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Village Savings and Loans Associations (VSLAs)

Armed rebellion, civil conflicts, natural/environmental disasters, and diseases are the major cause of poverty in the rural communities where PAG is providing Social Development Service. Village Savings and Loan Associations (VSLAs) are an ingenious solution to the financial needs of rural communities. PAG SDS adopted VSLA model and has been applying it since 2004 for economic empowerment of rural communities. Significant impact of VSLAs is evident in the households that PAG has been supporting. VSLA operations of PAG SDS are located in Kabale, Nebbi, Kaberamaido, Katakwi, Amuria, Soroti, Serere, Kumi, Ngora, and Bukedea districts. PAG SDS works with approximately 5,000 households in the VSLA program.

PAG SDS targets the most vulnerable communities, households and individuals with the goal of improving their livelihood. The VSLA program is introduced to the community when it has been identified and prioritized during Participatory Rural Appraisal (PRA). In most cases, VSLAs are set up after the communities have participated in the “Participatory Evaluation Process” (PEP), an empowerment model for social development promoted by PAG. PAG uses the PEP approach to encourage communities work together. During PEP, communities reflect on a number of key issues of concern in their locality, identify the underlying causes, prioritize local solutions and strategies, identify locally available resources to be used as inputs in the interventions, develop community based action plans, implement and regularly monitor and evaluate their interventions.

It is during this PRA process that financial need is prioritized by most villages. VSLAs is commonly identified by the community as the most convenient and affordable strategy to address financial needs in their rural and low income setting.


PAG SDS has a high performing team of approximately 200 professionals providing technical support in various social development projects. PAG SDS staff work with VSLAs, by building their capacity to sustain the scheme and achieve set goals. VSLAs are equipped with skills in various aspects of village savings and loan scheme. Some of the key components in the training include; Group dynamics, basic skills on group governance, establishing bylaws for the groups, record keeping and maintenance, basic financial and business management skills, Small and Micro Enterprise (SME) development.

The VSLAs members meet on regular basis to plan, reflect, and design strategies to increase their working capital. The capital is initially generated from the membership contributions. During each meeting of VSLA, the members deposit money in their saving account. This is referred as “Table banking” simply due to the fact that money is collected during round table meeting of VSLA members. Members of the VSLA are allowed to borrow the money collected and use it for business. An interest rate is set by the VSLA members for all money borrowed from their savings. Each VSLA has an executive committee elected by the members to keep records of minutes, main accounts books, and help in coordination. Each member of the VSLA has a book with details of copy of his/her savings records in the main accounts book. This helps members to track records of their savings and interest. In most cases, all the money collected is given out as loans. However, some VSLAs have each grown their savings to approximately Ushs50,000,000 ($20,408). In such a case, it may not be possible for the members to borrow all the savings. It is in such a case that VSLAs open accounts with a bank/financial institution and save the balance of funds to generate more interest.

Usually at the end of the year, VSLA members organize a celebration to enjoy part of the interest. It is during that celebration that members reflect on key issues of concern in their VSLA, and set goals for further growth. Part of the savings and interest is paid out to members for personal development. The payment is made based on the savings and interest gained by each member.


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