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Financial Services for the Rural Poor


Written by Plant With Purpose on February 22, 2011 in General

February 22, 2011

“Can really really poor people save money? The answer is yes!”
—Christina Huizenga, Africa Program Officer at Plant With Purpose

On February 27 Plant With Purpose’s Africa Program Officer, Christina Huizenga, will be attending a week long Village Savings and Loan (VSL) meeting in South Africa. Fifteen organizations will be represented at the meeting to receive training and updates in how the Village Community Banking (VICOBA) system functions. The meeting will be an initial step towards beginning VICOBA in Burundi. Successful VICOBAs in Plant With Purpose’s Tanzania program pool community resources for savings and small loans used to start businesses, send children to school, and cover emergency needs among group members.

Rural subsistence farmers often do not have access to banking institutions, are unable to qualify for even small loans, and cannot read or write. VICOBA, a system that first began in West Africa, has had tremendous success in providing financial services to the rural illiterate poor. Because VICOBA is decentralized, composed of and led by community members, there are few overhead costs that formal institutions require. In addition, all of the interest collected from loans goes back into the group’s fund rather than being drained off to a financial institution outside of the community. To accommodate illiterate populations VICOBAs utilize memorization as well as symbols that represent the number of group pledges.

VICOBA in Tanzania

In Tanzania VICOBAs have experienced rapid growth. Membership has increased and new groups have formed as Tanzanians witness the economic benefits of livestock, small business creation, and increased crop yields generated by community savings and loan money. VICOBAs have a large number of female participants, a reality that has had a transformational impact in gender relations among villagers.

In the area of Tanzanian where Plant With Purpose works, at the foot of Mount Kilimanjaro, land is owned by the community government and distributed to male heads of households. A woman has very little that she owns and is limited in what she can do without the help of male relatives. Within the VICOBA system men and women share an equal status and women can hold leadership positions. VICOBAs also empower women by creating a tool for them to save money and plan for their future and the future of their children. Women who do well and become prosperous as a result of participating in a VICOBA, gain respect and status in the community.

Farmers in Burundi

In Burundi, VICOBAs have the additional potential of bringing together members of rival Hutu and Tutsi ethnic groups. Refugees who fled civil war and genocide are returning to Burundi, an event that sometimes places Hutu and Tutsi people in the same communities. VICOBAs require that participants trust each other as they work together to save and loan their money for the common good. By giving Hutu and Tutsi people the opportunity to invest in their mutual benefit and place confidence in one another, the VICOBA system is a practical way to develop peace and reconciliation in Burundi.


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