A Grassroots Approach to Microfinancing
As the fourth component of our core project sectors, CREATE!’s income generation programs integrate a number of activities to help rural women gain basic financial literacy skills and use these skills to manage their profits from poultry and agricultural production programs. Voluntary Savings and Lending Associations (VSLAs) provide an accessible and effective system for group saving, lending, and social insurance. Association members save small amounts of money each week and then make loans to each other to cover business, personal, and household costs. Association members are able to save a portion of the profits they receive from participating in CREATE!’s cooperative community gardens. VSLAs are a sustainable and successful part of our income generation programs, empowering women to lift themselves out of poverty.
In eight of our partner communities, CREATE! staff have also helped women build poultry sheds and start poultry cooperatives. Poultry production is an important part of our income generation programs, bringing numerous economic benefits to women in our partner communities. Selling poultry is very profitable for cooperatives and women reinvest their earnings into the next round of poultry production.
How Do VSLAs Work?
The VSLA program was introduced in response to community members’ need for a simple, yet effective, way to manage their money. VSLAs are self-managed, highly organized, and democratic money management systems practiced by over seven million people worldwide, and represent a central part of CREATE!’s income generation program.
An association is made up of 10-25 people – mostly women — who save together and take small loans from their savings over a one-year cycle. 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.
“At microfinance institutions, you have to pay money even to save money because you are paying for their staff. With the VSLA, members are the staff, and they are paying themselves,” said Amady Kane, Community Volunteer in Fass Kane. For rural villagers who may not be able to read or write, and whose needs are rarely met by for-profit financial institutions, the VSLA provides an accessible solution for even the poorest of the poor. Unlike many other microfinance initiatives, the VSLA has no involvement with outside institutions. Each association’s money belongs to its members and stays within the community. To date, over 600 community members in CREATE!‘s partner villages are actively participating in VSLAs as a part of the income generation program.
Since it was first piloted in Fass Koffe in April 2013, CREATE! partner communities have been implementing poultry production as part of our income generation programs. Cooperative members manage their poultry in a 60-day cycle that includes 45 production days and 15 days for cleaning and sanitization. The entire group is responsible for ensuring the health and well-being of the poultry, in addition to marketing and reporting on finances. To date, over 2,000 chickens have been sold, 90% of which have been sold in partner communities, with many of the profits invested back into VSLAs. In addition to being an important source of protein for communities, the poultry production program also has a very short payback period, because poultry is so profitable. Communities receive full payback within their first year in the poultry program.