Published on March 1, 2009

Reaching rural Kenya with group savings and loan associations


Group savings and loans associations (GSLs) are a simple financial intermediation model where members of a group (usually between 10 and 20) contribute equal amounts of savings or their multiples during meetings which are held weekly, fortnightly or monthly. The savings are then loaned out to members of the group at an agreed interest rate, building up the group’s funds. The members’ passbooks are the core form of documentation although in some GSLs a simple ledger showing each meeting’s transactions is also kept. At the end of every 12 or 18 month period, an action audit is done and the savings, together with interest from loans, are distributed to the members in proportion to their savings. The GSL is then dissolved but reforms immediately. Research has shown that due to the simple nature of the model, GSLs continued functioning well and independently following initial support in the form of training. CARE Kenya with FSD’s support has designed and is implementing a GSL development project which is testing cost-effective ways of delivering training to GSLs.

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