Rakia Niandou (left), a banker at the Savings and Loan association in Genki, Niger, fills out receipt paperwork for one of the villagers who had made a deposit into the local bank.

VSLA at 25

The global humanitarian aid and development industry has a problem: innovation is everywhere, but examples of successfully scaled solutions are far less common. Even when we achieve impact at scale, the process can take decades. For example, it took 17 years for CARE’s Village Savings and Loan Associations (VSLA) to go from idea to widespread impact, economically empowering millions. CARE’s Scale X Design (SXD) Accelerator was created to bridge that gap between innovation and impact. Two of the SXD teams’ innovations, Chomoka (Digital VSLA) and Journeys of Transformation, contain a VSLA component. Here is a story about VSLA at 25 that appeared in CARE’s latest edition of Impact Magazine.

MMD cash boxes hold the contributed savings for the community in Genki, Niger.

CARE Village Savings & Loan Associations: A Transformative Innovation Then — and Now by Shawn Reeves

For 25 years, CARE Village Savings and Loan Associations have powered change through innovative economics. It all started with a few women, a lot of ingenuity and a lockbox in remote Niger. They engineered their own financial independence by saving pennies a week, then loaning one another money to start businesses such as making and selling peanut oil, doughnuts or home remedies. The interest they paid on their loans came back to them as profit. They had become their own bankers.

A quarter-century later, some 15,000 CARE savings groups operate in all reaches of Niger, their 500,000 members, mostly women, meeting regularly, depositing, saving, lending.

Some of that expansion happened strategically. Some of it happened organically, as people saw the success of CARE savings groups and wanted to share in that. The program may have started in Niger, but it didn’t end there. Further investment from CARE and word-of-mouth from passionate group members soon extended the concept to places like Mozambique, Tanzania and Zambia.

Today, more than 200,000 CARE VSLAs operate in 26 African countries and in parts of Asia and Latin America, having engaged more than 5 million people. Enterprising members have found through those groups the financial freedom to improve life for their families, whether through better health and more nutritious food, expanded access to education or even savings-based safety nets that help families withstand and overcome disaster.

CARE now looks to the next frontier for its VSLA initiative, aiming in the next 25 years to help VSLA members more closely guard their assets — chiefly by linking them to formal banks, where their accounts are safe and accessible through smart phones and money-transferring apps. CARE already has begun linking VSLA groups to formal banks in places like Tanzania, Kenya, Ghana and Uganda. And by fall 2016, CARE had announced plans to link a half-million more people to banks by 2020.

But the benefits of formal banking don’t end with added security. Access to banks yields more sophisticated financial services that groups inevitably need as their resources, skills and confidence grow. It means larger loans, which groups demand as they mature. One report shows that linking members to banks can double both their savings and their profit.

As the next generation of VSLA members reaches for and seizes its own financial independence, some of them will still meet regularly under shade trees in Africa’s most distant villages. Others will convene in urban centers. They’ll adapt the model to ever-changing contexts. And they’ll continue to use the power of saving and lending to transform their lives and communities.

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