The VSL scheme initiative of Cotton Tree Foundation Sierra Leone is a sure way to link small holders to financial institutions. It usually starts with the formation of smallholders into VSL groups. These groups will then be trained on the various modules of the VSL. During the training session, the members are capacitated in governance structures which upkeep the scheme. The trained groups will also be provided with VSL kits in order to start their regular meetings and savings. The VSL program is purely based on participants’ savings, which means that initially members only work with their own assets and not with loan liabilities (debts). VSL activities are immediately profitable (not merely sustainable) and are fully autonomous. Being a community-led methodology, all transactions of the VSL are carried out at meetings in front of the association, to ensure transparency and accountability and the activities are self-managed by the participants. The model has a distribution system which allows all participants in a group to acquire useful amount of capital at a predictable time that can be invested in longer-term activities or meet immediately large predictable expenses. The members are obliged to loan from their normal savings and re-pay with a minimal interest which they are always willing to pay because that interest belongs to them.
When the pouch would have reached certain amount, CTF will then facilitate the registration of these groups to the district council and the ministry of agriculture. The registration certificates will be used to open bank accounts for the members of which three executive members of each VSL group are usually signatories. No sooner the farmers are able to open an account, they can develop a business plan and a loan request for submission to the bank manager. In this way, they can have access to agricultural loans from the bank. Once the loans are secured, the groups can be able to engage in commercial production and marketing of food crops in the locality throughout the year of the loan.
At the end of the VSL cycle (which is normally a year) members will share out their accumulated savings and interests based on a setup formula, that is the share out is based on the amount of shares bought during the scheme.VSL scheme is usually repeated in every community it is established. It most times existed in communities even after the end of the project cycle. Cotton Tree Foundation as an NGO has ten groups which we established in the South of the country over five years ago. Those groups are still existing as VSL associations carrying out their savings and loans activities always. Linking these groups to financial institutions is the surest way of helping rural poor farmers to have access to loans and other facilities in the banks.