The Business Case for Village Savings and Loans Associations

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Author Youssouf N’djoré

Country Director, Côte d'Ivoire
World Cocoa Foundation

As a social development professional and an advocate for women’s empowerment, I am thrilled to see that Village Savings & Loans Associations (VSLAs) have now been widely adopted.

A VSLA is a group of 15-30 people, mainly women, who pool their savings in a fund from which members can borrow at an interest rate during an agreed period of time. Members also sometimes pay fines to the group if they break agreed group rules.

The social benefits provided by VSLAs are well known. The most important one is a reinforced sense of agency for women. Thanks to VSLAs, women can manage businesses and participate with greater confidence in households and community decisions.


Many reports also highlight more harmonious relationships between spouses, thanks to the support VSLA provide to households for food, health, and school fee coverage.

In reviewing revenue impacts, one question emerged: is there a business case or any clear financial relevance to justify continuing to implement VSLAs? This is especially pertinent as cocoa farming households’ prosperity depends on their ability to access additional sources of income.

This question on the business case immediately triggers more questions, including:

  • How much do VSLAs contribute to closing the income gap for cocoa farming households?
  • What is the marginal contribution of VSLAs to income generating activities (IGAs), and what other IGAs should be implemented alongside VSLAs?
  • What is the real or perceived return on investment of a VSLA? How do VSLAs compare with other savings and/or income-generating approaches in terms of effectiveness, efficiency, and impact?
  • Do VSLA impacts change based on household size, level of female participation, specifics of the intervention, etc.?

To answer these questions, WCF commissioned research from an independent consultant to assess the business case for VSLAs and to provide suggestions for streamlining their implementation.

I have long thought that making the case for the use of VSLAs was merely a question of telling the story of their financial benefits and advantages for businesses. I was therefore very excited to review the outcomes of such a long-awaited study in the cocoa sector. But the findings are slightly unexpected, and actually show that the additional income/profits from VSLA participation are not significant.

This lowered my expectations of seeing my favorite approach to closing the income gap in cocoa communities applied in the future.

However, after some reflection based on WCF members’ VSLA experiences, I realized that while the net profit is a relevant element of the business and financial case for VSLAs, the reality is more complex. Indeed, VSLAs seem to provide three cumulative types of financial benefits to their members:

  1. Direct financial benefit: The net profit of a VSLA is the sum of its total savings, the fines incurred, the interest paid on reimbursed loans, profits from the group’s collective IGA minus the losses, fees, and operating costs. This net profit varies but is generally quite low.
  2. Opportunity benefits: In addition to these direct financial benefits group members can access their total savings in cash plus interest paid on repaid loans. This type of affordable access to cash is extremely valuable for members of vulnerable populations who would not otherwise have such an opportunity.
  3. Catalytic benefits: Building on theses opportunity benefits, group members can also benefit from the effects of a VSLA-provided loan used to start a business in the form of the profits from that business.

Thus, VSLAs are quite relevant when one looks beyond net profits. Moreover, they have never been only about finance. The report reassured me on this point by clearly demonstrating that however small the net profit may be, the impact of that profit can be enhanced by the VSLA’s non-financial benefits. The report also clearly shows that integrating gender and income-generation programming alongside VSLAs ensures their overall success and lay the groundwork for a conducive environment for other development activities.

Therefore, our recommendation is still to reinforce VSLA programming. I welcome you to review the full report and learn what it takes to make VSLAs robust and business-effective in project planning, implementation, and data collection.