Village Savings and Loans Associations (VSLAs)
Village savings and loans associations (VSLAs) promote household savings in order to make households more resilient against shocks related to health, the economy, society and natural disasters. They are community-based institutions that accumulate and manage savings, and provide loans to members.
Most Suchana beneficiaries have little savings or assets, due to limited livelihood and employment opportunities. To deal with shocks and stresses, they are often forced to borrow from moneylenders, and often at rates of interest exceeding 200% per year. This pushes them into a cycle of debt that is not easy to escape.
VSLA is a resilience approach that can help beneficiaries generate, accumulate, and manage financial assets without exposing them to the inherent risks of formal and informal credit. VSLA is a widely accepted approach practiced by many organizations worldwide.
Abedur Rahman’s journey with Suchana began in 2018 as the Union Coordinator at Gowalabazar, Osmaninagar, Sylhet. He currently oversees various activities including 103 VSLA groups under the Gowalabazar Union. Beyond improving nutrition and growth of children in the target households, there is a need for social protection programs for beneficiaries vulnerable to poverty and natural disasters like flooding.
“I train all the VSLA groups under my union. I teach them about social funds, savings or shares purchase, credit policies, facilitate loan disbursements, and every other process, including the management of each cycle,” said Abedur.
“Before the VSLA was introduced, beneficiaries affected by disasters or poor economic stability took loans from other members and NGOs in their community. Paying the monthly interest on those loans was difficult and stressful for the households.”
VSLA members are trained through a multi-session program administered by Suchana field facilitators. In addition, financial literacy training gives households the skills to understand and budget their own expenditures It also enables women to play a stronger role in household financial decision-making.
“Through VSLAs, members can now help each other and their community. Households take loans to make higher investments in income generating activities and homestead production. Children and adolescents now have the opportunity to continue studying. The loans help students with school fees, school supplies, and even clothing.”
Abedur Rahman, 40, Union Coordinator at Osmaninagar, Sylhet
BHHs grow their savings through VSLAs, and establish funds for emergencies and other needs. VSLAs contribute to alleviating negative coping strategies like distress selling. They also encourage investments in children’s nutrition.
“Through the VSLAs, members can now help each other and their community,” said Abedur. “Households take loans to make higher investments in income generating activities and homestead production. Children and adolescents now have the opportunity to continue studying. The loans help students with school fees, school supplies, and even clothing,” said Abedur.
VSLAs create an opportunity for beneficiary households to save and borrow, and then build their savings through investment. By virtue of saving, households increase their resilience to climatic shocks. VSLAs also contribute to resiliency of members by providing immediate loans in case of illness, loss of livestock, or any other emergency.
The VSLA groups consist of all women members. Abedur added, “Our focus is on empowering women. Now, women have the independence to earn and provide for their families. More women are taking part in income generating activities and this in turn is improving households’ economic stability and overall nutrition.” VSLAs manage their own activities, which helps members build self-respect, self-reliance, and selfconfidence. It also reduces dependency on local moneylenders. So far, the 103 VSLA groups under Abedur have saved around BDT 8,000,000 lakh since their inception.
Through training, VSLA members acquire skills they need to manage their activities. This has helped beneficiary households to start a new cycle without any external support.
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