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What are village savings and loans groups?
As their name suggests village savings and loans (VS&L) groups are groups formed by poor people that begin by pooling the savings of members and then eventually using these savings to make loans to individual members. They may also focus on building the capacity of members in different areas including business management. The VS&L methodology seeks to facilitate the economic growth of a community and empower its members. CARE developed the VS&L methodology in Niger in 1991 in order to provide financial and non-financial services to the very poor. VS&L groups provide the means for low-income populations without access to formal financial systems to organise and finance their own informal financial institutions. In Africa and other part of the developing world, CARE has found that MFIs do not reach the very rural and isolated poor or those considered very poor owing to the high costs incurred to reach clients and the small demand for loans. In addition, most MFIs do not prioritise financial services in the same way as the poor. Very poor people generally require financial services with a greater emphasis on savings and insurance than on credit. There are a number of other local semi-formal microfinance initiatives which are similar to VS&L groups such as, for example, rotating savings and credit associations and credit unions.
