A case study of a Village Saving and Loan Association and its relation to poverty reduction among rural households in Kyabakara, Uganda

Abstract

Village Savings and Loan Association, (VSLA) is a microcredit financial service program which was launched in 1991 by CARE International. Today, the methodology has appealed to most rural poor populations and Sub Saharan Africa inclusive. As a result several studies have been and continue to be carried out to substantiate benefits accruing from participating in VSLAs. And although literature indicates a positive relationship between VSLA participation and poverty reduction, each study has its uniqueness and intensions. This study therefore, intended to add to the vast information by assessing the contribution of one case of KyabakaraKweyamba VSLA located in Kyabakara sub-county, Rubirizi –Uganda, in reducing poverty among its members and their households, using both quantitative and qualitative data from focus group discussions, key informants and household surveys. The study uniqueness lies in its sample which involves VSLA members and then for triangulation purposes their spouses are not left out. And for reliability purposes, local NGO leaders, local and district administration and leadership are brought in the study. Focussing on poverty reduction through asset building, welfare improvement, risks and emergency management; the results suggest that participation in the VSLA has an overall positive effect on various indicators of individual and household welfare. That is, on investment level in assets, incomegenerating activities (IGAs), education expenses, access to health services, nutritional diet and quality of housing and life. These are promising results given that the VSLA members are self- reliant, without outside/donor hand outs. And the sense of ownership that ensues is also significant for sustainability. More importantly, the VSLA model gives hope for the financially excluded, and a foundation for other development programs targeting the rural poor.