VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS
description
Transcript of VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS
![Page 1: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/1.jpg)
VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS
By: Fred Owera
![Page 2: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/2.jpg)
VSLA AFINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS
![Page 3: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/3.jpg)
FACTS FOR VSLA METHODOLOGY• The basic principle of the VSLA
methodology is that members are self-selected,
• Group members save money, which is the source of loan capital from which they can borrow.
• The group uses internally generated funds, thus there is no external funding.
![Page 4: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/4.jpg)
Facts cont`d• VSLA is made up of 15 -30 members,
membership is open both to women and to men.
• If associations is big with more than 30 members, they are encouraged to divide into smaller sub-associations
• VSLA is autonomous and self-managing, this is fundamental to their mode of operation and objectives.
• VSL Association’s goal is institutional and financial independence.
![Page 5: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/5.jpg)
Facts Cont`d• VSLA is comprised of a General
Assembly and a Management Committee.
• The General Assembly is the supreme body from which the Management Committee is elected
• Each member has only one vote.
![Page 6: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/6.jpg)
Facts Cont`d• VSLAs have 5 elected Committees
members, a Chairperson, Secretary, Treasurer and two Money Counters.
• They are subject to annual re-election at the start of a new cycle and may be removed at extraordinary meetings.
• At least two of the Committee members should be female in the case of mixed Associations.
![Page 7: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/7.jpg)
Facts Cont`d• VSLAs in Uganda meet on a weekly
basis, but can determine longer durations after their first saving out (action audit)
• All transactions are carried out at meetings in front of the Association
• This ensures transparency and accountability.
![Page 8: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/8.jpg)
Facts Cont`d• Members are able to witness who
has saved and who has not, who has borrowed and who has not.
• The Association uses a lockable cash box to prevent unauthorized cash movements
• limits the risks of tampering with records
• This improves on financial controls
![Page 9: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/9.jpg)
Facts Cont`d• The cycle of savings and lending is
usually between 8 to 12 months.• At the end of this period the
accumulated savings, interest earnings and other earnings, are shared
• Each member`s share is proportionate to the amount saved throughout the cycle
![Page 10: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/10.jpg)
Facts Cont`d• VSLAs agree on a set of rules, or a
Constitution, to guide their activities.• VSLAs give out loans for productive
purposes to members only. The size of a loan available to a member is linked to the total value of his/her savings ( 3 times of the member total savings) .
• Interest is charged on loans falls due every four weeks/month.
![Page 11: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/11.jpg)
GROUP
Repay loans interest
Cumulated working K
Booster/start up loans
Short-term working
capital/credit
3
4Purchase Inputs
(seeds)
Action auditShare money between
members
5
For Agribusiness
2 VSLA METHODOLOGY FRAMEWORK
12
![Page 12: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/12.jpg)
VSLA and agri-business funding
• Low transaction cost compared to high way financial service providers
• Easy access to finance. It is immediately available in the neighborhood at any meeting date every week.
• Low interest rate; it is also shared among members at the end of the cycle.
• Internally generated funds by members of the group.
• There is no need for collateral.• Provides a platform to engage other service
providers(Buyers,).
![Page 13: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/13.jpg)
VSLA PERFORMANCE AS OF JULY 31, 2013• Membership- 655,502(70% Female)• Cumulated savings- 43.7Billion• Average Savings per members UGX
62,747• Average Portfolio utilization 72%• 235 group savings accounts with
Barclays bank• 75 group savings account with
CERUDEB• 972,294,400 deposits with Barclays
Bank
![Page 14: VSLA A FINANCIAL MODEL FOR SHORT TERM WORKING CAPITAL IN AGRI-BUSINESS](https://reader036.fdocuments.net/reader036/viewer/2022062410/568164a0550346895dd692ce/html5/thumbnails/14.jpg)
End of presentation
THANK YOU