Providing Business Skills to Coastal Communities & Harnessing Informal Businesses through VSLA

April 26, 2021

Photo showing member of Village Savings and Loans Association (VSLA), Satu Challey in front of her business shop in Bumpetok, Turtle Island. Photo Credit: @ UNDP/Mohamed Kanu

"Before this time, there was no financial group in this Island where petty traders like me could access a loan. Now, there is a lending/borrowing scheme among us that is mustering much confidence we have been waiting in such a community surrounded by water”. Says Satu Challey.

Satu Challey is a petty trader in an Island community called Bumpetok, Turtle Island, about 12 hours boat ride to and from Tombo-a fishing community in the Western Area Rural District, where they (petty traders in Turtle Island) would get their goods  for business purposes. Satu is a mother of 7 children (4 boys and 3 girls), with a strong desire of growing her business in the Island where she has been living since childhood. Satu trades in food items such as gari, sugar, palm oil, among others, in an Island with a population of about 700 residents including women and children. According to her, what came out clearly after all these years of doing business in the Island, was her shortcomings on business management. As a result, suffered many bad debts from her customers who could not pay back for items they had taken from her shop, low business confidence including poor record keepings.

With support from UNDP, Satu Challey is among 180 Village Savings and Loans Association (VSLA) members in 6 coastal communities. She is part of a 30-member (Female 15; Male 15) VSLA Group in Bumpetok who benefited from trainings on the establishment of VSLA groups and alternative livelihood options including relevant techniques needed to provide adequate and continuous leadership over a community loan scheme. VSLA is a structured system of saving, borrowing, and lending of money generated from village contributions. The UNDP supported trainings and training manuals were designed to be simple enough to verbally explain the concept in a way even illiterate members of the community can easily understand how VSLA works.

Six month later, Satu and all 29 group members raised the sum of Le7,000,000 ($700) from their every Friday contributions when members pay minimum sum of Le5,000 ($50 cents) to get a share. Like Satu, every contributing member is automatically qualified for a loan with an agreed interest rate of 10%.

Satu has used the loan obtained from the VSLA to upscale her petty trading business in the Island. She used her little profit to support her 7 children all of whom are still in school. Although she is very concerned that loan received from the VSLA scheme is not enough for her business aspiration in the Island, she hopes UNDP and other partners could help the group with a startup capital which she believes would give bigger results in her small coastal community.

“Along with promoting small-scale economic development within the community, the VSLA has also become a well-organized structure to respond to welfare and social issues ranging from burial, marriage, to naming ceremonies including health related support to group members”-Satu reiterated.

33 year old Francis Musa Lebbie is also a member of the Shebro ‘Lomtible’ translated as ‘one word’ VSLA Group in Bumpetok, Turtle Island dealing in fuel which he sells to fishermen who use it to power their outboard engines at sea to fish.

Photo showing member of Village Savings and Loans Association (VSLA), Francis Musa Lebbie, a fuel dealer in Bumpetok, Turtle Island. Photo Credit: @UNDP/Mohamed Kanu.

When Musa received his loan few months ago, he was also hopeful that his community despite impoverished, could indeed mobilize resources among themselves to support micro businesses, like the one he is engaged in doing. Like Satu, Lebbie is also very concerned that Le500,000 loan is small to upscale his type of business with barely marginal profit, and with a monthly 10% interest rate, the impact is minuscule. Musa is also calling on UNDP and partners to support the VSLA with startup capital. For him, new business management skills earned from the VSLA training now assures new confidence level to risk bigger investment in the Island.

In Shenge, another coastal community in Moyamba District, Southern Sierra Leone, the trainings conducted for the VSLA groups are changing the story. Similarly, the 30-group membership  believes that the impact could have been greater if they are given some startup capital, and despite guiding their new ability to save money among themselves, their weekly meetings have brought unity, triggered by the  new zeal of doing business coupled with broader understanding of the business environment and alternatives. From our recent monitoring mission conducted in both Turtle Island and Shenge, it was observed that the VSLA Groups now have set aside welfare fund to cater for the welfare of its members. Unlike Turtle Island, where the gender mix is 50-50, Shenge now has 31 members in it VSLA (16 females; 15males).

This initiative is supported under UNDP’s ‘Adapting to Climate Change Induced Coastal Risks Management in Sierra Leone’ designed to strengthen women and youth’s resilience to climate change impact on the coastal zone to reduce pressure on natural resources. Thanks to funds from the Global Environment Facility (GEF).  

Photo showing Shenge Village Savings and Loan Association (VSLA) membership share passbook. Photo Credit: @UNDP/Mohamed Kanu.