Capital Commentary is the weekly current-affairs publication of CPJ, written to encourage the pursuit of public justice.

Changing the Currency of Rural Poverty

Annelise Jolley


By Annelise Jolley

November 3, 2014

Many farmers in rural areas of the world depend for their survival on what they grow from their land. Although they earn a small amount of money selling produce at local markets, they have nowhere to save their income. Village Savings and Loan Associations (VSLAs) are an innovative approach to microfinance that provides structure for the rural poor to save their money and easily access loans. Instead of walking to the nearest bank, which could take hours, rural families can save in a community VSLA group. If they need a loan – to pay for children’s school fees or farm improvements – they can access one safely without fear of loan sharks. Convenient, safe, and self-sustaining, the VSLA may just be the secret to tackling rural poverty.

Simply put, a VSLA is a group of people who pool their money and take out small loans from shared savings. Developed by CARE International, the VSLA model lends a new layer of accountability, transparency, and democracy to traditional microfinance methods. As VSL Associates explain, these community-based groups offer a system that “even the least literate, least influential member of the group can understand and trust.”

VSLAs could change the currency of rural poverty for a number of reasons. First, these grassroots savings groups receive training to mobilize their own funds, so they aren’t reliant on external organizations to provide capital and enforce loan repayment. In addition, VSLAs cater specifically to rural communities, a demographic that is largely unreached by typical microfinance institutions. Because they’re self-governed, groups require little outside monitoring. Their democratic structure empowers the rural poor to develop their leadership abilities and experience dignity.

In addition, VSLAs offer members a safe place to save their money as well as a way to make more. Group participants earn interest on their savings through loan repayment and group fees, and can access loans without fear of being taken advantage of and charged high interest rates. Thanks to the incentive of community accountability and other precautions, savings are secure. VSLA has proven itself to be a transparent and nearly foolproof system. ?

Today, NGOs and development organizations worldwide implement VSLA methodology in remote areas. Their success stories lend insight into why this strategy works. Plant With Purpose, an international development organization that reverses poverty in rural areas, is one such story. For years, Plant With Purpose implemented traditional microcredit programs without significant results. In 2006, the organization introduced VSLA methodology to partnering communities in Tanzania.

The initial response was skepticism. Families insisted, “We’re too poor to save money.” But as time passed, their response became “We’re too poor not to save money.” Without a financial safety net, rural families realized that any emergency could completely pull them under. A death, a medical condition, or even a bad harvest might mean months without enough to eat. Savings could change that.

The move from microcredit to VSLA gave farming families financial empowerment instead of handouts. Staff members were no longer viewed as loan officers, since the participants pooled their own money to begin a group. During the first savings cycle, VSLA participants’ skepticism morphed into surprise, and then into excitement. Most participants couldn’t believe how much they had saved in one year.

Today, Plant With Purpose counts 210 active VSLA groups in Tanzania, with 5,552 members. VSLAs are increasing financial security in farming communities as friends and family members invite those in need to join their group. Word is spreading about these savings groups and Plant With Purpose staff have a waiting list of new groups that are anxious to start building a more secure future.

Neema Elifadhi joined a Plant With Purpose VSLA group in 2010. At the time, Neema and her three children lived in single-room mud house with a thatched roof. “With such a situation it was hard to develop,” she remembers. But through her VSLA group, her circumstances began to change. “I revived my chicken project from 10 to 170 chickens in three month’s time and sold 150 chickens. Twelve months later, I received the revenue from a one-year cycle. This was the first time I had handled such an amount of money.”

This reaction is common among most VSLA participants. They never thought they had money to save, or that accumulated funds could change their families’ futures. In Neema’s case, she used loans to build a larger home for her family with electricity and three rooms. Her story is one example of how VSLAs can transform circumstances for the rural poor.

Recent years have seen an encouraging trend in the justice sphere. Instead of handouts, justice advocates are calling for sustainable development. Millennials especially are hungry for something more than charity, and they seek approaches to poverty that emphasize empowerment over dependence. VSLAs do just that by reaching the poorest of the poor and putting the power in their hands. The beauty of this innovative method is that it equips people to lift themselves out of poverty through stewarding their resources in community.

If we are to rethink our strategy to poverty alleviation, programs that create ownership for participants should be top priority. Equipping the rural poor to save their money and experience God-given dignity is a sustainable solution to global poverty, one that will incite long-term transformation as the kingdom takes root in rural communities.


A version of this article first appeared on, an online journal of the Center for Public Justice dedicated to engaging young Christian thinkers in a conversation on what it means to do public justice.

-Annelise Jolley works for Plant With Purpose, a development organization that alleviates poverty through environmental restoration.

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Capital Commentary is a weekly current-affairs publication of the Center for Public Justice. Published since 1996, it is written to encourage the pursuit of justice. Commentaries do not necessarily represent an official position of the Center for Public Justice but are intended to help advance discussion. Articles, with attribution, may be republished according to our publishing guidelines.”