Promoting Financial Inclusion through VSLA Activities in Okere Village
It’s a windy December afternoon and 40 out of 50 members of Okere Investment Club, one of our projects gathered to save, borrow and share random ideas about their community. The group started meeting and carrying out their VSLA activities in Sept 2019 shortly after a courtesy visitation to the parents of Okere Community School by the area Woman Member of Parliament Hon. Silvia Akello. The MP gifted the parents with a starting group capital of 500,000 UGX, a financial resource which gave the members a strong foundational boost.
Three months on, the group has turned their village saving and loan association (VSLA) into an important financial access platform addressing one of the core challenges of rural development in Okere village. Okere, a typical village in Otuke District, Northern Uganda is severely unserved by financial institutions and even mobile money banking services. For instance, all the 50 community members who are part of the investment club do not have a bank account.
Whilst 40 of them own a mobile phone with registered access to mobile services, all of them considers finding mobile money agents as a big barrier to their use of the service. In fact, members in the village have to travel a distance of about 5KMs to the nearest trading center or wait for a period of up to one week for the market day to do mobile money transactions.
Moreover, whilst many other VSLAs exist in the village and other neighboring villages, their small loan portfolios significantly thwart their abilities to give reasonable credit to many members who would like to borrow. This make Okere Investment Club a go-to group because of the slightly bigger lending capital and a committed members who regularly attend meeting and save consistently.
An important component of the VSLA is welfare collection which is given out at zero interest rate. Members democratically express their need to borrow and the money to given out to a member with the most pressing social need. On Friday 20th Dec 2019, for instance, Beatrice Ogwal was advanced the money to help facilitate the transportation of her sick child to the hospital for medical examination and treatment.
That same day, members contributed a total of 310,000 UGX has their weekly savings. Three members of the group each borrowed 100,000 UGX from the collected savings. They will pay back the loan after a period of 2months with a 2% interest rate. Members who would like to borrow the loan express their interests a week prior and also commit an asset — usually a bicycle, cow or goat as collateral in case of default.
One of the borrowers, Mrs. Akullo Juliet wanted more capital to boost her small agri-business during the festive season. According to her, being part of the investment club has been an important source of economic strength since she can now have access to the much needed capital to boost her business. “I am now more confident about my future because I have access to a small loan to inject into my business”, she said. “The first loan I got enabled me to start the business. This one will help me boost it”, Juliet continued.
Depending on the need and direction, our vision is to slowly develop Okere Investment Club as a village bank which serves a wide range of financial services needed to address rural development challenges in Okere and other neighboring villages.