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Ghana - 07 June, 2022
Tropenbos Ghana helped to develop 12 Village Savings and Loan Associations in the Juabeso-Bia and Sefwi-Wiawso landscapes. This has provided cocoa smallholders with access to finance to invest in climate-smart practices, such as diversifying their crops and improving irrigation.
Climate change is threatening the livelihoods of smallholders in the Juabeso-Bia and Sefwi-Wiawso landscapes in the Western North Region of Ghana. Most of these farmers depend on only one crop — cocoa — which makes them particularly vulnerable to changing and ever more extreme weather conditions. To increase their resilience in the face of climate change, farmers must invest in climate-smart practices; for example, by diversifying their income sources. However, such investments typically require more cash than they have on hand.
One promising way to overcome this hurdle is for groups of farmers to start saving together, enabling group members to take out loans with low interest rates. In the early 1990s, CARE started developing such savings groups in Niger, calling them Village Savings and Loan Associations (VSLAs). Since then, a range of NGOs have been successfully implementing VSLAs in many parts of the world.
The VSLA concept is powerful in its simplicity. A key feature is that people develop their own savings groups, usually consisting of between 15 and 25 members, who come together regularly. They jointly decide on the periodic cash contributions that everyone will make, and on loan conditions and interest rates. The cash contributions are kept in a box with three locks. The keys are distributed among different group members, which means they all need to be present to unlock the box. After one year, the accumulated savings and loan profits are distributed back to the members. When a VSLA is up and running, it is entirely self-sufficient, and does not require external support. It is an easy and safe way for farmers to have access to cash to make small investments.
Inspired by the success of VSLAs in other parts of Ghana, Tropenbos Ghana decided to start similar savings groups in the the Juabeso-Bia and Sefwi-Wiawso landscapes, with the specific aim to help farmers invest in climate-smart practices. In 2021, they established 12 VSLAs in 10 communities; these involved close to 300 people, most of whom are women. The groups started saving immediately, enabling their members to take out loans in the second half of the year. The loans were typically used to diversify income sources by investing in vegetable farming and expanding small scale businesses. In one village — Suhenso — VSLA members decided to use their savings to purchase irrigation equipment as a group.
The results of these VSLAs have not gone unnoticed by other community members, as they have started requesting Tropenbos Ghana to help them establish additional savings groups. In response, Tropenbos Ghana has started training community agents to help set up VSLAs throughout the landscape in the coming years. This will greatly increase smallholders’ access to finance, which is key to developing vibrant and climate-smart landscapes.