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Unlocking opportunities amid economic crisis: Strengthening the role of Village Savings and Loan Associations (VSLA) in Yemen

A woman carrying a white box on her head

Fatima carries the box that changed her life for the better. Photo: Bassam Saleh/CARE

Fatima carries the box that changed her life for the better. Photo: Bassam Saleh/CARE

CARE’s initiative of Village Savings and Loan Associations (VSLA) is one of the most dignified means of assistance. Savings groups are self-managed groups of 15-25 members from within a community who meet regularly to save their money in a safe space, access small loans to cover expenses such as school fees or invest in small income-generating activities and obtain emergency funds to face shocks and crises. In Yemen, CARE has been implementing the Village Savings and Loan Associations in Emergencies (VSLAiE) model, combining standard VSLAs and cash assistance to ensure that families have sustainable access to money to meet their needs, save, invest, and rebuild their resilience and become self-reliant. VSLA sparks systemic changes in humanitarian response that will have a longer-term impact for millions of families for years to come.

In Lahj Governorate, CARE has established 22 village savings and loan associations under several projects, integrating cash assistance earned from cash transfers and cash-for-work activities with the VSLA model to promote families’ access to resources and the ability to respond to crises. These groups comprise 10 to 25 individuals from the same community collaborating to pool their savings. By doing so, each member is able to borrow small amounts of money or engage in joint economic projects.

To strengthen the capacity of existing VSLA groups in Lahj Governorate, and in partnership with CARE USA, the CARE Yemen team provides them with extended technical trainings and continuous monitoring. This also includes conducting research and collecting evidence on the effectiveness of VSLAs in supporting Yemen’s war-torn micro-economy. In the period from September 2022 until August 2023, members of the 22 VSLA groups in the Maqaterah, Madaribah, and Tuban districts of Lahj Governorate received intensive training in life skills.

In this article, we shed light on the role of VSLAs in supporting Yemeni families to unlock opportunities amid economic crises.

Empowering Women's Micro-businesses

Fatima displays her ice cream products, standing next to her solar-powered refrigerator. Photo: Bassam Saleh/CARE.

With the proper training and financial management mechanism, a box, three locks, and basic stationery could improve Fatima’s life.

Fatima is a 38-year-old mother of four children from Al Massad, Al-Maqatrah District, Lahj. Before joining the VSLA group in her area, Fatima faced difficulties supporting her family as a stay-at-home mother. Despite her strong desire to open a small ice cream business, she lacked the funds to purchase the necessary materials for her business.

“I had a small amount of cash, but it wasn’t enough to fund the ice cream business,” says Fatima. “I needed to buy some tools, such as a refrigerator and raw materials. The saving group allowed me to save the small amount of money I had and I was able to benefit from the pool fund to take a loan and start my business. I also benefited from the training of setting up and managing a business.”

After acquiring the needed skills and money through the VSLA group, Fatima opened a store selling ice cream, groceries, and other essentials. As her business thrives, she can now support her family, repay the loan, and continue saving.

“Thanks to the VSLA, my life has improved in numerous ways. I can now provide for my family while contributing to the growth of other women in my community through savings. I’m genuinely grateful for the support of the VSLA,” she says.

Restoring Hope for Smallholder Farmers

Members of the farmers’ VSLA group members stand in their farm in Tuban District, Lahj. Photo: Bassam Saleh/CARE.

In 2022, CARE supported a group of 18 small-scale farmers in Tuban District of Lahj Governorate to form a VSLA group and save the money they earned from CARE’s Cash-for-Work projects in their area.

“After six months of saving, we agreed to use our savings to rent farmland and cultivate it,” says Ali, a 48-year-old father of six children. “We planted different crops, including okra, corn, and tomatoes. It was a great season, and we sold our crops in the market. Part of the revenue was used to pay off the loan, and we invested the rest of the money in renting more farmland to increase our production.”

The success of the farmers’ VSLA group has significantly enhanced its members’ quality of life. They can now support their families and save money for the future. It also inspired other farmers in the region to cultivate their abandoned lands.

A farmer from the farmers’ VSLA group harvesting okra crops. Photo: Bassam Saleh/CARE.

“Before the life skills training, we were aiming to save money to spend on buying food and new clothes for our families,” says Ali. “The training sensitized us to the importance of investing our savings to generate sustainable income for our families. It also alerted us that we can do this jointly for a greater impact,” he concludes.

Farmers transport their crops to be sold in a local market. Photo: Bassam Saleh/CARE.

Displaced Families Access Finance to Rebuild Their Lives

Afaf and her family were displaced to Al-Maqatra district in Lahj Governorate years ago, yet they could never find suitable jobs to provide for their young ones’ education and healthcare.

Luckily for Afaf and her brother, they participated in CARE’s VSLA and life skills training and joined one of the saving groups in their area.

Afaf and her brother inside their boutique. Photo: Bassam Saleh/CARE.

“With the help of the VSLA group, my brother and I were able to obtain loans and launch our wedding planning and dress rental business,” says Afaf.

“I work in the boutique with my brother and have trained my sister to do brides’ hair so we can provide full service for our clients all in one place. Our hard work is starting to pay off, and as a result, we’ve been able to cover the school fees for two high school students in my family. It’s such a relief for our family.”

Afaf helps her female clients pick a wedding dress for rental. Photo: Bassam Saleh/CARE.

Afaf’s business is one of its kind in the area. Another CARE-supported project rehabilitated the unpaved road to Afaf’s village, linking it to neighboring regions and increasing the number of customers that can reach her business.

“Thanks to CARE’s project that paved the road, we have seen a rise in our clientele and demand for our services. We are now planning to establish the first wedding hall in the area,” concludes Afaf.

Afaf's brother works in the boutique. Photo: Bassam Saleh/CARE.
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