Uniting to Save Money in Uganda: Lessons in Financial Literacy

In the United States, over 95% of adults have access to a checking or savings account. Access to financial services such as banks and lending services makes it easy for people to borrow money, earn rewards, and build credit. In places like Uganda, it’s not as easy for people to access formal financial services. Most communities are rural and hard-to-reach.

An estimated 89% of the Ugandan population was vulnerable to poverty in 2021, and most faced severe food insecurity. The country hosts 1.5 million refugees who have fled neighboring countries because of climate shocks, conflict, and disease, desperate for a safer and more peaceful place to live. As they begin to rebuild their livelihoods—taking on industries such as agriculture or livestock maintenance—refugees don’t have formal ways to manage or save their money.

To tackle this very issue, Action Against Hunger and partners are training Ugandans and refugees in financial literacy. Through Village Savings and Loan Associations (VSLAs), people can pool their resources, distribute loans, teach financial techniques, and empower community members of any gender on the best ways to increase their savings.

“I have [saved] some of the money I earn with our group, which we’ve called Amaecora,” says Agatha Drajiru, a VSLA member in Terego District. In the Lugbara language, this means ‘we can.’ “This has allowed me to pay school fees on time. Before I received support, I would save 150,000 UGX, [$40]. But now I can save over 500,000 UGX [$133] each year.”

Financial inclusion is key to improving economic resilience. Many community members were unable to save money because they were considered “high risk” by financial institutions. That’s why Action Against Hunger’s team intervened.

“The first topic was teaching us how to save,” said Cosmas Taban, a VSLA Agent and refugee from Terego District. “Then, how to budget and financial literacy. When one faces financial challenges, they are supported by the group savings. It brings unity in the community.”

VSLA Agents are volunteers who inspire interest in the program and encourage others to create their own VSLAs, which can be groups of up to thirty people. The agents work to mentor the trainees and prompt continuous growth.

In less than four years, around 374 VSLA groups have been established and trained, reaching more than 7,863 community members. Each VSLA is unique, and each is based on community trust. They function as a support network: about 30 members meet to set financial goals, whether it’s to buy a bed, build a house, get a milling machine, or send their kids to school. During the first meeting, the group receives a money box—essentially a piggy bank—to store the collective savings. The group elects a committee to govern the fund, and a few designated people hold the key to the box. The group also outlines a “constitution,” a written agreement that stipulates how often they meet, their saving goal, the initiation process for new members, and other details they agree on.

The minimum savings goal is typically a manageable amount—maybe around 50 cents per person per week. But one small step forward can lead to a whole new life for these community members, most of whom have never used a bank.

The loan system can also transform lives. When a farmer needs to hire laborers or acquire money to buy a bigger piece of land, they can borrow money from the VSLA to kick off their business. Their constitution guides the loan process and sets the rate at which they need to pay it off. The maximum amount each person can borrow is typically determined by the savings they already have. Over time, the loans generate interest, and so the VSLA will end up making a profit when the money is paid back. Charles Wabwire, the Consortium Coordinator, knows that access to finances and financial inclusion is essential to ensuring a strong community economy and staving off poverty.

“If [community members] are to sustain their enterprises…they need to have access to finances to hire labor, to expand, to access land, and to invest,” he says.

The VSLAs have created a ripple effect. Isaac Amane, a refugee in a VSLA program in Yumbe District, has spread VSLA trainings to other community members. Action Against Hunger’s team gave him a bike to help him move between groups as well as extra materials to teach eager community members.

“With the training I got, I am now able to train others,” he says. “I was elected a village agent within our village savings group, and I train the group on savings.”

The government has also started to implement these changes, and Innocent Asaba, Chief Administrative Office in Yumbe District, is happy to receive the support.

“Quite a number of groups have been trained in this, and it has helped them be more financially independent, especially women, who are actively involved, and some youth,” he says.

One VSLA group, the Okubani Mixed Market Vendors Association in Yumbe, was started in October 2020. Its 30 members have all gained knowledge and skill in saving, spending, budgeting, and loan management. “Before I joined the group, I used to spend money extravagantly, but now I have a purpose,” says one member named Sara. “For this round, I want to save [$233] and use it to pay school fees for my children.”

At the time of their first share out, in December 2021, the group’s total savings stood at roughly $1,600. Their hard work motivated them to increase their collective goals, and by July 2022, they had nearly doubled their group savings.

After years of poverty and without access to formal financial services, VSLA group members can now generate savings and loans, and use these loans to assist other group members. To increase their savings even further, the highest performing VSLA members were connected with formal financial institutions or Savings and Credit Cooperative Organizations. This gave them the opportunity to access bigger credit lenders and larger investment opportunities.

With more access to bigger loans, each person can grow more financially. With the security of bigger savings, some members have opened bank accounts at a commercial bank in Uganda.

“VSLA is a very important aspect of the project, that we can say is driving us and the community towards achieving self-reliance and achieving resilience,” says Sam Isaac Ejoy, one of the project managers. “The community will tell you that they are now making better financial decisions.”

“This is what has changed my life,” says Susan Adrania, Chairperson for the Unjamaku VSLA in the Adjumani District.  “Action Against Hunger trained us on saving, ways of planting seeds, and when these seeds are ready, how to sell them. We have made money bit by bit which enabled us to start a shop.”

As chairperson, she leads her VSLA and in particular the executive committee that provides leadership to all VSLA members. She ensures that all members are following the VSLA constitution and are working in accordance with their own guidelines.

The community members have the tools—and now the savings—to continue to thrive for years to come.

“The VSLA approach builds cohesion,” says Charles Wabwire, EUTF RISE Consortium Coordinator. “We are confident that those groups will continue after we leave.”

About the Project

The European Union Emergency Trust Fund (EUTF) Response to Increased Demand in Government Service and Creation of Economic Opportunities in Uganda (RISE) Project, organized by a consortium of nonprofit organizations and spearheaded by Action Against Hunger, launched the Village Savings and Loan Associations (VSLA) program throughout several villages in Uganda. Action Against Hunger’s partners include the Norwegian Refugee Council (NRC), Welthunger Hilfe (WHH), PALM Corps, and local communities in the Arua, Adjumani, and Yumbe districts of West Nile, Northern Uganda. Since 2019, EUTF RISE has improved the lives of nearly 150,000 refugees and members of their host communities.