‘State must recognise village banking’

AN international development cooperation organisation, We Effect, has called on Government to recognise the Village Savings and Loans Association (VSLA) while introducing a regulatory framework to protect people’s savings.

The call comes after Zambia has witnessed an increase in the establishment of VSLA which are positively impacting on people’s livelihoods with financial assistance.

However, lack of regulations has amplified the risks involved in this set-up.

We Effect Country Manager, Albert Mutasa, expressed confidence that regulating this sector would help to track finances.

Mr Mutasa called on the Bank of Zambia (BoZ) to introduce special and suitable regulations for these groups.

He said this in an interview after launching We Effect’s recently published report: ‘Village Savings and Loans Groups: A cornerstone for women’s rights and community development’ last week.

“VSLAs are a dependable source of income it has been providing banking services to people in the village who cannot access the bank. The outcome is that this is pushing people to venture into businesses to help them have a continuous supply of money to invest in the group.

“But at the same time these people are at risk. The risk they have is that someone can steals their money and they have nowhere to run to because of lack of regulation,” Mr Mutesa said.

He said the organisation started the VSLAs project in 2022 and by the end of 2023, it had about 4, 000 members with the majority being women who were saving in excess of K3 million annually.

Mr Mutesa also said the idea of VSLAs was not new, they had and still working and were a dependable help with capital for most people that did not have access to formal banking especially women.