VSLAs Savings Exceed 1.1 Million Birr
A Village Savings and Loan Association (VSLA) is a group of people who save together and take small loans from those savings. The purpose of a VSLA is to provide simple savings and loan facilities in a community that does not have easy access to formal financial services. Over the past decade, VSLAs have attracted attention among development partners and governments. The VSLA approach is a well organized and accountable system that even the least literate, least influential member of the group can understand and trust. The system is very simple; but the results are powerful. The promise of VSLAs lie in their ability to empower people to work their own way out of the poverty trap, while avoiding dependency and handouts from aid. Numerous studies have found substantial positive impacts of participation in VSLAs, specifically in the areas of eradicating poverty, promoting children’s education, improving health outcomes for women and children, and empowering women.
Having these benefits in mind, PRIME supported Private Service Providers (PSPs) for the formation and expansion of VSLAs through the PSP model, which was selected because of its cost effectiveness and sustainability. PSPs train VSLAs, for a fee, paid by the VSLAs, eliminating the need for long-term external technical support. The main advantage of this approach is that new VSLAs continue to be created (and supported) after a project has ended.
The approach was started early in the month of July 2014 by providing eight days induction training for PSPs across all PRIME intervention areas. The PSPs are expected to transform individuals into effective VSLA by organizing, communicating, and paying attention to how the group members work together. PSPs create an environment of respect and safety, encourage active listening, and help groups to plan and monitor. PSPs are help to ensure the success of the VSLA. They help participants to understand their own self-interest in joining a VSLA. PSPs build awareness and confidence among VSLA members so that they adopt the system, keep it within their control, and work independently.
As of the reporting period of Quarter 10, the number of groups formed Via PSP approach across three clusters reached 232 with total members of 4,390 (68% are women) respectively. On top of these, value of saving reached 1,155,012 (ETB) and value of loan outstanding is also about 305,450 (ETB) respectively.
The groups also save social fund for emergency loans or grants to take care of unexpected and urgent needs, during weekly meetings or in between. The total social fund balance also reached 212,780 (ETB). The social fund is to address social issues such as emergency assistance, educational costs for orphans, funeral expenses, maternity, etc. these prevents members from VSLA members in Kebribeya Woreda unexpected shocks during disaster and overcomes shortage of money to cover unexpected situations.
Mercy Corps is also using the Management Information System (MIS) to conveniently track a variety of VSLAs data established via Private Service Providers (PSP) approach across all clusters. The SAVIX MIS will help to know which Private Service Providers are performing the best and which Private Service Providers are performing the worst. Additionally, it helps to track the data or status of VSLAs and it supports to take corrective action in improving their performance.
Please click the link to download the success story, VSLAs Savings Exceed 1.1 Million Birr