Participation, Income Effect and Challenges of Village Savings and Loans Program in Garu and Tempane Districts of the Upper East Region, Ghana

Abstract

Village Savings and Loans Associations (VSLAs), have the aim of reducing poverty and creating assets to rural dwellers who have limited access to formal finance due to high collateral requirements. However, since the implementation of VSLAs in the Garu and Tempane districts for over a decade, there is inadequate evidence as to the impact of VSLAs on the lives of the participants. Not only that, there is the need to find out the current and anticipated challenges faced by the participants in the program. This study analyzed the effect of VSLAs on the income of households in Garu and Tempane districts. Data was collected from 100 respondents, 50 direct beneficiaries and 50 non beneficiaries from 3 and 2 communities in Garu and Tempane districts respectively. A Heckman treatment effect model was used to analyze the determinants of participation and the effect of participation on income. The results showed that participants of the VSLA program had an annual income of about GH₵ 2016.60 more than the non-participants. Decision to join VSLAs is mainly influenced by age, the years a respondent spends in the community, the number of active labor force in a household and whether a respondent is a native or migrant. However, based on the challenges identified, it is recommended that the government and other institutions interested in rural development should institute appropriate policies that will help enhance participation in the program. Also, the associations should enforce tougher sanctions on members who absent themselves from meetings without prior notice.

Impact of village saving groups on adoption intensity of sustainable agricultural practices among smallholder farmers in Northern region, Ghana

“…Consequently, many previous studies (Aaron et al, 2019;Karlan et al, 2017;Lambongang et al, 2020;Mbiro and Ndlovu, 2021;Mwansikilwa et al, 2017;Sienso et al, 2021) have addressed the impact of village saving groups on food and nutrition security and some other welfare indicators. Bannor et al (2020) examined the influence of VSLA on off-farm income and poverty in Ghana and found that VSLA had a significant effect on off-farm income.…”

“…Consequently, many previous studies (Aaron et al ., 2019; Karlan et al ., 2017; Lambongang et al ., 2020; Mbiro and Ndlovu, 2021; Mwansikilwa et al ., 2017; Sienso et al ., 2021) have addressed the impact of village saving groups on food and nutrition security and some other welfare indicators. Bannor et al .…”