One does not have to be man of God to be told that one of the major problems confronting rural women in Ghana particularly those in the five regions of the north is lack of access to credit facilities. In other words without formal financial services such as credit and savings products, the rural poor face challenges to making complex financial decisions such as investments in their farms and businesses or expenditures for unforeseen events like floods and droughts associated with climate change and illnesses or funerals.
Past and previous governments have made attempts over the years to help mitigate the problem but not much had been achieved leaving these large number of rural folks particularly women who just need some little support in the forms of soft loans to engage in petty trading and small scale farming activities economically disempowered.
But I think an antidote to this problem is being found with the Village Savings and Loans Associations (VSLAs) Scheme established by the Sustainable Land and Water Management Project (SLWMP) in rural communities in the five regions of Northern Ghana where the project is being implemented.
The VSLAs concept introduced by the SLWMP in the project areas is to help increase the capacity of vulnerable households in the Northern Savannah ecosystem to adapt to climate change variability and to improve their resilience to climate change as well as also help sustain the SLWMP.
In contexts with limited access to formal financial institutions, VSLAs could fill in the gap by facilitating access to informal financial services.
VSLAs build on the Rotating Savings and Credit Associations model to create groups of people (often women) who pool their savings to have a source of lending funds; members make savings contributions to the pool and can also borrow from.
The model has three main components: a group-based commitment savings program, a process for members to request loans from the group whenever needed, and a social emergency fund regularly financed by members. In this evaluation, members met weekly and pooled money in a locked box to create a fund from which members could borrow. The group together set interest rates for loans to members, which allowed other members to earn a return on their contributed savings. In addition, most VSLAs included a social or solidarity insurance fund managed by the group to help members in need through interest-free loans or cash grants in case of emergency.
Interested women formed groups of about 24 members
In fact barely 10 years after introducing the VSLAs model by the SLWMP into the women groups in the project communities, success stories from the ground had proved beyond reasonable doubt that the concept is not only a good development model for climate change resilience but also considered as very important development model for economic and social empowerment of the rural folks particularly women.
Stakeholders working visits to SLWMP communities
During a –three- day working visit embarked upon by the Head of the Technical Coordination Office (TCO) of the SLWM project, Mr Asher Nkegbe and some Local Steering Committee members of the project including some journalists to inspect progress of work of the VSLAs in the project areas, it was revealed that the model had made some significant impact on the livelihoods of the communities.
Among some of the project communities visited included the Mamprugu-Moaduri and West Mamprusi in North East, West Gonja in Savannah, Sawla-Tuna-Kalba Districts in the Northern Region, Talensi, Bawku West, Builsa South and Kassena-Nankana West District in the Upper East Region and Wa East, Daffiama-Bussie-Issa, Sissala East and Sissala West in Upper West Region.
Briefing the media about the details of the VSLAs model, the TCO of the SLWM project who is also the Upper East Regional Director of the Environmental Protection Agency (EPA), explained that each of the group is composed of 30 self-selected individuals and that groups meet weekly and members save through contributions decided by the group.
“At each meeting, each member pays between 1 to 5 Ghana cedis depending on one’s ability. This enables them to build their savings more easily. Savings are maintained in a loan fund from which members can borrow in small amounts, up to three times their individual savings. Loans are for a minimum of six months and a maximum of one year depending on the purpose of the loan (either investment in the agaric sector or small business)”, he explained.
He said to ensure effective governance and the management process, each VSLA group elects a chairperson, secretary, treasurer, and two money-counters who form its executive committee. In addition, members select three others and entrust each with a key to one of the three locks on the cashbox where the group’s funds are kept. This governance structure serves as an internal control system. All transactions are carried out at weekly meetings in front of all members, ensuring transparency and accountability.
Impact of the VSLAs Model
Mr Nkegbe further explained that the SLWMP funded by the Global Environmental Facility (GEF) through the World Bank introduced the concept to 227 communities in the project areas and added that currently’ 30, 00316 people are benefiting indirectly from it.
He said the model which is aimed at building the resilience of the communities in the vulnerable households in the Northern Savannah ecosystem to adapt to climate change variability is also targeted at increasing the capacity of the communities to sustain the SLWM project.
“Under the model, women who are often the majority of the members of the community and are believed to be the most vulnerable have access to credit created by the VSLAs to fund their investments in income-generating activities. Accesses to credit improve women's position both in their households and the community level is ensured. Women are empowered to speak at public meetings and advocate for themselves”, Mr Nkegbe stressed.
He said before the introduction of the VSLAs to the groups, the project organised a- three-week training to help members define the VSLA’s purpose, elect members to serve as officials, and set terms for savings and accessing loans. The terms include interest rates, repayment schedules and penalties for late payments, lateness to meetings and missed meetings. The groups were also trained in record keeping, savings, issuance of loans and general issues relating financial management.
He said since the establishment of the 21 VSLAs groups under the SLMP, the communities have netted more savings which the group members loan to one another to go into petty trading ventures such as shea butter processing, soap making, “pito” brewing among others.
Mr Nkegbe stated that the 10-year SLWMP, which begun implementation in 2010 in the North East, Savannah, Upper East, Upper West and Northern regions and funded by the Global Environmental Facility (GEF) through the World Bank was aimed at reversing land degradation. He added that the project decided to introduce the VSLAs model to help fast-track the attainment of the goals of the project and to ensure its sustainability.
Testimonies on VSLAs from project communities
Speaking to the team about the benefits accrued from the Scheme, some of the women who were seen engaged in alternative livelihood activities such as buying of some foodstuffs from smallholder farmers to stock and to retail in dry season to make profit, said they are often able to engage in such business through the VSLAs intervention.
Many indicated they are able to sustain the improvement of their living conditions particularly the wellbeing of their children and to pay their health insurance premiums as well as carry out their farming activities on their own all through the loans they enjoy from the VSLAs model.
The groups also indicated that anytime their farms are affected by drought or floods, it becomes very difficult for the community members to get money to purchase foodstuff from other areas to feed their family and that they are often to mitigate such situation with the intervention of the VSLAs concept.
“We are very grateful to the SLWMP for introducing these VSLAs interventions into our communities. Before the intervention anytime drought or floods occur as a result of the climate change, our yields are often affected and feeding become problem but with the introduction of the VSLAs, we can now access loans from it and purchase food items to feed our family particularly our children”, one of the women leaders of the VSLAs, Mrs Abina Akolpoka, indicated.
In conclusion, there is the need to replicate the SLWMP VSLAs as a development model in many rural arrears of the country where financial institutions are not existing to help bridge the financial inclusion gap. This would empower more rural folks especially women to become socially and economically independent to be able to help contribute to the upkeep of their families. When this is done it would also help the community members to adjust themselves to the climate change resilience issues such as floods and droughts that affect food security.