Village Savings and Loans Associations in Fragile Contexts: A Case Study of Almadow VSLA Group in

Hingalol Village, Badhan District of Sanaag Region

A Village Savings and Loan Association (VSLA) is a group of 15 - 25 people who save together and take

small loans from these savings. VSLAs offer rural and often marginalised communities, who are unable

to access formal funding, a system of a community-based source of funding which allows them to save

their money, access small loans and gain emergency insurance. The activities of the VSLA run in ‘cycles’

of about one year, after which the accumulated savings and profits are shared between the members in

accordance with the amount they have saved. CARE’s experience around the world in establishing VSLAs

in vulnerable communities has demonstrated success beyond savings and loans. VSLAs have been shown

to build solidarity among groups of disadvantaged women, provide a platform for developing business

enterprises, and provide a link to education and training opportunities for women where their access to

such opportunities might otherwise be restricted by time constraints or a lack of support from their

partners. These groups are repeatedly seen to be springboards for other activities.

Almadow VSLA is a union of five local women groups that operates in Hingalol village of Badhan district.

It is a women-led association with both profit and non-profit activities. The women groups were first

initiated in 2011 by businesswomen living in the village. However, due to different obstacles including

irregular contributions by group members and poor organisational structure, their activities were not

regular.

Thanks to the STORRE project, in early 2015, Almadow VSLA was re-established. The STORRE project has

established and trained a total 42 VSLAs groups, including Almadow VSLA group. In total 811 VSLAs

members (154 males and 657 females) have been trained. Almadow savings and loans association

consists of both skilled and unskilled members who perform different activities for their association and

for the wider community. According to the chair-lady of the association, Hali Farah, “the group has

become more productive, efficient and organized after CARE’s trainings and support”.

Almadow VSLA is one of the largest group in the Sanaag region. Being one of the biggest VSLAs group in

Sanaag region of Somaliland/Somalia, the group runs business activities and provides voluntary services

that include but are not limited to the provision of primary education for girls, adult education and

vocational skills for women as well as supporting women and girls who suffer from gender-based

violence.

Individual VSLA members have different and flexible business activities such as livestock and livestock-

related activities, including petty-trade, tailoring and dyeing of clothes/dresses. These voluntary services

help improve the capacity and personal skills of the individual VSLAs members and/or their family

members by, for instance, helping them access the skills training platform. VSLA members are happy to

contribute to voluntary services within their local communities. To VSLA members their ability to

contribute to the development of their communities is very important for them as it also contributes to

the goals set by group members.

The political crises in several countries in the Middle East including Yemen and Syria have resulted in

poor livestock sales. Additionally, prolonged drought in the region has also had a negative impact of

communities’ livelihood activities. Despite decreasing revenues from livestock sales and drought in the

region, the VSLA members of the have managed to sustain their saving and loans activities. To date,

Almadow group has 30 members and together they have managed to save 27 million Somali Shilling

($U1350) in their first cycle of savings, which continued for nine months. Within their first cycle, the

group supported 14 members with social fund and lent money to nine other members for business

establishment/expansion activities among others.

In addition to accessing loans and social funds, Almadow VSLA group, also had vocational skills training

and voluntary community services which were offered to their members. This offered group members a

platform to learn new skills, and gain exposure to different skills sets both financial management and

practical skills trainings. Additionally, the voluntary services also developed stronger relationships

between VSLA members and their communities.

The skill-building platform offered members a secure network where they can gain training in income-

generating activities. These skills offer groups an opportunity to diversify their sources of revenue thus

this has contributed to building the resilience of VSLA members in Almadow.

What is unique about this VSLA group?

Risk Sharing

Any individual expects both profits and losses upon entering a business venture. Doing a group business

activity has a risk sharing benefit; the risk is spread thinly across members who collectively share risks

and losses. Within the VSLA, members have the opportunity to share business risks as most businesses

are put together as a group. Halimo Farah, a member of the group, explained:

“After I lost most my livestock business, I was blessed with another chance to join Almadow VSLA group

and engages in a joint business activity (dyeing of women dresses) and by this I managed to sustain my

livelihood and cater for the needs of my family. Had it not been for this business group, the life of my

family would have been a misery”.

Access to information and networks

Being a member of Almadow VSLA group provides access to a wide range of issues including business

opportunities, market updates, nutrition and hygiene information. Members also make new friends and

business partners in the process. Another member of the group called Asha Mohamud said “I have

gained new knowledge of how to feed and care for my children from the nutrition awareness sessions in

the group meetings”.

Adult education for women and girls

The provision of adult education is also another excellent service, as observed during the interview,

especially for women and girls who have not had the chance to go to school at an early age and who

now feel a bit ashamed to attend formal schools. The adult education service is also one of the added

advantages of this VSLA group. One of the group members who benefitted from the adult education

classes, Layla Abdirahman, happily exclaimed, ‘’I learnt how to read and write Somali and arithmetic

numbers after joining the group and I now feel I can do many more things. This has built my confidence

and I want to start a small business of my own and I will be writing everything myself. Now that I know

how to read and do some arithmetic I know I can do many other things. I cannot thank the VSLA group

enough for this gift”.

Skill transfer: Although extensive skill transfer takes time, with sufficient teaching and learning

materials, this VSLAs group has managed to use their certified skilled trainers to pass on their skills, such

as tailoring, cooking and weaving, to willing learners. Waris Yusuf who benefitted the skills learning

platform of the group said that one of the skills she learnt after joining this group was tailoring and she

now works with others to make a living by tailoring clothes.