Namikango Mission

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VS&L

Sep 26, 2019

Most people in Malawi have no access to formal banking. They are just too poor to qualify for a bank loan! To solve this problem and offer help where it is needed most, Namikango’s Staff has helped to organize a Savings & Loan system for villagers; this is a Village Savings & Loan (VSL) and
• The people of the village own it.
• They manage it.
• They fund it.
• They receive all the proceeds from it.

We advise and help them organize it. A VSL group is comprised of 15 to 25 individuals, usually begun by church members in a community. . . These members come together to form a group to have a safe place to save money and to have access to funds for loans for themselves and for their neighbors.

When we began introducing VSL in the villages, there was resistance from some church leaders who thought this ministry was outside the work of preaching the Gospel of salvation, which is their primary concern. But after a full explanation, it has been well received.

Group Constitution: The first thing members do is create their own “constitution” which sets all the rules for the group and serves as its guide. A Namikango trainer helps new groups through this process but then allows the group to turn to its constitution to solve any problems. This effectively trains the group to stand on its own. It is important to note that Namikango never provides any money at all for these groups. All of the funds that accrue within a group comes from the members within that group only. This "ownership" of the S & L is what makes it so amazingly successful.

Savings: Once the group is formed, members meet weekly to save and give loans to one another as delegated by their group constitution. They do this through the purchase of shares. The price of a share is decided by the group. At each meeting, every member must purchase between 1 and 5 shares. The shareprice is fixed for the entire cycle.

Community Fund: Each group may also have a “community fund” which provides members a basic form of insurance. This fund serves as a community safety net - setting aside a certain amount for emergency assistance, and for funeral expenses – for the entire village. This includes benefits for group members and non-members alike.

The group members identify a person or problem in the community where funds are needed and they decide how the funds are to be used. This is usually a big blessing which would benefit a widow or family in need of food and basic necessities. One time, a church VSL group purchased basic food items for a needy Muslim family. This was widely noted as the only time a Christian group did anything for a Muslim family in the community. What a great witness it was! Preachers in their areas continue follow up.

Loans: Savings are maintained in a loan fund from which members can borrow in small amounts – up to three times their individual savings. Loans are for a maximum period of three months in the first year; loans may be repaid in flexible installments with a monthly service charge determined by the group. Loans are usually used to purchase seed and fertilizer. It is important to note again that there have been no monies spent by Namikango for these VSL projects. We provide guidance but no funding.

Share-out: The activities of the group run in cycles of one year. At the end of the year there is a pay back where the accumulated savings and the loan profits are distributed back to the members. This return of the shares plus interest is called “share-out”. The interest returned back on savings is usually around 30-50%. This comes from fees collected on short term loans during the year. Share-out is always a time for celebration when the group members realize (often for the first time) that they have successfully saved their money during the year, that their savings has helped their neighbors, and that the increase has been returned to them! Share-out Day is indeed a day of celebration!

As you can see, the system is very simple; but the result is powerful. Here are a few key important results of this ministry showing the Importance of VSL groups:
1. This is a Safe Place to save and invest money: Not only are people here not able to get a loan, they also do not have a safe place to store their savings when they do have a little cash. This is partly due to thieves but mostly due to the culture. If there are any monies in the household, it must be available to anyone in the family, at any time, who needs it. Thus, if a father/uncle/cousin needs money for medicine, hospital bills, seeds, transport etc. their family cannot refuse them. Thus, their hard-earned money is soon gone. VSL groups provides a safe and reliable way to save and invest money outside of the home. It no longer is kept in a can or under the mattress but is now invested; even small amounts saved will soon add up.


2. Ownership and growing the money: A large portion of the success of groups is attributed to the fact that it is the members’ own monies being used from which others can benefit, plus the money is there for their own use when needed. This accumulation of funds helps people learn that they don’t have to wait for a wealthy person or a mission to provide money for their needs. They soon realize they have the skills and ability to work together and to take care of their own needs as well as provide help for their communities.
3. Community Fund (doing something for others): As noted above, the Community Fund provides a primary source for the group to bless the community in some way. We see this as a crucial component of being good stewards of one’s finances and time and rejoice at being able to help others.
4. Evangelizing group members and the community: Every group meeting is comprised of prayers, songs, and a Gospel reading which allows each member to hear the Gospel and discuss Scripture each week. This is a crucial aspect of the group that ensures the Gospel is heard and responded to each week. This is evangelism in its purest form.

Namikango now has 148 church based VSL groups, with around $90,000 in assets among those groups. We are blessed when we see how these group members have managed to build churches, build homes, replace damaged roofs, start a new business, and take care of each other’s needs. We are all learning together that "It is a blessing to be a blessing."

by Ryan Hayes