Here’s a new approach to multiplying impact: prove to communities that a method works. For every Village Savings and Loan Association (VSLA) that an NGO starts in Uganda, communities start 1.99 on their own or with agent support. That’s nearly double what we reach through the development sector.
Why do they replicate on their own? Because communities interact with VSLA members, and can immediately see how this helps them. In fact, VSLA members get a 30-35% return on savings (in the US, a great savings account gets you 1% return) Datu Research conducted a 2013 evaluation of the VLSA method in Uganda looked at how micro-savings programs through CARE and CRS (they call the groups SILC) to see what happens after our programs close. The results are astonishing.
What did we accomplish?
- Proved value: Project-formed VSLA groups get a 30% return on savings every year. The replicated groups get a 35% return.
- Tripled reach: For every VSLA the NGOs started, 1.99 more got started in neighboring communities without project support.
- Improved investment: 63% of participants were using their share outs for productive investments like land or livestock.
- Started sustainable groups: 80% of the groups NGOs started were still running 3 years after their projects closed.
- Lowered default rates: Groups have a 4.7% default rate on loans.
How did we get there?
- Demonstrate success: There was significantly higher replication in areas that had existing groups. Having a successful model gave communities something to build from.
- Let the community be ambassadors: Members in existing VSLAs were happy to interact with others and explain the benefits of a VSLA and explain how to start one.
- Create useful services: 85% of members in groups were satisfied with their groups, and felt that they had learned about how to save from the VSLA experience.
- Train village agents: CARE uses agents to help support groups in their first 2 years, and those agents supported the creation and supported more than 60% of the non-project groups.
What else did we learn?
The report is full of other interesting findings about how VSLAs work. A couple that popped out to me are:
- Many people are members in multiple groups: In CARE areas, 66% of VSLA members are part of more than one group because they feel that one group can’t meet all of their savings and loan needs.
- Project groups are more likely to pay for support: 62% of replicated groups used an agent at some point in their history, but project groups are more than twice as likely to pay for those services—leading to more sustainable support.
- Flexible groups perform better: Groups that were willing to adjust the rules to changing circumstances were much more successful and sustainable than those that stuck strictly to the manual. This echos findings we’ve seen in lots of CARE country programs.
Want to learn more?
Check out the 2013 report.