Impact of Microfinance Village Savings and Loan Associations on Women’s Empowerment and Resilience Against Vulnerability in Malawi

Abstract

The purpose of this study was to explore and discuss the impact of village savings and loan associations (VSLAs) on socio-economic changes among women and resilience against vulnerability. The study employed a descriptive research design, and household-survey methods were used to obtain data from two districts: Chiradzulu Tradition Authority Maoni and Blantyre Rural Traditional Authority Kapeni. The multi-stage sampling method was used to select the samples. The sample size was 70 (n = 70) women from VSLA groups, and the data obtained were analysed using ‘Statistical Package for the Social Sciences’ (SPSS). The findings of the study show the positive contributions of VSLAs towards women, such as an increase in the economic and social level of members. Despite these positive results, it was found that VSLA members have no access to loans from external organisations or banks, and there is also a lack of training among the VSLA members.

Keywords

Village savings loan and associations microfinance women empowerment

Introduction

Malawi is a developing country with an acute socio-economic development challenge. Being a landlocked country in sub-Saharan Africa, it faces many development challenges: there has been a rapid increase in its population, it faces natural disasters, and it has high prevalence rates of human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS). The country is ranked among the world’s least developed countries, with about 54% of the population living below the poverty line (NSO 2013). Close to 90% of Malawi’s inhabitants stay in rural areas, of which 70% are women (World Bank 2018). Malawi reflects a weak HDI (Human Development Index), proving that the country is poor (UNDP 2018). The World Bank (2001) chose the theme of ‘attacking poverty’ in its development report, which estimates that out of 6 billion people, almost 3 billion live on less than a ‘dollar’ (US $1) per day (Chirwa Ephraim 2002). According to the Malawi Poverty Reduction Strategy Report (MPRS 2002), poverty is caused by restrictions on the economic productivity of land, labour and technology. Restrictions on land productivity include rapid environmental degradation and limited or insufficient access to land. Labour restrictions generally include low levels of education, poor health conditions, lack of or limited employment in farms and gender inequalities.

After the 1995 Beijing Conference, the Malawi government identified two critical areas for action, namely poverty reduction and empowerment (GOM 2014). Access to financial services is inadequate, especially in rural areas. Women belonging to the most vulnerable groups of the poor are generally financially excluded due to poor access to formal employment and resources that can be used as security (GOM 2013). Compared to men, women are marginalised and underprivileged in countless aspects of development (Kadasigne and Semasigne 2014).

Throughout the history of the development process, development practitioners have tried to identify strategies that could promote the level of women’s involvement in the race for growth. Therefore, several interventions, such as microfinance lending, have precisely targeted women in an attempt to improve their level of socio-economic development (Morduch 2002).

The village-savings-and-loan-association (VSLA) model was first developed by ‘CARE International in 1991’, and it has spread to almost all the countries in Africa, including Malawi (Allen and Staehle 2007). A VSLA usually consists of 10–30 members who decide to be part of the group. At each meeting, usually every week, members save by buying shares. The amount of each action is set by the group. Each action is marked in the logbook handed over to all members, which simplifies accounting procedures. Depending on their ability to save in a given week, members can decide whether to save a share or more (CARE 2013). The VSLA is an autonomous group that does not collect any other capital and provides members with a safe place to save money, access small loans and get emergency insurance. Groups are cheap, are easy to manage and can be seen as an initial step for people to achieve more formal and a broader range of financial services. VSLAs raise the self-respect of the participants and support the building of social capital within communities, particularly among women.

Poverty is among the core problems that are faced today by developing nations, and it is at the centre of development policy.

‘Working women contribute to the national income of the country and maintain the sustainable livelihoods of families and communities worldwide’ (ILO 2010). However, women face many sociocultural problems. Usually, they are marginalised and are rarely financially independent, and they are often more vulnerable members of society (Vijay and Ankita 2017). Therefore, this study is aimed at analysing the role of VSLAs in economic empowerment in the rural areas of Malawi.

