Microfinance Through VSLAs

Microfinance Through VSLAs

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The Power of VSLAs

The last frontier in the provision of microfinance to the world’s poorest people has been the remote villages and teeming slums of Africa. Traditional banking has not penetrated most of Africa, and microfinance in Africa has only reached a fraction of those who need it.

But in 1991 in a poor village in southern Niger, CARE discovered a way to harness the ancient practice of group savings and create a sustainable system of home-grown microfinance. In the years since then, we have helped establish more than 370,000 women-lead Village Savings and Loan groups in 51countries, serving nearly 8.4 million members. We plan to reach 50 million people by 2030. Read our strategy for scale (in English or in French)

CARE’s Village Savings and Loan Associations (VSLAs) are built entirely on member savings and interest from loans; they receive no direct capital investment from CARE. However, their members do receive a year of intensive training from CARE in group dynamics and governance and in money management. This training enables the groups to become self-supporting, to flourish and even to establish and train other groups.

The VSLA approach has unique features that make it a powerful tool both for broadening financial inclusion and for development:

  • It is simple and easily adapted to illiterate group members.
  • It promotes group solidarity and learning, and establishes a vehicle for addressing community development issues.
  • It relies on no infusions of outside funds.
  • It requires no physical infrastructure.

CARE has found that VSLAs meet the need for savings and credit at the very bottom rung of the world’s economic ladder. They create a platform from which the poor can advance to receive the more sophisticated financial services that they inevitably need as their resources, skills and confidence grow. The next step, therefore, is the linking of VSLAs to microfinance institutions and banks so that the poorest people in Africa can have access to all of the financial services that can help them improve their lives.


Mobile Banking

See how CARE, Equity Bank and Orange Money, with funding from the Bill & Melinda Gates Foundation, is helping groups in Kenya access banking through mobile technology: