Village Savings and Loans Associations — sustainable and cost-effective rural finance

MFIs and banks find it difficult to cover the costs of providing rural financial services – especially in Africa. In its large-scale Village Savings and Loans Associations (VS&LA) programmes in Africa, CARE is tackling these difficulties by encouraging the formation of village loan funds entirely composed of members' savings, keeping the time-bound savings and lending methodology very simple and limiting external involvement to a one-year training and follow-up period. This article describes how the methodology works in principle and practice and describes evaluation results from the CARE VS&L programme in Zimbabwe, where very high rates of inflation pose a challenge to any microfinance programmes. Finally the need for management information systems and better record keeping are identified as issues that need further development.