Creating Access to Financial

services for the youth through

VSLAs Prepared and presented by:

Asum-Kwarteng Ahensah

Program Support Manager

Plan Ghana

Presentation outlineo Background to Financial access (Exclusion)o Plan Ghana Response (Phase I)o (VSL Methodology)o Multi-level partnership to scale upo Reach: Across Africa and Ghanao (Phase II) : youth-driveno Challengeso Recommendations

Background• Access to financial services by the poor is

constrained by inadequate institutions that provide appropriate services (chiefly savings, but also small, flexible loans);

• Some populations (rural settlers, women, youth, migrant tribes etc) are more excluded --- due to distance, social and other barriers.

• Lack of access to viable financial services deprives communities of the opportunities to build cash assets through savings and to raise financial capital to initiate and expand their businesses.

• Populations remain in poverty !!

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Plan Ghana’s Response (Phase I)• Design and implement programs that promote

financial inclusion via Village Savings & Loans (VSL) methodology:

Projects: Barclays-funded Banking on Change (BOC)– 3-

year duration targeting Adults (2009 to 2102)

CIDA-funded Promoting African Grassroots Economic Security (PAGES) project. 5-year duration targeting youth

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Basic features of the VSL model VSL methodology is designed for the very poor (financially

excluded) . Enables them to manage their household cash flow more efficiently and flexibly and to invest in income generating activities that secure and stabilize cash income: self-selected group of people living in the same community, who

pool their cash into a fund from which members can borrow Group membership could be: pure stand (e.g youth; women;

men); or mixed Group-dynamics regulated by agreed constitution Borrowed money is paid back with interest, causing the fund to

grow ! After about a year, the fund is shared among the members in

proportion to each one's savings (shares). This process produces pay-outs for members.

Members may receive a return on their savings investments 30%-100+% per annum!!!.

The groups normally re-form immediately and start a new cycle of savings and lending. 04/09/2

3

Value addition Value addition • Ability to mobilize own savings on a regular basis

which serve as loan fund from which members borrow at ease without any form of collateral/guarantor

• Provide a social fund against emergencies. • inculcates habit of regular savings, provides

relatively easy access to financial services by the excluded;

• Relatively low cost• ensures social cohesion or unity even in

communities difficult to mobilize (e.g: we have 3 Fulani groups!!)

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Multi-level partnership to scale-up• .

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UK: UK: •BarclaysBarclays- (Corporate/Private)•Plan International Plan International (INGO)

•CARECARE (INGO)

AfricaAfrica: : •Barclays : Ghana, Egypt, Uganda, Kenya, Tanzania, Kenya •Plan Ghana, Egypt; Uganda, Kenya, Tanzania, Kenya •CARE Ghana, Egypt; Uganda, Kenya, Tanzania, Kenya

Ghana: Ghana: •Barclays

•Plan Ghana, •CARE Ghana

•9 LNGO implementing partners•Community Volunteers (CVs)

•Village Savings & Loans Groups (Adults + youth)

Reach Across AfricaReach Across Africa

• Within 3 years, established over 21,000 village savings & loans associations (VSLAs) with over 500,000 membership in Ghana, Uganda, Tanzania and Kenya.

• Accrued over $6.5m in savings• Loaned out over $5m.• Nearly 500 groups formally linked to group

accounts in branches of Barclays

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Reach in GhanaIndicator BOC

(predominantly adult-based )

PAGES

(youth-based project)

Total % Youth

Total # VSL groups formed 2,927 349 3,276 11

# groups graduated 1,596 26 1,622 1.6

Total membership 77,372 7,808 85,180 9.2

# members graduated 41,922 667 42,589 1.6

% women 77% 73% 75

Cum. savings mobilized GHC 4,093,296 (US$ 2m)

GHC449,184 (US$225,000)

$2.25m 10

Total Loans disbursed GHC 3,458,652 (US$ 1.7m)

GHC349,118(US$175,000)

$1,875,000 9.3

Av. Cost/member GHC 20 (US$10) GHC 18.60 (US$9) na na

Attendance Rate 93% 88.3%

Retention Rate 99.3% 98.8%04/09/23

Selected project outcomesSelected project outcomes Improved access to loans by VSLA members in terms of

# of beneficiaries, size of loan and # of times that loans are available (VSLAs account for almost all loans contracted by their members in the past 2 years).

% of VSLA members who contracted loan increased from 39.8% to 73.2% during 3-year project duration.

VSLAs are the major savings mechanism for members % of VSLA members hiring labour increased from a

baseline of 39.8% to endline of 50.8% Average amount invested in IGAs increased from US$60

to US$110 ( positive economic impact although not enough to reduce susceptibility to poverty).

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Selected ImpactsSelected Impacts

• Nearly 70% of VSLA members who indicated improvement in quality and quantity of their meals attributed the change to VSLA.

• Close to 80% of members reported improved access to children’s education attributed the change to VSLA.

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Phase II (Youth-led): objectives Phase II (Youth-led): objectives Over 200,000 INDIRECT beneficiaries will be reached

through households

Support youth (under 35 yrs) to set up 1,650 youth savings & Loans groups with at least 41,000 members

Integrate skills-building to achieve additional impact: financial literacy, employability and

entrepreneurship skills training to beneficiaries. Expand geographically through training and use of

community volunteers (CVs); Support the establishment of around 41,000 sustainable

IGAs and small businesses

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Key Challenges• Youth migration tends to negatively impact on

their mobilization, attention, and retention • High youth unemployment a huge barrier to

savings• Potential “drain” on accumulated funds by

commercial MFIs if careful linkage of VSL groups is not achieved

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RecommendationsRecommendations Employ “smarter partnerships”--- multi-level but

with emphasis on strong community-based mechanisms

Move beyond access to savings & loans towards business/entreprenuerial capacity enhancement for greater impact and sustainability

Business start-up support must be “economically meaningful and viable”

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