Village Savings and Loans

Village Savings and Loan (VSL) groups provide basic banking services to the rural poor. Once a group is organized and trained the VSL group is totally governed and operated by its members making the model truly sustainable.

Fadhili has been involved in VSL groups for nine years; and in that time we have reached over 40,000 members in 1,500 plus groups. Women make up 91% of VSL members. As the benefits extend to these women’s families, we estimate that over 120,000 individuals have been impacted by this project.

An impact assessment in 2015 found that 89% of groups formed in 2010-2013 were still operating with many going on to form new groups in their villages. To date the groups have transacted over 220 million KES. These were people that previously thought they had nothing to save!

A typical VSL has 15 to 25 members (mostly or all women) who meet weekly over a period of 12 months. Members buy one to five “shares” at each meeting where each share might be 50 shillings. From the monies collected, members can apply for small loans which are guaranteed by the group. The loans are repaid with interest, then at the end of the cycle the members cash out taking home a tidy profit and the cycle begins again. On cash out, members can receive two times or more the amount invested.

Record keeping is designed to be very simple and all business is also conducted verbally so even the illiterate can participate.

Although amounts may seem small, to the rural poor having even modest savings can make a huge difference in their lives. Many start by buying a few chickens to sell meat and eggs then diversify to other livestock, crops or businesses. Loans are also used for school fees, household nutritional needs, home improvements like sheet metal roofing and purchasing stock for small businesses.

Most groups maintain a social fund which acts as a form of group insurance. The fund assists with medical and funeral expenses among others.

Here are a few stories of the 40,000 plus members experiencing the benefits of our more than 1,500 VSL groups.