Savings groups live: “Money can be misused if kept at home. Money can disappear if kept at home”

Stories from the Northern Malawi

Introductory Words

As a guest blogger let me first of all introduce myself.

My name is Anne Sofie Hansen and I am a master student in Business & Development Studies at the Copenhagen Business School, Denmark. I will be supplying this blog with a few accounts on Village Savings & Loans Associations (VSLAs) from the northern part of Malawi during the next month and a half. I will be spending most of my time in the rural area of Kamphenda in Rumphi District, northern Malawi where I am collecting data for my master thesis on VSLAs. My particular interest is the composition of the groups and their membership criteria in relation to outreach of the VSLA method.

The savings and loans groups are an element in a larger program undertaken by a local organisation: Church & Society (C&S) and the program is supported by DanChurchAid, through which I got connected to C&S. C&S is facilitating my stay in the villages I work within, and have provided me with excellent contact persons in the field. Such assistance is essential as my Chitumbuka, the local language of northern Malawi, is rather limited (though improving by the day), and the vast knowledge of the communities my translator possesses is invaluable in getting access to information.

Of my three weeks in Malawi so far, half of the time has been spent in the field. I am hosted by the Nkoswa family a typical rural Malawian family where the family relations of members living under the same roof or at least eating the same Nsima (the pasta of Malawi) extend to cousins, aunties and in this case a child from a disadvantaged family which cannot themselves afford schooling for their son. I have been placed with this family as Mrs. Nkoswe is a member of a VSLA: Chazimya which means quenching fire.


Chazimya is a newly started VSLA of 20 members, but as I met the group at their weekly sharing everything was done by the book. Perhaps this close accordance to procedures is a result of the fact that the group was created on the basis of a 10 member ROSCA (rotating savings and credit association a forerunner to the VSLAs) which had been working for nearly two years. Half of the members have as such been used to the weekly handing over of funds to one member. This is the only instance of ROSCAs I have come across so far. As I later ask my host family I find out that ROSCAs are relatively known in the area. The apparent advantages of the VSLA, however, is explained to me as, first of all, the larger amount of capital in the group, as up to 25 members are involved, as well as the interest paid on loans which adds to the pool of funds.

It is my clear impression that the VSLAs are perceived as a great development to the area and often times the only access to any financial service. The nearest town, Rumphi, which provides banking, is about 52 km away or 2½ hours by bus, if you can afford the ticket. The importance is underlines by a female member of the group. ‘I might refrain from paying to the church, but not to the VSLA’. It should be noted that religion is a matter of what church you belong to, not if you belong to one.

Group meeting in the local school

Group meeting in the local school

Accommodating Features

Getting back to my first meeting. Upon arrival at the meeting site for Chazimya, the classroom of the local orphanage, my translator and companion, Gija, are received with singing and dancing arranged for the occasion. In my capacity as a ‘researcher’ and walendo: visitor or stranger, I am placed on a chair alongside Gija, while the rest of the group finds themselves in a circle on the floor. After an opening prayer the session begins with the step by step sharing and payments into the social fund takes place. A new arrival to the group pays what amounts to 45 shares (approximately 12 US$) which is a considerable amount in this context, e.g. nearly 3 return trips to Rumphi. This serves to bring this member up to the same amount of shares as the rest of the group members despite the agreed maximum purchase of 5 shares per meeting. In this way each group finds its own ways of accommodating the needs of its members.

Another local feature and a common way to boost the capital of a VSLA in this area is for all members to, for instance, offer their labor for one day in the field of one member and the salaries collected for the work then goes into the VSLA to boost the pool of capital. Interestingly, an apparent competitive atmosphere arises as share-out approaches and each member do their outmost to buy as many shares as possible. The larger share-out must serve as an incentive.

But Why the Enthusiasm

As the above may have revealed, the amounts that are pooled in the VSLAs are rather infinite in a western context, but not to a rural farmer in the northern Malawi. The essentials that are purchased by the means saved up in the VSLA in Malawi are soap, salt, clothes, fertilizer and sometimes school fees. What makes the difference is a safe place to keep the money. Money can be misused if kept at home. Money can disappear if kept at home. A metal box with 3 locks and three key-holders seems to provide the security needed to progressively save up for larger expenditures.

What further encourages the female members is the slight freedom from the husbands grip on the family fortunes. Through the opportunity to start small scale businesses one their own and to make basic contributions to the family income, some women have expressed a freedom to act on their own without constant consent from the husband. In many cases, however, the husbands are the sponsors of the initial capital to the VSLA. Noted it must be, that most of these groups are made up of women, but in this area many groups do not exclude men. However, there is a certain understanding that too many male members distorts power structures in a group, hence I have mainly come across groups with one or two male members. Finally, some women find men rather unreliable, as expressed here ‘Men are crocks! You get problems from having men in the group’.

These will be my final words of these initial accounts from my field stay in Kamphenda.


4 Responses to Savings groups live: “Money can be misused if kept at home. Money can disappear if kept at home”

  1. Interesting post and some great work you’ve been doing out there in Malawi. Yes I have been reading in more than one place that micro finance in the hands of women – does seem to go a lot more further than when in the hands of the men. I have read reports of men often opting to buy materials items – instead of using the loan for its original purpose. This finding is important for the future of the micro loan and micro funding – and at World Vision Micro Loans we enjoy reading of success stories regarding this – you can view these here:

    Great work Anne keep it up – your work and efforts are priceless

  2. Anne Sofie says:

    Thanks Adrian. It is nice with the encourangement. Especially, since it is my first shot at doing this type of work. It has been facinating to experience microfinance in its working! I hope you will find the next posts interesting as well. I’ll have a look at your website as well. :)

  3. Jonas H. Lønborg says:

    Hi Anne,

    Definitely an interesting couple of posts! I hope your efforts resulted in useful data for your thesis. And undoubtedly a unique and exciting experience staying in the village in Rumphi.

    Hopefully there will be time and opportunity for you to blog about the findings as well at some point when you get there. The composition of the groups are very interesting, I think. There is definitely a gender issue and an intrahousehold power struggle going on that the VSLAs are affecting. Perhaps this is part of what you are looking into as well?

    It definitely seems the VSLAs are a new hot topic within microfinance, as the recent article in the economist also suggests:

    All the best on writing your thesis.

  4. asoffy82 says:

    Thanks Jonas,
    Shortly, my final post on this blog will be posted. It contains my preliminary findings. Not so much on gender issues, as this has not been a particular focus of mine, but the research did reveal that these issues are still prevailing.
    Anne Sofie

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