Expanding rural Savings and Loans scheme in Uganda

Covid continues to be a challenge in Uganda. Having apparently escaped the worst of the pandemic until recently, unfortunately the number of infections has now increased dramatically, and the Government has introduced restrictions on gatherings and travel in an attempt to halt the progress of the virus. 

Despite these difficult circumstances we are delighted to report that the money raised from GlobalGiving donations has enabled two more Village Savings and Loans Associations to be formed.

The Lyama Widows and Orphanage Association is comprised of 55 members (50 women and 5 men), with a leadership committee of 9 (8 women and 1 man).This is a special interests group because all members are either widows, having lost their husbands or orphans fending for themselves. The group had a very simple savings scheme previously, but GlobalGiving funds have enabled us to support them with savings materials like cash box, passbooks, and calculator, complemented by ongoing training.

The group meets weekly, and members generate savings by selling agricultural food stuffs and vegetables and running informal businesses such as local juice and alcohol brew bars.

The second group is named "Nakibulu Akugeya Takuwa" Nakibulu is the name of the village, “Akugeya Takuwa” means “one who spreads rumours about you will not give you anything, and so, such a person should be ignored as you toil to make ends meet”. The group was created from scratch thanks to the effort of one woman who is now the chairperson. It comprises of 30 members (25 females and 5 males). There is a leadership team of 8 women, and meetings are held every Friday. Almost all the members are small-scale farmers. They have also received a Savings Kit and training is ongoing.

With Covid the groups have been formed at a challenging time, but it is great to see the enthusiasm of the members and their determination to make the scheme work for them as individuals and for the group as a whole. 

In December 2020 the Village Savings and Loans Associations had their annual "year end" when they reviewed their income and expenditure over the previous 12 months and shared out any dividends. This was the first such review since the arrival of COVID, and so provided a valuable insight into how the VSLAs are coping during the pandemic, and how they were able to continue supporting their members.

Individual members have continued to create or improve businesses by borrowing money from their group savings. Many are small scale enterprises (e.g.) growing and trading in crops such as maize, ground-nuts, vegetables, water melons and sugar cane; selling/hiring farm implements such as hand hoes, ox ploughs, pumps and sprays; running retail shops, vending of cooked foodstuff, livestock rearing especially poultry among others.

During COVID, however, agri-business has slowed down, when agricultural markets and institutions like schools and restaurants were closed. As a result, loan repayment was difficult for some of the borrowers, which affected the other group savers. Some members who took loans could not recover the money invested as business slowed down. Some defaulters had to sell personal property to clear debts. One group sued a big defaulter and the case has been registered in a court of law.

In response some of the associations have altered their practices to better cope with the situation (e.g. by computing interest on loans on a monthly rather than tri-monthly basis, resulting in more returns on savings) and overall the enthusiasm remains for this type of activity as members see the benefits gained from being part of the association. The demand for setting up new VSLAs remains.

As yet we have not raised enough funds to invest in the establishment of more VSLAs, but it is great to see how the existing associations are strong enough and adaptable enough to survive such a major challenge as COVID.