Reduce poverty : savings and loans plan

In the village of Sinthiang Koundara, located 25 kilometres from the departmental capital of Vélingara, World Vision Senegal set up a savings and loans program specifically tailored to meet the needs of the community. The biggest challenge in this municipality is simply survival as the majority of households remain vulnerable due to lack of resources most of the year, and this is accentuated by the inaccessibility of banks in such remote areas and economic exclusion requiring them to become dependent on foreign aid. With the support of Mamadou Baldé, president of the Local Platform of Producer Organizations (LCOPs) in the department of Vélingara, Village Savings and Loans Associations (VSLAs) were developed to address and overcome these challenges.

A VSLA is a kind of a modernized revolving loans fund, designed to help those who do not have access to banks for savings and loans. This type of community savings is a common practice among Senegalese women, collecting and dispensing a sum of money to assist members with their domestic and business financial needs.

The first step World Vision took before creating VSLAs in Vélingara was to provide special training and support for field workers to enable them oversee the effective governance of the plan to be put into action. As with numerous other projects supported by World Vision, such as Farmer Managed Natural Regeneration (FMNR) and the processing of local products, World Vision ensures the success of VSLAs in vulnerable communities by associating them with income-generating activities. VSLAs are designed in such a way to enable members to access loans on the basis of reasonable, well-thought out, self-determined interest rates and terms. 

In Vélingara, communities choose names for their VSLAs that are symbolic and meaningful. For example in the community of Sinthiang Koundara, the VSLA is called “Kawral”, which means "agreement". The Kawral Association is made up of workers who conduct the lucrative trade of peanut processing that allows them to repay their loans while still making decent earnings.

"My name is Salimata Camar. I'm a 38 year-old, trader and, mother of three girls and a boy.  I learned about the VSLA through the CLCOP and became a member about a year ago. Currently I am privileged to enjoy the opportunity of saving confidently and safely. I now benefit from loans, granted with reasonable time allotment for repayment, to replenish my merchandise and trade successfully. The profits I earn enable me to support the education of my children. I thank World Vision for its commitment and support to our community. "

How VSLAs function ?

VSLAs are predominantly women's associations, each composed of 15 to 25 members who combine their small savings in order to create bundle capital to be loaned to applicants on monthly repayment terms. The capital consists of units of shares purchased and from profits or interest rates derived from loans.

Members meet every week in order to contribute the required savings and keep a notebook to track their savings, loans and repayment transactions. The savings and interest rates accruing from lending are divided proportionally among the members. Members in good standing can borrow up to three times the value of their savings and all transactions of VSLAs are performed in the presence of members during meetings. Amounts payable are set at the beginning of the cycle and do not change until the end of each cycle. To ensure transparency, no transactions are conducted outside of the meetings. Cash and transaction documents are stored in safes secured with three padlocks whose keys are held by three members that are not part of the management committee.

 "My name is Mariame Kesso Ba, I am around 45 years old and the mother of four children, two girls and two boys. I am thankful to World Vision. I suggested creating associations in the neighbouring villages so that others can benefit too. "

A VSLA for Each Town 

“We are very happy and pray that the association lasts as long as possible: Many thanks to World Vision.” Adama Diallo Woury

Savings and loans associations expanded rapidly in Vélingara during 2015. With the support of World Vision Senegal, a total of 135 associations were created, comprising a total of 3,214 members, of which 90% are women. While the members run these associations, World Vision staff or village agents who are not part of the VSLA are there to provide support, training and assistance as needed and to ensure compliance with procedures and regulations.

With these VSLAs, communities are increasingly autonomous and capable of caring for their families, supporting children’s education and managing daily expenses.