VSLA Case Study in Zanzibar

VSLA Case Study in Zanzibar
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Zanzibar: Growth and Sustainability Through Financial Inclusion

VSLA Overview:

Village Savings and Loan Associations (VSLA), modelled on CARE’s project in Niger (commonly referred to as the Mata Masu Dubara or MMD model) have attracted much interest because of their promise to attain outreach to very poor and rural people better than formal, centralized, microfinance institutions. While the model is being widely replicated, few detailed studies of its performance have yet been undertaken.

A VSLA is a time-bound accumulating savings and credit association (ASCA). In it, 15 to 30 people save regularly and borrow from the group fund. Loans are repaid with interest, and have a period usually between one and three months. On a date chosen by the members, usually after about a year, all the financial assets are divided among the members in proportion to each one’s savings. This pay-out is called the “action audit”. The groups normally re-form immediately and start a new cycle of savings and lending. 

The role of CARE and other support organizations has been to train these groups on how better to operate the ASCAs based on a four-phase curriculum. During an intensive three-month phase, a trainer visits the groups every week and trains them on group dynamics. In a second three-month phase the trainer visits the groups every two weeks as they become more independent. After three months, the trainer comes only once in a month. After 12–18 months, the trainer ceases to visit the group (Grant and Allen 2002).  

 The Zanzibar Scenerio:

The VSLA methodology proposes that once mature, groups can function with no external support. Its proponents suggest that in the best programmes, 95% of the groups continue to function after two years and that the model reaches deeper into rural areas and serves poorer people than other microfinance models. In order to study the model’s achievements, the researchers sought to identify a situation where groups had been trained and then left to operate on their own. This proved extremely difficult since in many cases groups had continued to receive support or training of various kinds from CARE or another programme, even if this was not directly related to the VSLA component, hence creating ongoing incentives for the groups to continue to operate.  After a literature search and many contacts, the researchers decided that the case closest to the ideal was the Jozani Savings and Credit Associations (JOSACA) programme in Zanzibar, Tanzania where CARE trained groups between 2001 and 2002. After CARE left, the groups were left under the supervision of an apex organisation that they themselves ran, the Jozani Credit Development Organisation (JOCDO). While the JOSACA programme was the best option, it did not reflect a situation where the groups were left entirely alone but did offer the possibility of examining how well an apex organisation run by the groups themselves was operating.

For further information, please see the attachment of the complete Zanzibar study.


  • PublicationDate: 1 Dec 2006
  • Author(s): Financial Sector Deepening Project Uganda (DFID) & Decentralised Financial Services
  • Related Programs: Vulnerable Women Program
  • Related Projects: VSL Scale Up & ISARO Project
  • Related Partners: CARE Tanzania
  • Media Type: Document
Published in Case studies