Objectives of the Study

To assess the role of VSLAs in empowerment and socio-economic changes, as well as changes in the vulnerability of group members; and

To study the current activities taken up by VSLA members.

Research Hypothesis

H0 = There is no correlation between women’s participation in VSLAs and the upsurge in their socio-economic empowerment and their increased ability to support their households.

H1 = There is a correlation between women’s socio-economic empowerment and the upsurge in their welfare and their increased ability to support their households.

Significance of the Study

The study highlights the influence of microfinance institutions, VSLAs, on the vulnerability and empowerment of rural households, specifically women. In general, it contributes to a general understanding of the role of informal microfinancing institutions in the country’s economic development and empowerment. The results of the study are also important for other researchers to make people understand the importance of involving communities in microfinance groups.

Women’s Empowerment and Microfinance: Some Existing Studies

According to Kabeer (2003), the empowerment of women is the process of equipping women with abilities capable of making life choices. Its emphasis on the ability to make choices includes three related dimensions: resources, agencies and achievements.

According to World Bank (2012), the empowerment of women extends beyond economic and social aspects to also include political empowerment. This means increasing the access of women to the democratisation process, governance, politics and decision-making. Duflo (2012) concludes that women empowerment is critical for making livelihoods. In his studies, he reported that there is a strong correlation between economic development and women’s empowerment. Duflo (2012) argued that women’s empowerment is accelerated through microfinance, and through means of empowering women, changes in decision-making will take place, which will lead to development, in turn.

Measuring Empowerment

Measurement of empowerment may vary depending on the context, such as the social, economic and political contexts of a given society. Empowerment can be seen as a way of creating a social environment in which decisions can be made and choices are made independently or jointly for social transformation. Weber and Ahmad (2014) assessed the level of empowerment of women in diverse phases of credit cycles in Pakistan. To measure empowerment, they decided to focus on two dimensions: social and financial. The indicators used to measure these dimensions included national decision-making, child education, freedom of movement for the borrower, usage of loans, contributions to household expenditure on income and income decisions and participation in resource allocation and savings. Beaman et al. (2014) provides an example in which participation in household decision-making is used to measure empowerment. He decided to measure empowerment through social capital. The empowerment of women is considered a critical feature of promoting wider gender equality, focusing on identifying and reselling the imbalances of power and giving women more autonomy to be able to take care of their own lives. Empowerment of women is vital for sustainable development and the realisation of human rights for all women, and it can be well defined as a multidimensional social process that helps women take control of their welfare.

Kabeer (2001) noted that economic empowerment can be measured based on a woman’s ability to command sufficient resources, which involves a level of economic independence. Social empowerment can be measured based on the ability of a woman to participate in decision-making at the household and community levels (Kabeer, 2001). Women’s empowerment increases the social, economic and political power of women, allowing them to be active in their lives and participate in transforming their societies. Women’s empowerment in all sectors of life brings the necessary balance in nature. Strengthening the economic situation of women is the initial step towards social progress.

Ligon (2003) suggests that income and consumption level of a household is an indicator for measuring women empowerment. This could also be measured the national poverty line, a critical cut-off in income or consumption level, whereby an individual or a household falling below it is determined to be poor. The influence of microfinance in this regard can be judged from its contribution in helping households move from a permanent ‘below-poverty-line’ situation to a permanent ‘above-poverty-line’ situation.

World Bank (2001) reports that

societies that discriminate on a gender basis have greater poverty, slower economic growth, weaker governments, and lower living standards. Microfinance has gained momentum, particularly in developing and underdeveloped nations over the past few years, and their governments have developed and implemented many financial and economic policies, in particular, to increase microfinance its potential whilst empowering women and mitigating poverty.

Microfinance and Empowerment

Noreen and Khan (2012) explored the link between microfinance and empowerment in Pakistan and used five indicators to test empowerment: ability to decide on children’s health, access to education, ability to choose a child’s spouse, ability to buy basic goods and ability to decide on family savings.

White noted that investing in women’s economic empowerment provides a direct pathway towards equality, poverty eradication and inclusive economic development. Women make huge contributions to a country’s economy, such as farmers and entrepreneurs.

