Savings & Loan programs bring greater financial stability to the poorest
Microfinance is enabling women and children in villages all across Africa to change their futures. Through Village Savings and Loan groups, women and children are now able to access banking services formerly not available to them.
In Africa, on average, less than 20% of households have access to formal financial services, with low population densities, poor transport and limited communications infrastructure contributing to a lack of supply in extensive regions of the continent. Most households and small business owners cannot afford the fees or meet the participation requirements developed by other banking organizations and institutions. Plan works with communities to emphasize savings, investment and participation.
"Women, and children, gain financial independence and security when they join a Plan Village Savings and Loan Association (VS&LA), improving their ability to provide for themselves, their children and families," said John Schiller, Plan’s microfinance expert.
Plan will take part in the Arusha Savings Group Summit (October 4-6, Arusha, Tanzania) and will share the successes, challenges and hopes for the future of its Savings and Loan clubs with partners and other agencies. "Increased savings serve as the foundation for the community, and empowers members to assist their community when extraordinary needs come up," he continued.
This approach to microfinance emphasizes group participation, decision making, savings and investment to increase financial security and reduce the effects of poverty. Women, youth and children are the primary targeted beneficiaries of the VS&LA program which has received financial support from financial institutions including Barclay's Bank and MasterCard Foundation. Plan VS&LA programs can be found in 22 countries across Africa.
The VS&LA are community-level membership associations that enable members to take control of their lives through savings and investment. Members invest by purchasing initial "shares" and participate in weekly management meetings where business options are discussed. Additional shares can be purchased to increase savings. The VS&LA makes small loans from the invested monies to members for education or business purposes which are repaid with interest. At the end of a year, all shareholders receive their initial investment plus dividends based on the number of shares they owned.
A sample of some Plan supported VS&LA programs:
- Ghana: With operational support provided by the Barclay's Banking on Change program, groups have saved more than $1,283,000 and made loans to over 35,000 individual savers.
- Senegal: VS&LAs whose members are working adolescent girls and young women also promotes entrepreneurship through the sales of coffee and soap.
- Tanzania: Among Plan Tanzania's 63,000 VS&LA members are 6,000 children who are developing regular savings habits, learning about money management and whose activities and new behaviors have attracted renewed attention and approval from their parents.
- Zambia: Since 2007, Plan has been promoting and supporting a VS&LA program called Own Savings for Asset and Wealth Creation (OSAWE) groups. To date there are 1,350 savings groups with 16,600 VS&LA members of which 71% are women. By June 2011, groups had mobilized ZMK 2,375,780,287 ($ 494,538) in own savings and total group asset were at ZMK 3,305,533,663 ($ 688,653).
Vida, a VS&LA member in Ghana sums it up, "Were it not for the VS&LA, I would be struggling to make a living for my family. Now I am a teacher and I look forward to sharing the importance of savings with my students."
Learn more about Plan's microfinance programs.