What do you do if you live in a remote village and you need to borrow some money? In rural Northern Ghana, villagers tend to have little money and their borrowing needs are often small. There are no banking facilities even in the larger villages. Towns are a long bus ride away and, even then, the banks charge high rates of interest. If you miss a payment, the banks can be punitive in recovering their money. The only option is to borrow from your family or neighbours or send your daughters to the Accra, the capital, to become head porters. Borrowing money from family can lead to all sorts of problems and obligations, even after the loans have been repaid. Young girls alone in Accra are extremely vulnerable.
A simple metal cash box seems an unlikely answer but all around the world Village Savings and Loan Associations (VSLAs) have been proved transformational in helping people find a way out of poverty and helping become more empowered. Our VSLA schemes, bring together 25 women in a village to create a local group. Together they each save a small amount of money every week. Within a short time, there is money in the box which the women can also borrow. They pay a flat borrowing fee and might use the money to start a business, pay for school uniforms or buy medicines.
The members all know each other, but even if they are related you are not borrowing from family, you are borrowing from the group. If you have a problem repaying, then the group decides how to deal with it. The savings schemes typically run for one year at the end of which there is a share out. The women receive back the money they have saved plus interest, from the loans repaid. The sums involved may seem tiny to us, saving a few pence or pounds a week and getting back fifty or a hundred pounds after a year but, for many of these women, that is the largest sum of money they have ever held in their hands. And it is theirs, not their husbands! The sense of empowerment that women report after the scheme is very significant in a culture where women’s voices often aren’t heard and men control most of the money. For the first time, they have a choice about how to manage their lives.
Tzedek supported 60 VSLA groups in 2017 and is supporting another 60 groups in 2018, benefiting over 3,000 women. We have been working in partnership with a Ghanaian NGO called Nfasimdi Development Association (NDA). They were trained on the methodology by Star Ghana and follow the international standard for VSLAs. NDA identify the women’s groups, help them form, give them all the training and materials needed, including the savings box, passbooks and a calculator. They also support the groups to make sure everything runs smoothly during the first year, all for a cost of just £60 per group. Although there are immediate small gains to women’s incomes, the project is not solely about increasing their incomes. It is also about supporting these women develop the confidence and the skills they need to save. Once they can save, running small businesses becomes viable, and they can borrow from the scheme to start up or expand their business. This is when we see incomes really grow and the women really develop as a result of their economic empowerment.
Tzedek is currently undertaking an extensive evaluation of our VSLA schemes, with support from the Royal Statistical Society. We look forward to sharing the outcomes with you towards the end of 2019.