Littlefield (2008), in his study, noted that ‘microfinance’ worldwide demonstrated that access to financial services allows poor people to increase their household incomes, further ensuring women’s economic empowerment. Silvi and Krishnan (2010), in their studies on microfinance and empowerment, reported:

microfinance has the potential to change the lives of tribal people in India in the ‘state of Kerala’ Wayad District. The study reported that the microfinance program had a positive effect on the target household income, assets, and savings. The microfinance program also contributed to livelihood diversification among households.

Atibudhi and Panda (2009) examined microfinance and the impact of group-based programmes on the mobilisation of savings by participating in rural households. In their findings, they ‘noted that the average annual savings per household in the target group was significantly higher. The reason behind this is their increased savings habit and increased income due to their participation in compulsory savings led by microfinance programs’.

Masanjala and Tsoka (1997) conducted a study on the impact of microfinance in Malawi and found little impact of Foundation for International Community Assistance (FINCA) on the living standards and expenditure of participants. Anderson (2009), in his studies, found little long-term impact of microfinance as measured by increases in household assets. However, the study used a much less robust methodology and made little attempt to control for selection bias.

Kabeer (2001) noted that microfinance resulted in women’s empowerment by positively influencing women’s decision-making at the household level and their overall socio-economic status. It has been well acknowledged that an increase in women’s resources or their better access to credit facilities results in the increased well-being of their household. Khandker (2005) and Mwenda (2004) argued that many studies have established the fact that aiming for female clients in microfinance is an active method of guaranteeing that the benefits of improved income add to the general welfare of the family. They indicated that such gender-targeted microfinance programmes have been proven to have a positive consequence on the equality and empowerment of women.

Terry (2006) found that there were significant improvements in the lives of female borrowers who took loans from FINCA in Tanzania, including improved social status, self-esteem and confidence. Women also feel empowered when there is an improvement in their income and they thus have the ability to save, buy household assets and provide better education to their children. There is a suggestion in Terry’s findings that family members and the community at large see female participants in a better light.

Khandker (2005) also found a positive impact of microfinance on poverty rates in Bangladesh. He found that between 1995 and 1998, moderate poverty in all villages fell by 18% in areas where Grameen Bank or Bangladesh Rural Advancement Committee (BRAC) operated and by 13 percentage in non-programme areas. Microfinance, therefore, helps not only poor members but also the indigenous economy. Overall, Khandker (2005) noted that microfinance represented 40% of the entire decrease in moderate poverty in rural Bangladesh.

Sherin (2012) posits that there is a positive effects on micro-credit programs on households material and social well-being with further spill-over on the indigenous economy. This is because there well documented positive effects, particularly for the extremely poor. Numerous studies (Terry 2006) have found that access to microfinance services reduces the incidence of poverty. According to these scholars, micro-credit programmes have a positive impact not only on poor households’ income and consumption level but on their social well-being as well, reflected by the impact of these programmes on the recipients’ level of education, health and child nutrition. Furthermore, they extend women’s feelings of empowerment and independence.

Dinbabo undertook an evaluation study on microfinance and poverty reduction using a case study in the southern region of Ethiopia. His methodology employed both ‘quantitative and qualitative’ approaches, and the results showed that microfinance helped to empower participants. Dinbabo noted that partaking in microfinance is essential for enhancing effectiveness of microfinance activities in terms of poverty reduction at the community level.

Riley et al. (2002) and Bayes (2001) conducted studies in Bangladesh to evaluate the different effects of microfinance membership participation, using indicators such as improving food security, smoothing consumption and increasing empowerment. This suggest there are positive outcomes of women empowerment for participating in micro finance. Addai (2017) noted that in developing countries, there is a consensus that microfinance and micro-credit can alleviate poverty and are linked to strengthening the socio-economic status of their beneficiaries.

The Approach of Village Savings and Loan Associations

IPA (2015) reported that VSLAs try to overcome difficulties in offering loans to the rural poor by building a model for creating groups of people who can combine their savings to gain access to loans.

