Self Replication and Sustainability of CARE's VSLAs
Among the poor in sub-Saharan Africa, almost no one has access to even the most basic financial services, including savings, which is what the poor want and need most. High operational costs, the informality of economic activities and the perception that the poor are not credit worthy have discouraged banks from serving rural areas. Yet World Bank data show a strong correlation between the development of a financial sector and reductions in poverty and inequality, and experience in Asia and Latin America has demonstrated that the poor are indeed credit worthy. To achieve faster rates of development in Africa, the poor must gain access to savings, credit and insurance that targets their needs. CARE’s Access Africa program is designed to provide the poor, even in remote areas, with the financial services that can help them improve their lives.
In 1991 CARE developed in Niger a self-managed system of Village Savings and Loan Associations (VSLAs) based on small amounts of member savings, with no outside capital investment. The model has grown into a network of more than 55,000 VSLAs in 23 African countries providing more than 1 million members – around 70 percent of them women – with savings, credit and emergency insurance.
Through VSLAs, many group members are engaging in income-generating activities for the first time. The loans are used for investments in small businesses, farming and animal husbandry. People become more food secure, are able to buy fertilizer and harvest more food. Others use the loans to meet household obligations such as medical expenses, school fees and even family events such as weddings or funerals.