VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS

1. VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS By: Fred Owera

2. VSLA AFINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS

3. FACTS FOR VSLA METHODOLOGY • The basic principle of the VSLA methodology is that members are self-selected, • Group members save money, which is the source of loan capital from which they can borrow. • The group uses internally generated funds, thus there is no external funding.

4. Facts cont`d • VSLA is made up of 15 -30 members, membership is open both to women and to men. • If associations is big with more than 30 members, they are encouraged to divide into smaller sub-associations • VSLA is autonomous and self-managing, this is fundamental to their mode of operation and objectives. • VSL Association’s goal is institutional and financial independence.

5. Facts Cont`d VSLA is comprised of a General Assembly and a Management Committee. The General Assembly is the supreme body from which the Management Committee is elected Each member has only one vote.

6. Facts Cont`d • VSLAs have 5 elected Committees members, a Chairperson, Secretary, Treasurer and two Money Counters. • They are subject to annual re-election at the start of a new cycle and may be removed at extraordinary meetings. • At least two of the Committee members should be female in the case of mixed Associations.

7. Facts Cont`d • VSLAs in Uganda meet on a weekly basis, but can determine longer durations after their first saving out (action audit) • All transactions are carried out at meetings in front of the Association • This ensures transparency and accountability.

8. Facts Cont`d Members are able to witness who has saved and who has not, who has borrowed and who has not. The Association uses a lockable cash box to prevent unauthorized cash movements limits the risks of tampering with records This improves on financial controls

9. Facts Cont`d The cycle of savings and lending is usually between 8 to 12 months. At the end of this period the accumulated savings, interest earnings and other earnings, are shared Each member`s share is proportionate to the amount saved throughout the cycle

10. Facts Cont`d • VSLAs agree on a set of rules, or a Constitution, to guide their activities. • VSLAs give out loans for productive purposes to members only. The size of a loan available to a member is linked to the total value of his/her savings ( 3 times of the member total savings) . • Interest is charged on loans falls due every four weeks/month.

11. 2 2 1 GROUP For Agribusiness Booster/start up loans Short-term working capital/credit Action audit Share money between members 3 5 Cumulated working K 4 Purchase Inputs (seeds) Repay loans interest

12. VSLA and agri-business funding Low transaction cost compared to high way financial service providers Easy access to finance. It is immediately available in the neighborhood at any meeting date every week. Low interest rate; it is also shared among members at the end of the cycle. Internally generated funds by members of the group. There is no need for collateral. Provides a platform to engage other service providers(Buyers,).

13. VSLA PERFORMANCE AS OF JULY 31, 2013 Membership- 655,502(70% Female) Cumulated savings- 43.7Billion Average Savings per members UGX 62,747 Average Portfolio utilization 72% 235 group savings accounts with Barclays bank 75 group savings account with CERUDEB 972,294,400 deposits with Barclays Bank

14. End of presentation THANK YOU