Over a hundred women are gathered at a familiar meeting ground in Tindonsobligo, a suburb of the Bolgatanga Municipality in Ghana’s Upper East Region. Seated at a table is Janet Abinimah, a pivotal figure in the group. In front of her is a box secured with a padlock. Each Saturday morning, Janet oversees the group’s activities: collecting money from members, recording transactions, and addressing requests for loans.
These women belong to the Widows and Orphans Movement’s (WOM) Village Savings and Loans Association (VSLA). The Tindonsobligo group has been operational for nearly eight years and currently boasts a membership of 120 women.
The VSLA Concept
The VSLA model is simple yet transformative. Members meet weekly to contribute a predetermined amount set at the beginning of the year. This fixed contribution cannot be adjusted until the year ends.
The VSLA concept is built on the idea of financial inclusion—connecting unbanked women to basic financial services.
For many of these women, the VSLA is a lifeline—an accessible way to secure loans without the burden of collateral. The loans empower them to expand their businesses, address emergencies, and improve their livelihoods.
Take Janet, for instance. Her business has flourished thanks to the low-interest loans provided by the VSLA. She shared her experience:
“It has benefited me a lot. I take my loans from here. Previously, I used to go to the banks, but they required guarantors and collateral. The interest rates were also high. Although we pay interest here, it’s far better than the banks, and the payment terms are flexible. If my loan repayment is due and I haven’t completed payment, I can pay the interest while the principal is carried forward.”
An Imperfect System
Despite its numerous benefits, the VSLA model is not without flaws. One major challenge is its cash-based nature. While it simplifies operations, it also exposes the group to risks such as theft or loss. Janet admitted that keeping the money at home can be stressful: “We usually keep the money at home. Since loans are disbursed at every meeting, there’s often not much left to store. Especially during this season, when members need money to buy goods for sale, the funds don’t stay long. However, in the first four weeks of savings, when we don’t give out loans, we deposit the accumulated amount into our bank account.”
This hybrid approach—keeping smaller amounts at home and depositing larger sums in the bank—helps manage the risks but doesn’t completely eliminate Janet’s concerns: “We do worry sometimes. Keeping people’s money at home is a big responsibility. But if we were to deposit it in the bank every week, it would be impractical due to the small amounts left after loan disbursements.”
Mobile Money: An Answer?
According to the statistics portal Statista, as of January 2024, 59.7 percent of the population aged 15 years and older had a mobile money account in Ghana. Anyone with a national ID card can now own a mobile money wallet, which enables users to transfer money and benefit from savings options.
Mobile money has significantly enhanced financial inclusion in Ghana, particularly in rural areas where traditional banking services are scarce. Through mobile platforms, individuals can save, send, and receive money conveniently, reducing reliance on cash-based systems. Small-scale farmers, informal workers, and marginalized groups, including women, now participate in the financial ecosystem.
This has boosted economic activity, allowing users to manage their finances and trade without requiring a formal bank account. Additionally, the ease of accessing funds and transferring money has improved resilience during emergencies, such as the COVID-19 pandemic, when contactless transactions became essential.
Beyond individual benefits, mobile money has catalyzed economic growth by supporting small and medium-sized enterprises (SMEs). Businesses now conduct transactions seamlessly, reducing delays and improving payment efficiency. Governments and institutions leverage mobile money to digitize payments, making processes like tax collection, school fee payments, and subsidies more transparent and efficient. This innovation has also created jobs for agents and service providers, contributing to Ghana’s digital economy.
Mobile money is regulated by the Bank of Ghana. According to the CEO of the Ghana Chamber of Telecommunications, Ing. Dr. Kenneth Ashigbey, Ghana has crossed the trillion-value mark for mobile money transactions.
Adopting mobile money would eliminate the need for groups to meet physically, streamlining the entire process. The group leader could receive contributions via mobile money, ensuring a secure and transparent record of all transactions, complete with the names of contributors. Loan requests could also be submitted digitally, with receipts automatically generated for each loan disbursed, further enhancing accountability and convenience.
For Albert Naa, a tech expert and CEO of Norgence IT Academy, the adoption of mobile money in the VSLA model goes beyond convenience and ease of payments. It also benefits the Bank of Ghana.
“If all VSLAs go digital, it would mean the money becomes part of the formal circulation, which can be tracked by the central bank to help formulate policies,” Naa explained.
Fati Abigail Abdulai, Executive Director of the Widows and Orphans Movement, believes mobile money could address Janet’s fears of loss or theft of money. However, she also noted barriers to adoption.
E-Levy and Other Barriers
The President of Ghana, Nana Akufo-Addo, signed the Electronic Transfer Levy (E-Levy) Bill into law on March 31, 2022. The levy imposes a 1% charge on electronic transfers, which is deducted at the time of the transaction.
“The difficulty with mobile money is that the E-Levy charges eat into their profit margins,” Ms. Abdulai explained.
Another significant challenge is high illiteracy rates among VSLA members. “Because of illiteracy, they often get cheated when using mobile money,” she added.
Ms. Abdulai also highlighted the impact of Ghana’s banking sector crises, which has left many women wary of traditional banking services. “The banking sector’s instability has created a sense of fear and distrust among some women,” she said. This mistrust further complicates the adoption of digital financial tools, as many women are hesitant to rely on systems they associate with previous financial setbacks.
Conclusion
The Village Savings and Loans Association (VSLA) system has proven to be a transformative force, empowering women to improve their financial standing, expand their businesses, and provide for their families.
Its ability to foster financial inclusion, especially for women in rural communities, is a testament to its success. However, as effective as the system is, digitalization offers an opportunity to address its current challenges while enhancing its many positive features.
By digitizing the VSLA system, risks such as theft and loss of funds can be mitigated, and the process of saving and accessing loans can become even more convenient and efficient. Digital integration would also enable better tracking of funds, improve transparency, and align with broader efforts to formalize Ghana’s financial ecosystem.
The Widows and Orphans Movement (WOM), in partnership with the KGL Foundation, is already leading the way with their “Advancing Financial Inclusion and Women’s Entrepreneurship” program.
Through this initiative, WOM is equipping women with vital skills in financial literacy, basic numeracy, and the use of USSD services for mobile money transactions. This collaboration is a shining example of how targeted interventions can empower women to leverage digital tools for financial independence.
It is imperative that other organizations take inspiration from such initiatives and consider similar partnerships to make VSLAs fully digitized. By doing so, they would not only enhance the operational efficiency of these savings groups but also contribute to the broader goal of financial inclusion, economic empowerment, and sustainable development.
Furthermore, the digital shift could play a crucial role in boosting confidence in the banking sector, which has been undermined by past crises. By creating more secure and accessible financial solutions, VSLAs could encourage women to trust and engage with formal banking systems, promoting greater financial stability across communities.
The journey to a fully digitized VSLA system is not just a possibility—it is a necessity for building a resilient, inclusive, and financially confident future.
“This report is produced under the DPI Africa Journalism Fellowship Programme of the Media Foundation for West Africa and Co-Develop.”
Source: A1 Radio Online | 101.1 MHz | Mark Kwasi Ahumah Smith| Bolgatanga
