Village Savings and Loan groups and economic development at the Children’s Academy
The Haiti Partners Children’s Academy and Learning Center opened its doors in the fall of 2012. Its overarching goal is to provide an inspiring example of education-centered, values-based, Haitian-led, sustainable community development for the entire country. Its motto is, “Learning for Life,” by which is meant both an education that (1) provides the skills and knowledge needed to be successful in life, family and community, and (2) that prepares students to be active, life-long learners.
Recognizing that economic development and resultant financial insecurity is a crucial issue in the rural, undeveloped area in which the school is located, in the fall of 2015, we introduced the practice of Village Savings and Loans (VSL) groups. These VSL groups are generally organized by groups of constituents within the school community. Currently, there are VSL groups organized by school staff, parents of students, as well as local community members. There are even VSL groups that are self-organized and operated by students in the third and fourth grades at the school.
Here’s how VSLs work: Each week participants gather to“purchase”savings shares that are carefully and publicly recorded into their account booklet. As the pot of savings grows, the group makes loans to those participants seeking to borrow. Borrowers have a predetermined amount of time to pay back the loan at a low-interest rate that helps the group cover its costs. The average loan size is 25,000 Haitian Gourdes (US$300) and allows borrowers to purchase stock for their small businesses that they otherwise couldn’t afford. In some cases, and depending on the group, these microloans can reach over US$1000 and be used for more substantial expenses like education costs or home improvements.
VSL groups accomplish a number of goals at once: (1) they teach participants how to save and manage money; (2) they help them grow their small businesses and improve their financial security; (3) they teach reliability and accountability both financially and in social terms; and, (4) as participants learn to rely on themselves and their neighbors, VSL groups build trust within the community. Furthermore, since they are self-organizing and self-sustaining, VSL groups teach community members self-reliance, autonomy, collaboration, and positive communication – critical factors in any sustainable development strategy in the developing world.
Currently, there are 12 Village Savings and Loans groups – totaling 531 participants – functioning out of the Children’s Academy and Learning Center each week. This has grown from an initial single group of 25 in 2015. One hundred percent of participants use the VSL groups to help them save, and approximately 80% of them use the groups to acquire capital through loans. The average loan size is 25,000 Haitian Gourdes (US$300), though loans range from 10,000 to 100,000 gourdes (US$120 to $1200).
Across groups, the repayment rate on these loans averages 95%, which is remarkable, given how poor group members are. Rather than merely kick out those members who default on their loans, however, to deal with this 5% who fail to pay they have developed a system where these members remain in the groups, but they are only permitted to save until they have paid back their loans in full, with interest. Ultimately, this works out better for everyone: the groups get their money back, with interest, and the participants who failed to pay on time are permitted to stay in the groups, build back their reputations, and eventually be able to access loans again in the future.
As a broader measure of impact on the community, in the last year alone (February 2018-2019) over 5,000,000 Haitian Gourdes (over US$60,000) have been saved, loaned or repaid through the Village Savings and Loan groups run out of the Children’s Academy. Bearing in mind that there is no bank available to this community, and therefore these people would otherwise have no access to either loans or savings accounts, this is no small achievement.