Three-quarters of adults in sub-Saharan Africa do not have access to a bank account. As you can imagine, this puts many adults at a severe disadvantage when it comes to pursuing their own business ventures or trying to improve their lives through self-employment. Without bank accounts, many people find themselves in an impossible situation when it comes to saving money and investing in their future. Where would you even begin in this type of situation? An increasing number of adults have found their solution – participating in informal savings groups.
Village Savings and Loans Associations (VSLAs) were created as a way of helping impoverished people gain some control over their sparse incomes. The associations are made up of and controlled by the very people who contribute the money. Each person decides the amount of money that will be deposited monthly. This money can in turn be loaned out and loans are paid back with interest. At the end of the year, or by a time decided upon by membership, the interest gained on these loans is distributed to the members based on the amount they had originally contributed to the savings account.
One organization that is working to give financially disadvantaged people a world without hunger and poverty is Freedom From Hunger (now part of Grameen Foundation). In an effort to advance gender equality, Freedom From Hunger specifically targets women in need of financial assistance. The group transfers skills to the women to expand their knowledge on topics such as how to prevent malaria, a disease that affects many families in Africa. Information like this can be shared and passed down from generation to generation.
Assa Fofana, a woman from Mali, is one example of someone whose life has been changed by Freedom From Hunger. Growing up, Fofana watched her mother work hard to support her family selling vegetables after Fofana’s father passed away. Fofana followed in her mother’s footsteps, selling vegetables, and barely making ends meet to provide for her own four children.
Fofana wanted more for her children, so she decided to join a savings group in order to set herself up with a better life. After borrowing money from the group, Fofana expanded her vegetable business and can now afford more nutritious food and medicine for her children.
Her next goal is to buy textbooks and to get an education for her children. “My children study very hard,” Fofana told Freedom From Hunger, “so I am confident that they will achieve a good life someday.”
Another organization, Plan International Ghana, also aims to improve the lives of poverty-stricken and vulnerable families, but specifically targets young people. Kaka Latifa is an example of a young woman whose life was changed by this savings group. Before joining the savings group, she struggled to pay for her school fees. Joining, she was about to get a loan of about $90, which allowed for her to afford her school’s fees, uniform, and books.
These VSLAs have made leaps and bounds to provide Africans with the financial means to pursue their own entrepreneurial ideas and improve their living conditions. They work by the power of community and dedication to provide better financial opportunity for its membership and in turn, the greater economy of their area and sub-Saharan Africa as a whole.
Featured Image by US Army Africa on Flickr
Attribution 2.0 Generic (CC BY 2.0)
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