1/ Why Does a VSLA Group Exist?
In Uganda and in many other places, standard financial services are not available to the poorest populations. If commercial banks are slowly - although still in a geographically lopsided manner - spreading to rural areas, their services remain closed to the illiterates, too expensive for the smallest incomes and often too far for the most remote.
Our group members usually cannot save more than 1€ per week, and a journey back and forth to the bank office costs usually between 1 and 2€. And if you cannot save, you cannot borrow.
In terms of savings, their only option is to save at home, within a metallic can, within a hole dug under the house's mud floor, or literally under the mattress, leaving their family's savings within range of thieves or personal misuse from the family's husband. In terms of loans, only "loan sharks" would lend them, with excessive interest rates and severe consequences if the loan is not paid off.
That is why VSLA groups arise, where a group of 30 to 40 individuals meet weekly within their area, save together and take small loans from those savings, generating profits that will be distributed amongst the group members at the end of the cycle, which usually lasts one year.