Although access to financial services has drastically improved over the past decade with the spread of microfinance institutions, provision of financial services in rural areas remains a challenge. Globally, more than 2.5 billion adults do not have a formal bank account, most of them in developing economies. In sub-Saharan Africa, only 1.8% of the two lowest income quintiles saved at a formal institution in the last 12 months, but 70 million people are still using informal savings clubs.
The Business Savings Program is a key component of Village Enterprise’s microenterprise development program targeting the rural poor. Village Enterprise empowers its business owners by giving them the tools to start successful and sustainable businesses so that they can generate income and become self-sufficient. The four aspects of our program are, business and financial literacy training, seed capital, mentoring, and savings circles. The Business Savings Program helps business owners form self-directed Business Savings Groups (BSGs) known commonly in the industry as Village Savings and Loans Associations (VSLAs). These groups teach business owners the habit of saving on a monthly basis.
Savings are a powerful means to not only maintain their current businesses, but also to diversify into new businesses or recover from setbacks such as unsuccessful harvests, theft, a medical emergency, or even a failed venture. The structure of the BSG is created during the first months of the program and participants continue to receive savings training and on-going mentoring throughout the year. After the completion of the program the BSGs continue to function, thus serving as Village Enterprise’s exit strategy.
Village Enterprise trains and empowers people living in extreme poverty to increase their savings and create sustainable incomes. In turn, this income will enable business owners to invest in education, health and nutrition, housing, and their small business. Over the long term, investments in these key areas will result in significant additional economic and social benefits. Savings is a key part of a business owner’s long-term success.
Caroline Bernadi
Foundation Director