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The Village Savings and Loan Association Program (VSLA) is a highly structured system of saving, borrowing, and lending money generated from member contributions. It is designed to be simple enough to explain verbally so that all members of the community can easily understand how it works. VSLAs are self-sustaining because any money borrowed must be used for income-generating activities, and all financial decisions must be made by the group. Each year, the interest earned is divided among the association based on the amount each person has contributed.
The Amani group in Ukelemi village, Mufindi district, in Tanzania is comprised of 23 members, 90% of whom are women. The group not only buys shares but also supports the demonstration plot—land showing improved agricultural practices—established by the CARE-WWF Alliance. And it uses a smartphone application that helps them keep records and conduct their meetings smoothly within a short time.
Efrosida Mwinuka, the group's secretary, acknowledges that before VSLAs, the available groups were geared only toward self-help and had no cash security and poorly kept records. However, most farmers were not involved in these groups, living a hand-to-mouth existence. Now, the groups have saving boxes for cash. Members use their small loans for income-generating activities—such as essential tools for business activities and raw materials—while maintaining a social fund to support members facing hardships.
"So far, I can tell you that VSLA is an exciting concept that does help! A group is making a financial impact on the lives of these people in a very sustainable way," Efrosida said.
Members of the Amani group have not only bought shares and gotten loans, but they have also invested in a kindergarten. The school is owned by the group and offers a place where children from ages 2 to 5 can learn while adults participate in other activities. At the same time, the group will turn a profit through tuition from non-member children who attend the school.
"The school has 38 kids as of now, and parents pay 5,000 tshs ($2) monthly to support the running of the school, which includes paying a teacher who is also a member of the group," said Davis Manga, the group’s chairman.
The Amani group has bigger plans for having its own school building, but for now, the kids are using a church, which has a bigger space for learning and playing. During classes, kids get a cup of porridge and sometimes a mixture of beans and maize.
"People in this group all seem very interested in their children attending school while they will be busy with farming activities and other income-generating activities for share buying, so this was the best idea to them to start with," said Zainabu Nyakunga, the community-based trainer who has been supporting the group.
Community member Leah Ugulumu has three girls who are all attending school. She is happy because she can now do home, farm, and other economic activities while the kids are in school.
Tabitha Kavenuke, the group treasurer, said that the group currently has a total savings of $670 (1,680,000 tshs), an input fund of $146 (365,000 tshs), and a social fund of $173 (433,000 tshs). The group also provides weekly loans to its members. Kavenuke expressed the group's desire for more training on how to effectively manage the school and encourage personal investment by members.
The most significant impact of the VSLA group is the transformation of members' attitudes towards saving. Prior to joining the VSLA, members did not prioritize saving, but now they recognize its importance and benefits. They have witnessed how saving money can have a positive impact on their farms, families, and future. As a result, the group intends to maintain its culture of saving and investing in the future.