The Learning Post: insights from UK Aid Direct and UK Aid Match

Village, Savings and Loans Associations: successful sustainable wealth creation interventions

Episode Summary

Continuing our series on successful sustainable wealth creation interventions in projects, this episode focuses on some of the common challenges when setting up a Village Savings and Loans Association (VSLA) and ways to overcome them.

Episode Transcription

Ben Anderson (00:10):

Welcome to the Learning Post, a podcast dedicated to sharing insights from the UK Aid Match and UK Aid Direct funds. My name is Ben Anderson, and I'm the Communication Specialist for UK Aid Match and your host for this episode. This is the fifth and final episode in our series on sustainable wealth creation in projects with Rick Magill, an expert in this field. If you haven't already, it is recommended that you listen to other episodes, which cover a wide spectrum of subjects, including team composition, building good business cases, and identifying suitable jobs in a target community. In this podcast, we discuss Village Savings and Loans Associations, also known as VSLAs.

 

Ben Anderson (00:53):

Rick, what do you think some of the most common challenges are when setting up a Village Savings and Loans Association?

 

Rick Magill (01:00):

They've been around in development for quite a while, but the role of them has changed on some of the projects that we see. Now, traditionally, they were often regarded as a safety net for communities, where people would be able to pull their financial resources and help each other out through difficult times by borrowing from that central pool. But what we're seeing with the sustainable wealth creation projects is something quite different. And that's where the mechanism can be used to provide loans to people, to help them to set up small businesses, for example, if they want to set up a little restaurant or a tailor shop or whatever.

 

Rick Magill (01:39):

But it's really important in that instance to understand that the communities need to be able to find income from sources outside of their community. That they're not just recirculating the little amount of money that's already there, is that they're finding customers and opportunities beyond perhaps in the local town or the local city. In some cases, even from international customers, that brings money into the community so that people can repay their loans or reinvest and grow their businesses. It's about looking outside the borders of that particular community that you're working with.

 

Ben Anderson (02:17):

You've mentioned thinking outside the local area when trying to set up a Village Savings and Loans Association. Can you think of a way you would approach trying to achieve this?

 

Rick Magill (02:26):

It links back to the market research that we discussed earlier. So an example might be a loan that would help a smallholder farmer to improve their production and yield on their little farm. And it may be that that farmer is going beyond just providing for his family and friends and neighbors, and trying to sell his crops at the local market. That's a great example where you could demonstrate that there really is a market for this crop in the local town, that people are willing to buy at those volumes and prices, and that it will give them an income that comes back into the community that that farmer could then reinvest in the Village Savings and Loan Association, that would provide opportunities for somebody else.

 

Ben Anderson (03:18):

In this podcast, Rick mentioned a previous podcast on market research, which is a good supplement to this episode. To find it, look for the episode entitled, Team build and market research: successful sustainable wealth creation interventions. Thanks for listening.