Assessing the contributions of village saving and loan association on the households welfare

Abstract

Households in Lamwo district and Northern Uganda at large are associated with very poor welfare conditions. The indices of household welfare in the region have deteriorated over time despite participation in informal savings schemes such as Village Savings and Loan Associations (VSLAs) among others. There was therefore need to carry out a scientific investigation to establish the contribution of VSLAs on household welfare or socio - economic status (SES). The study was conducted in the Northern Uganda district of Lamwo. Primary data was collected from a total of 50 respondents (households) who were; VSLA participants (each group comprising of 8-10 respondents). Comparisons of the VSLA participants were made before and after joining regarding the indicators of SES or welfare such as; the mean monthly income, the mean asset index and the mean number of Income Generating Activities (IGAs) initiated and being operated as a result of participation in VSLAs. To further examine the role of VSLAs in enhancing rural household’s welfare, Chi-square method was used to analyze the contribution of participation in VSLAs on household asset accumulation, a logistic regression analysis was carried out to analyze the contribution of participation in VSLAs on house hold income level and number employed household member, expenditure pattern of house hold and the level of income generating activities. The Cross tabulation were also employed to investigate the impact of participation in VSLAs on the loan association and asset accumulation. The key findings of the study were as follow: the average monthly income of the VSLA participants is statistically significant since Pr=0.000<0.05 at 5% level of significance.. Further evidence from regression analysis showed that loans from VSLAs does not leads to reductions of having school drop – out children in the family. Lastly, it was evident that participation in VSLAs and the monthly savings made by the VSLA members into the association’s savings pool have a positive and significant contribution on the number of IGAs initiated and being operated by the participants under the study since Pr=0.0182<0.05 at 5% level of significance. Overall, the conclusion of the study is that based on the evidence gathered, VSLAs are playing household income and supporting the development and diversification of IGAs by households. It is therefore recommended that; the government and development agencies should encourage the development of VSLAs and the general community should be sensitized about the significance of savings.