Originally published on August 12, 2014.
Franckline Claudy's need to feed her family has made her a small business success, through her participation in a Village Savings and Loan Association (VSLA). As in most parts of Madagascar, the village of Ampasimbola — in the Mahanoro district — primarily produces rice. Franckline, a young mother with two daughters, lives in this village and for two to four months out of the year she feeds her family by cultivating and selling rice. To make ends meet, she also periodically works in the field, which pays about $1 USD per day. However, the rice production season is very short and for the rest of the year Franckline struggles to feed her family. She previously took out loans to get through the difficult period between harvests, but she said, “When the time to harvest comes around, I end up having to pay back two times what I borrowed.”
Help came when the USAID-funded Strengthening and Accessing Livelihood opportunities for Household Income (SALOHI) program introduced VSLA to Franckline’s village in 2010. Implemented by Land O’Lakes, VSLA is a model of self-capitalized groups that uses and manages pooled money for savings, loans and insurance. VSLA specifically serves villagers, like Franckline, who would normally be excluded from formal microfinance institutions because of their lack of money and/or collateral.
Thanks to my VSL group, I no longer had to take out a loan to buy rice or food for my children. VSLA helped me so much during the period between harvests
Two different savings and loan groups were formed in Ampasimbola and Franckline became an eager participant. Every Thursday, her group would meet and each member contributed $0.5 to $1.25 USD. “Every Monday, I would start to put money aside for the next savings meeting,” she said. At the end of the cycle, Franckline received 71,300 ariary ($35 USD). Franckline also took out two loans during this cycle. The first loan was for $5 USD, to prepare and sell rice dishes, coffee and small donuts; the second was for $7.5 USD to buy and resell fish.
These two activities allowed Franckline to feed her family during the long period between the rice harvests. She said, “Thanks to my VSL group, I no longer had to take out a loan to buy rice or food for my children. VSLA helped me so much during the period between harvests”.
Today, Franckline continues to use the lessons she learned from her VSL group, which gives her the income to feed her family and create a better life for them.