Village Savings and Loan Associations

The Village Savings and Loan (VS&L) model is a savings-based approach that has proven on a significant scale that it can substantially fill the gap between the needs of the poor for financial services and the ability of banks and MFIs to provide these services. It provides sustainable and profitable savings, insurance and credit services to people who live in places where banks and MFIs do not have a presence such as rural areas and urban slums.

The model was originally developed by CARE in Maradi, Niger, in 1991 and has spread to 17 countries in Africa, 2 in Latin America and 2 in Asia, with over 1.25 million participants. A VS&LA is a self-selected group of people, (usually unregistered) who pool their money into a fund from which members can borrow. The money is paid back with interest, causing the fund to grow. The regular savings contributions to the group are deposited with an end date in mind for distribution of all or part of the total funds (including interest earnings) to the individual members, usually on the basis of a formula that links payout to the amount saved. This lump sum distribution provides a large amount of money that each member can then apply to his/her own needs.

This training guide describes the VS&L methodology and then provides detailed instructions on how to initiate and provide the training that groups will need. It covers group leadership, elections, developing policies and a constitution, record-keeping and procedures for managing meetings. The manual includes examples of stories and games that can be used in the training process and examples of all the forms that are required. A management information system for field officers involved in promoting the groups is provided in an accompanying spreadsheet.

This is a highly practical and useful guide which promotes a methodology that deserves the widest application and use in rural areas of Africa and elsewhere. The guide and the spreadsheet are downloadable from the RFLC and can also be downloaded from the VSLA website. You should regularly check the VSLA site for updates and new releases.

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