Village savings and loans associations: an approach adapted to the poorest households?

Village savings and loans associations: an approach adapted to the poorest households?

To improve preparedness and prevention of drought risks in the agricultural and pastoral communities around Lake Fitri in Chad, Solidarités International implemented a project between 2013 and 2016 that endeavoured to strengthen their capacities for resilience. One of the activities more specifically concerned women and addressed their need to access credit in order for them to launch merchant activities: Solidarités International supported the creation of 15 Village Savings and Loans Associations (VSLA), based on the existing tontine model and inspired by VSL Associates’ methodology. The associations are made up of between 15 and 30 members, are presided over by internal regulations drawn up by its members and run for a cycle of 9 to 12 months. Members buy shares  on a weekly basis and are able to take out a loan with interest for up to three times their individual total savings.

This case study presents the VSLA methodology in more details, and attempts to shed light on the socio-economic profile of the members (does the activity incorporate the poorest households?), on how the latter use the loans granted, on whether participation in a VSLA can improve the resilience of member households, and on the determinants of success.

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