In Tanzania, MicroLead Expansion (MLE) is funding CARE and the Mwanga Community Bank (MCB) which are working in the Kilimanjaro region to develop and offer formal financial products and services designed for savings groups called village savings and loan associations (VSLAs).

The MLE intervention aims to link VSLAs with MCB through the development of branchless banking services tailored to the VSLAs. The Kanani Group, the VSLA group in the village of Lembeni, was founded by 23 women two years ago. Their creation was facilitated by CARE which provided the VSLA with financial education training, guidance in creating their own by-laws and regulations and most importantly, support in establishing themselves as a savings and loans group.

The women, young and old, with different educational and working backgrounds, come together on a weekly basis to “buy shares” of savings that will have two purposes:

1) allow them to accumulate and store savings over a one-year period and

2) pool their savings so they can be on-lent to fellow group members who have little or no access to credit from formal financial intermediaries.

In addition to the savings fund, the Kanani Group decided to establish a social fund as well as a community fund – three funds in total. The VSLA members contribute about 10 cents each every week to the social fund which can be used upon a common vote to help members with unexpected expenses such as funerals, medical bills or other unforeseen life emergencies. The community fund was established to provide support special causes outside the group, for example helping impoverished village families in dire circumstances.

Each weekly meeting begins with a song, a greeting, attendance check and the counting of the money held in the metal lock-box. Formalities are respected and fines are imposed for missed attendance, interruptions of the meeting (e.g. mobile phone ringing), and speaking out of line.

Over the course of a 45 week-period in the third savings cycle, the Kanani Group was able to accumulate a total of 5 million Tanzanian shillings ($3,125) of which 3.6 million has been loaned to its VSLA members. What is unusual about the Kanani Group is that it not only has a lock-box to hold their money, but also holds a group bank account with a formal financial institution, the Mwanga Community Bank.

An uncommon arrangement, MCB, has been working with CARE to do exactly that: link VSLAs with local banks by offering savings services that reflect the needs of the group. Still at an early stage of the pilot, MCB has nevertheless managed to open 197 group savings accounts with the support of CARE, which has been providing financial education to the VSLAs and preparing them for a banking relationship.

Another ground-breaking innovation from CARE is the VSLA’s ability to deposit their share funds into their bank account through a branchless banking agent.

The Kanani group does just that; once a substantial amount is accumulated, it meets with a local Vodacom agent and uses M-Pesa to deposit its share funds to its secure bank account held with MCB. This mobile banking solution is being fine-tuned even further in collaboration with Vodacom and CARE so as to allow VSLAs to transact as a group rather than as an individual representing the group (greater security, flexibility and less fraud).

The Kanani group is proud of its achievements. In a few weeks, the women will participate in the share-out, when the pooled savings are given back to the members. The women will use their savings mainly for their children’s school fees, but there are also women who will invest in their businesses, and buy materials or build additions to their homes.

Will the women come together again after the share-out and begin another cycle? The answer they give is a definite yes! One member says, “the VSLA has made a difference in our lives. It has taken us out of our grass roots and given us strength to prepare for our future.”