Recovery Lending to Savings Groups
Recovery Lending to Savings Groups
As part of the Recovery Lending for Resilience program, VisionFund is scaling up financial products that will provide loans into savings groups, to help provide greater liquidity in the savings box that enables members to re-start their businesses.
VisionFund Savings Group Linkage Loans
Learn how VisionFund is providing savings groups with loans that are enabling members to grow their businesses in new ways.
Saving Groups
Savings groups are informal community groups which are owned, managed and operated by the members.
Savings groups use a simple, transparent method where groups accumulate and convert small amounts of cash into savings. The group’s savings are then lent as credit to the group’s entrepreneurs to invest in their micro-businesses to earn additional income, or to help cover emergency needs. By lending additional capital to these established groups, VisionFund is helping Savings Group members access extra funds for broader financial needs, and the group guarantees the loan together, reducing the risk for all parties.
Linkage Loans
As farms and businesses struggle through the pandemic, members are drawing down their savings to pay for daily essentials.
This has the unintended effect of stopping a savings group from being able to offer its members loans from the pool of savings, meaning that businesses with needed expenses can also suffer.
The savings linkage product works with mature groups that need more capital to fund their enterprises than they’re able to save from within the group. VisionFund lends the whole group extra capital right into their savings pool, allowing them to withstand economic shocks and continue to draw down on the group for loans. It was successfully piloted in Uganda working with refugee populations and is now rolling out in other focus countries, as part of our Recovery Lending for Resilience Program.
Recovery Lending for Resilience
As VisionFund supports Savings Groups entering the recovery phase, we're working closely with World Vision to identify groups who need our support.
New agreements have been made between VisionFund branches and World Vision Area Programmes in Ghana and Malawi, as well as with other non-governmental organisations in Uganda, to set up special branches to specifically serve recovery lending to savings groups. World Vision and our Partners can more readily identify savings groups that have matured beyond their savings box, and whose members are ready to not only recover, but make their businesses thrive as economies reopen.
New and bigger recovery loans to savings groups mean that members can access larger loans from their group's savings - not only covering business expenses and working capital requirements, but ensuring children's school fees are paid, nutritious food is on the table, and health care needs are being met for the whole family.