Village Savings and Loan Associations are transforming communities in Somalia

By CARE Australia September 18, 2016 2 comments

Damac, 40 (left) and Habibo, 35 (right), started their clothing shop after joining a VSLA is Somalia. Photo © Wanjiru Wambugu/CARE

Damac, a 40-year-old mother of eight, and Habibo, a 35-year-old mother of nine, are members of CARE’s Village Savings and Loan Association (VSLA) in Somalia. Just a few years ago, they could barely make ends meet. Now, thanks to CARE’s VSLA program, their future looks promising.

Introduced to Somalia in 2011, the VSLA initiative is designed to meet the economic needs of vulnerable women. Under the program, women receive a business start-up grant of $USD 300 and training in courses such as bookkeeping, management, and entrepreneurship.

The participants then form a group of 15 women who make up the VSLA. They then make regular financial contributions to the group, and are able to take loans from it when required.

So far, CARE has supported 239 groups (4,388 individuals) across Somaliland and Puntland.

Although this initiative is not unique to Somalia, it was particularly life-changing for whole communities in the country. Somalia’s infrastructures are just beginning to recover from more than two decades of civil war. As such, access to basic financial services such as loans and saving facilities are almost nonexistent.

In one of the most remarkable stories so far, VSLAs in the Sanaag region donated $USD1,000 of their social fund to support the most vulnerable people in the drought-stricken region.

The program is transforming the lives of the two clothing shop owners, Habibo and Damac pictured above. Before joining their VSLA, the two were in a small tailoring business where they earned $USD4 per day. Their earning has now nearly tripled. On a good day, they can earn as much as $USD12. Their investment has also seen some improvement: from their initial investment of less than $USD600, their business is now estimated to be worth $USD5,000.

“My situation has changed a lot,” Habibo told us. “I can now afford food and pay school fees for my children.”

Damac added: “We thank CARE for the support and training and hope to get more support if possible.”

2 Comments Leave new

Mary Khozomba Apr 10 2017 at 09:04

This is very encouraging. How are the women protected from violence that can be associated to them having large sums of money in a community that is struggling to make ends meet? How do they ensure safety of their business income?

CARE Australia Apr 24 2017 at 10:04

Hi Mary, thanks for the question.

The safety of women is of the highest importance to us, and the risk of theft is something we give much consideration to for VSLAs. Each metallic box where savings are stored has multiple padlocks with different people in the VSLA in charge of different keys. This helps ensure that the box can only be opened with multiple group members present, and only at VSLA meetings. This is one deterrent. Community support for the VSLA can also provide some protection from theft due to the shame such a theft would bring on a family in the eyes of the community.

There are still inevitable risks though. In African countries where VSLA programs are more mature, we look for ways to link these VSLA groups with suitable formal financial services in their country. This includes trials to link groups with mobile banking services like M-PESA so that they can more safely store their money, and can access it quickly and easily. You can read about this pilot project here:

Thank you, - CARE Australia

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