The Village Savings and Loan Project; Banking in the BushWhile my service as a business advisor to a environmental conservation NGO did not include training women to run a village savings and loan (VSLA), all the volunteers were educated in the process and ready to go if there was an opportunity. Some volunteers found a need at their site and began setting up a VSLA as a secondary project to their teaching, agronomy, heath or other assigned program. Financial literacy and fiscal planning is a process that we strive for at home, while not all succeed we take this life step for granted. In Kenya and most African countries a VSLA offers the opportunity for capacity building. Most African men and women, even in the bush have a cell phone and can buy a chicken with a mobile money MPesa account. However, the VSLA offers people a way to learn banking skills and ends the practice of carrying money around in a sock!
With a population of 40 M in Kenya, 60% live on les than $1 per day. In a perfect world couples plan their family and finances according to their work and how may children they can afford to clothe, feed and educate. In Africa family planning is rare. Children's school fees (even with "free" public education supposedly available to all) typically absorb much of the available household income. Discretionary money does not exist. The locals are always "topping up" their cell phone minutes a few shillings at a time. Putting aside a little money at a time and developing the habit is taught through the VSLA process. The people learn and love it after some months of seeing their money grow and become a tool for covering unexpected expenses.
Here's how it works. Here in America the youth learn about handling money through piggy banks,
allowances and earning spending money from chores, school bake sales, mowing lawns and summer
projects. In Kenya the VSLA is sometimes the first method of managing money a woman encounters
(some men participate). A group in the community (usually around a dozen) set up their constitution or ground rules for participting in their VSLA. One to five shares are contributed by each member
earning a certain return at weekly group meetings. The money is counted and stored in a large heavy lock box, stored safely by a designated "elder." Any member could also request a loan with usually up to 10% interest usually coming due in three months. I saw all kinds of requests, from buying a chicken for a layer business selling to neighbors to seeking a loan to pay for travel to visit a sick relative many miles away. All loans are paid back in nine or 12 months, savings returned to investors and a new cycle begins.
Building personal savings accounts locally helps in three major ways - avoids corruption and theft problems, solves the inability to travel to banks located many miles away, builds skill and personal
income. These community based programs made us all Peace Corps proud.