In the course of my voluntary work, I have been to visit some Village Savings & Loans Associations (VSLAs). These are groups of 20-30 people in a particular neighbourhood who come together to save a little money each week and then take out loans from the collective pot, either for personal expenses or to start or improve a business. At the end of the year-long cycle, the savings and profits are shared out among all members in proportion to the amount they saved.
Some of the practicalities are quite surprising – all the funds and record books, for example, are stored in a metal box with three padlocks, and the three keys are held by different members of the group to prevent anyone having unsupervised access. The interest rates on loans are quite high, but this means that the profits are higher when they are shared out among members at the end. The community based trainers who set up and recruit to these associations also provide training to members on procedures, financial literacy and business skills.
When I first read about the VSLA model, the Marxist in me piped up that this is less community development and more capitalist indoctrination, funded by the US Government’s foreign aid programme. The method of saving is the purchase of shares at weekly meetings, and the profit is down to the increase in share value. Although all shares are equal in value, the difference in the number of shares purchased by each individual (with the poorest probably borrowing more and paying more in interest as well) means that, at the end of the cycle, some people’s share will be more equal than others’. Follow-up work is done to link members with mainstream financial services once they are acquainted with the technicalities of saving and borrowing, and some of the same big players are present in Uganda as are present on British high streets.
However, when I attended the meetings I was genuinely impressed. Most people in these groups are excluded from mainstream finance either by poverty or lack of local infrastructure, and this sort of financial cooperation is opening up opportunities that simply would not normally be available to them. Saving and managing access to funds is very difficult to do as an individual or small family, but the idea of pooling resources is pleasingly collectivist. One of the groups I visited was composed entirely of women – largely by accident, rather than design – and it was fascinating to hear some of the stories of how an independent income had transformed their lives. Furthermore, the meetings were some of the most calm, friendly, efficient and orderly that I have attended. (In the UK, I have participated in many political and community meetings that had none of those characteristics.) They are well-attended, too, with very few people dropping out before the end of a fixed cycle.
The thing that struck me as I watched the members calculate balances and fill out their passbooks was that these aren’t the people who are supposed to make money out of this global economic system. They look like they are taking on the world at its own game and, if not winning, certainly giving it a run for its money. I want to learn more about these groups before I pass final judgement, and part of my role is to conduct an evaluation exercise, but my experience so far has really got me wondering: can capitalism be subversive?