Fanny Jackson, 29, a member of Tiwale Village Savings and Loans (VSL) Group in Phalombe will never regret the day she joined the group.
She says through the group, she has managed to keep her household economically secure at a time when climate change shocks in the district have affected agricultural production. Phalombe is one of the 15 districts declared a disaster area by President Peter Mutharika in early 2015.
“The VSL has been very helpful to us because, for example, when floods destroyed our crop fields last year , we were able to buy food for our households due to reliable source of income,” says Jackson.
Similarly, in Chabwera Village, Traditional Authority (T/A) Jenala in the same district, Fanny Makiyi, 35, a member of Chisomo VSL Group, has nothing but praise for the savings scheme.
Last year, Makiyi bought two goats valued at K7 000 ($10) each and paid for her daughter’s school fees with profits from VSL.
“The VSL has helped me to gain economic independence. It has cushioned my family against the impact of floods and other disasters such as dry spells that affected our crop yield here,” explains Makiyi, who sells fritters and tomatoes.
At first sight, VSLs may appear unattractive, but this financial concept is making a difference to scores of people affected by climate change in Phalombe and other districts.
Also known as village banks, the practice involves members contributing money which they can access as loans at a 20 percent interest rate, which is half the interests charged by commercial banks.
The money grows over time and at the end of the year, the members share the proceeds.
The good thing about VSL is that it increases access to finance by smallholder farmers, especially women who contribute 70 percent labour force in agriculture, but cannot access loans due to lack of collateral.
Tiwale Farmer Field School (FFS) is one of the most successful VSL groups in T/A Jenala in Phalombe with a membership of 12 people, 10 of whom are women.
Started in 2015 by a $2 million resilience-building project funded by the Africa Solidarity Trust Fund (ASTF), the group has grown from seven members to 12 due to soaring profits.
The two-year project, coordinated by the United Nation’s Food and Agriculture Organisation (FAO), uses the FFS approach which is a participatory extension model that groups 30 farmers to develop skills for research on different farming technologies for adoption in line with the prevailing local contexts in the face of climate change.
About 56 FFS groups have been established, bringing together 2 606 vulnerable households with an outreach of at least 13 000 people empowered to diversify and increase their household incomes, increase their access to agricultural inputs and improve their food and nutrition security, culminating into increased resilience to climatic shocks.
As a result, the project has been instrumental in enhancing coordination of all resilience initiatives at district level and has fostered a common approach to resilience for the UN country team in Malawi, by bringing together four main agencies (United Nations Development Programme [UNDP], World Food Programme [WFP], United Nations Children’s Fund [Unicef] and FAO) that have a resilience mandate under a common approach to resilience.
To ensure diversity of sources of income, VSLs have been incorporated under the FFS model as a business component for increased household incomes to reduce impact of climatic disasters.
At Tiwale VSL Group, members are allowed to make contribution, known as “shares”, five times as much as the minimum contribution.
As a result, for 32 weeks in 2015, members of this group made a profit of 123 percent from their contributions, which they used to start up small-scale businesses, buy farm inputs or food while others paid school fees for their children.
FAO representative in Malawi, Florence Rolle, says she is happy with the way the project has empowered communities.
“In Phalombe, VSLs are enabling members to access agriculture inputs, but also build and diversify household assets such as livestock which can be helpful during times of shock,” Rolle says.