VILLAGE SAVINGS & LOAN ASSOCIATIONS (VS&LAS)

1. VILLAGE SAVINGS & LOAN ASSOCIATIONS (VS&LAS) Welcome to the Partners Conference – Shangai Hotel, November 4th 2005 Organised by Financial Sector Deepening Uganda (FSDU) and CARE International

2. What are VS&LAs? These are self-selected groups of people, (usually unregistered) who pool their money into a fund from which members can borrow. The money is paid back with interest, causing the fund to grow.

3. VS&LAs cont’d • The loans are used to meet their small, short-term financial needs for income generating activities, social obligations and other emergencies

4. Names associated to the concept VS&LAs - Village savings and loan associations SLAs – Savings and Loan Associations ASCAs – Accumulating Savings and Credit Associations

5. SLAs are not! • ROSCAs • SACCOs

6. Origin of the concept • Launched in 1991 by CARE Niger as MMD - Mata Masu Dubara meaning “Women on the Move” • Built from the ROSCAs but added many different twists. Unlike the ROSCAs, MMD borrowers repay their loans with interest • Now implemented in over 15 African countries

7. Groups are made of 15 - 30 people Members select themselves Based on own savings and self management How does the methodology work?

8. Methodology Cont’d • Meet regularly (weekly, fortnightly) and saving per meeting • Save multiples of minimum amount • Short term loans

9. Cont’d • Borrowers repay the loans with interest • Cash box, three locks • SLAs formed for a specific cycle (time bound) usually 9 – 12 months • At the end of the cycle, portfolio divided equally among the membership- Auction Audit

10. Advantages • Allow savings and loan access as often as needed • Auction audit provide tangible incentives to the members • Interest earned remains in the group/community. • Cultivate the culture of financial management of the borrowers/savers • The cost of running the activities is low i.e the cost per member is between $15 and $25 per member • The system of transactions is quick, simple and transparent

11. Disadvantages • Loan amount is small especially at the beginning of the cycle • Loan period is usually short and limits long term investment • Loan funds are not always available at appropriate times

12. Thank you for coming and please join us !