FEATURE STORY

Saving Groups Narrow Poverty Gap Among Afghan Rural Poor

December 7, 2016

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This mill machinery was bought using money from a loan provided by the Village Saving and Loan Association (VSLA). Now all the villagers bring their wheat grains to this mill to be ground to flour.

Photo Credit: Rumi Consultancy / World Bank

Story Highlights
  • Villagers with no previous means of livelihood are being given an opportunity to earn a living through loans from local village associations, allowing them to invest in income generating activities.
  • The establishment of Village Saving and Loan Associations is a result of the Afghanistan Rural Enterprise Development Program, implemented by the Ministry of Rural Rehabilitation and Development.
  • The program aims to enhance economic mobilization and activities by organizing the rural poor into Saving Groups and Village Saving and Loan Associations. It is supported by the International Development Association (IDA), the World Bank Group’s fund for the poorest countries, and the Afghanistan Reconstruction Trust Fund (ARTF).

ENJIL DISTRICT, Herat Province – Ghulam Nabi, 48, holds the handle of a metal bucket with his calloused hands and fills it with wheat grains. He pours the grains into the mill’s feed chute, and the coarse grains are ground to fine flour. The noise of the power generator breaks the rural quiet of the village. Near the mill, children play in the water and rest under trees.

Ghulam Nabi founded the mill only a few months ago in his home village of Noqra in Enjil district in Herat Province. He bought mill machinery using money from a loan provided by the Village Saving and Loan Association (VSLA). “Before buying the flour mill machine, I was unemployed and had a hard time,” he says. “Thank God, I took a loan from the VSLA and started the mill. Now I run the mill and have employed two other workers as well.” All the villagers bring their wheat grains to his mill to be ground to flour.

A short distance from the mill, members of the Noqra VSLA have gathered in a house for a regular meeting. First, the Saving Groups (SGs), which make up the VSLA, collect the weekly savings of 20 afghanis (approximately $0.30) from each member. The weekly savings make them eligible to take out a loan in the future.

After the collection, members discuss problems, successes and potential projects for the community. “The association has led to people uniting and solving their problems quickly through sharing them on this platform,” says Abdul Ghafor, 58, chair of the Noqra VSLA.

The VSLA is a direct result of activities of the Afghanistan Rural Enterprise Development Program (AREDP).  Started in 2010, AREDP is a program of the Ministry of Rural Rehabilitation and Development (MRRD), which aims to increase employment and income of rural men and women and enhance economic mobilization and activities by organizing the rural poor into Savings Groups, Village Savings and Loan Associations, and Enterprise Groups (EGs).

The program provides technical support to these groups so as to build a financial discipline through savings and internal lending practices. AREDP receives funding support from the International Development Association (IDA), the World Bank Group’s fund for the poorest countries, and the Afghanistan Reconstruction Trust Fund (ARTF).


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Members of the Noqra VSLA have gathered in a house for a regular meeting. First, the Saving Groups (SGs), which make up the Village Saving and Loan Association (VSLA), collect the weekly savings of 20 afghanis (approximately $0.30) from each member. The weekly savings make them eligible to take out a loan in the future.

Photo Credit: Rumi Consultancy / World Bank

" AREDP has promoted and institutionalized a culture of financial savings among people in the villages it operates in.  "

Sayed Ismail

Shop owner, Noqra village

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The program works with rural communities and encourages them to establish Savings groups (SGs) and Enterprise groups (EGs). Mature SGs are then federated into groups of eight to ten to form a Village Saving and Loan Association. It also provides technical support to small and medium enterprises in rural areas.

Photo credit: Rumi Consultancy / World Bank

Capitalize on own resources

AREDP has been operating in Enjil, Gozara, Karokh, and Rabat Sangi districts in Herat Province since 2010. The program works with rural communities and encourages them to establish SGs and EGs. Mature SGs are then federated into groups of eight to ten to form a Village Saving and Loan Association. It also provides technical support to small and medium enterprises in rural areas. AREDP covers 122 villages, which have established 1,128 active SGs.

AREDP encourages people to capitalize on their own resources, which has helped them create livelihood and employment opportunities for which they would not have otherwise. “Since I have a disability, it was hard for me to find a job and maintain a livelihood,” says villager Sayed Ismail, 32. “Fortunately, I could get a loan from the VSLA and open a small oil and benzine shop.” AREDP has promoted and institutionalized a culture of financial savings among people in the villages it operates in.”

Another villager who has benefited from a VSLA loan is Ghulam Rasool, 45, who opened a grocery store near his home. “All the villagers are my customers and buy their groceries from my store,” he says. “Previously, they needed to travel to another village to buy groceries, an hour trip by car, or four hours by donkey.”

“Our goal is to create employment opportunities and increase villagers’ income,” says Massoud Noorzad, an information systems manager for AREDP. “When we started our work in Herat, we knocked on the doors of every villager and discussed the benefits of our activities.” Today, through SGs and VSLAs, community members have successfully mobilized 47 million afghanis (about $680,000) from their own savings, he says.






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