Village Savings and Loans are something like the original conception of the Grameen Bank, but perhaps even simpler. A small number of people get together and agree to save a regular monthly amount each. In rural Malawian villages this might be as little as 30c/month. As soon as there is some money, it is lent out to the members, with interest of sometimes as much as 25%/month. With this sort of interest rate, the ‘bank’ quickly increases its capital base. After an agreed period, the total earnings are distributed amongst its members.
In 2014 Concern Universal Malawi supported the formation of 1008 VSL groups with a total of 21,779 members. The funds in circulation are currently MK212,650,138, which is approximately $28/member.
We provided the school exercise book which is used for keeping the record. Austin is the Day group keeper and Robert the Night group keeper.
After distributing the donations received to assist the guards in recovery after the wild weather of January (as per previous blogs), some late contributions came in. Rather than distribute these funds as per the first round, we were keen to try and build something more with the money. We thus suggested that they establish a VSL group. In fact, they decided to establish two, One for the day guards, the other for the night guards. In this instance we got Tiaone – a CU staff member known as the VSL Queen – to come and explain the concept and help them establish the ‘ledger’. From there each group elected a book keeper and immediately distributed the funds. In fact my understanding is that most VSL groups in the villages don’t actually hold any money at all, it is all constantly out on loan. Security at payout time though is becoming an issue, together with stand over tactics by local power holders.
All eyes on the money. A great kickstarter for some small business enterprises.
Whilst not the record keeper, I have become a member of each group to have a legitimate way of monitoring how it is all going.
