance, women can make loans to each other to cover business, personal, and household costs. In addition, members attend weekly meetings where they deposit their savings and collectively make decisions on loan disbursement. All activities are carried out in full view of the entire association, building trust and creating transparency among members.
VSLAs include all levels of literacy. Members record financial exchanges and events with a passbook and stamp system.
Creating Financial Independence
CREATE! developed the VSLA program in response to community members’ need for a simple, yet effective way to manage their money. “It was very difficult to save money before,” Diop tells us, “Sometimes I got loans, but it was not easy for me.” Borrowing money from outside the village often comes with a high return price. This made it difficult for people to save money. However, through saving in VSLA, women can boost their household income.
In a VSLA, the interest that borrowers pay in the program goes back into the fund that people borrow from. In contrast, with an external organization, the interest would go back to the money-lender. “Now, I have been able to save money for a year!” Diop boasts. Each association’s money belongs to its members and stays within the community. Above all, saving money for families is important for sending children to school, affording proper health care, or even for holidays like Tabaski. “We have the means for succeeding,” Diop says.
VSLAs provide an accessible and effective system for group saving, lending, and social insurance. “With the VSLA group, I am able to save money and easily take out loans with the community group.” Diop tells us. “It gives me the opportunity to make loans for satisfying my family’s needs.” VSLAs are a sustainable and prosperous part of our income generation programs, empowering women to lift themselves out of poverty.