As a self-sufficient and self-replicating mechanism, VSLA can provide access to financial services to rural areas. However, empirical evidence of VSLAs’ impact on household welfare is still limited. Although several studies have analysed the effects of VSLAs on welfare in southern Africa and beyond (Brannen and Connor 2012), very few of them were designed to quantify the impact of VSLA participation in a systematically robust manner, and none for the context of Malawi.

(Daley 2009) asserts that the revolution of micro finance has made people who reside in rural and urban areas, particularly the very poor, to have difficulties in gaining access to useful microfinance services. The VSLA model helped to reduce many of these obstacles and reached the very poor and rural people better than formal, well-established microfinance institutions. Rogaly in his study on empowerment in sub-Saharan Africa, noted, ‘proven that VSLA has positive benefits for the members, but not for the poorest, microfinance helped to provide financial services, but not directly increasing income and empowering women’.

Thomas studied VSLA and noted that ‘empowerment is related to change and VSLA has transformed women’s status socially, economically and politically’. Cheston (2002) conducted a study in Nepal on women’s empowerment and microfinance, and the findings showed that 67% of women experience increased confidence in their decision-making roles after joining microfinance groups. This increased confidence in decision-making was in the areas of buying and selling of household assets and sending of children to school, as well as in family planning.

Wakiso (2004), in his study on the contribution of VSLAs to women’s decision-making, noted that ‘VSLA contributed women decision making at the household level and community level. This was considered as an indicator for women to control their households and income and women were able to support their husbands because of the small business created from the VSLA’.

A study conducted by United Nations Capital Development Fund (UNCDF) (2004) in Malawi and Haiti on empowerment reported that self-esteem, decision-making at the household level and decision-making on the use of programme loans were used as indicators of empowerment among women. Wosene (2014), in her study, concluded that

the VSLA has contributed to increasing family productive asset levels. The study further noted that there was a reduction in the use of the formal sector and traditional savings instruments. The number of income-generating activities per household increased and income-generating activities became more stable, while household labour allocated to income-generating activities increased. 81 of the participants felt that their status in the community had improved due to their association with their VSLAs.

Anyango (2005) reached similar conclusions in his study. The results showed that ‘the VSLA program had helped to uplift the livings of its members and reduce poverty, particularly for women who constitute the majority in the VSLA. Several economic activities that members of VSLA were tied up had increased, as had the magnitude of other activities’.

Mutesasira and Mule (2003) noted that most VSLAs consisted people with very low income. The thrust of VSLA had led to increased accumulation of assets for its members. Wosene (2014), in her study of poor women and their social capital, which was an exploratory study of VSLAs’ contribution to women’s empowerment in Ethiopia, noted that VSLAs contributes positively to social empowerment.

Allan and Hobane (2004) reported that

the VSLA has contributed to increasing household productive and non-productive asset levels among the great mainstream of Ishungu Districts in Zimbabwe and some positive progress in the excellence of housing. The study further noted that there was a significant reduction in the use of the formal sector and traditional savings instruments, in favour of group members.

Dunn and Arbuckle (2001), in his studies, noted that only 20% of microfinance members in Peru’s capital, Lima, lived below the poverty line. Furthermore, Khandker (2005) also confirmed the positive effects of VSLA on poverty reduction.

Scheurle et al. (2014, p. 145), in his studies in Ghana, noted that

for years, the success of VSLA has been widely recognised as evidence that the economically vulnerable in society are now improving.The VSLA was set out to bridge the gaps identified with the operations of microfinance, they reduce the financial inclusion gap. VSLA has grown historically from its start in the early 90s and was identified as an important apparatus to achieve the “Sustainable Development Goals.

Mochoge (2016) reported that ‘VSL schemes are viewed as the one glimmer of hope for the poor, a critical way out of poverty and a means to the empowerment of low income-earners, especially women’.

Bouman, in his studies, reported that

the fundamental idea of the VSL approach is to reach out to the rural poor and develop their access through savings, loans, and insurance services. Most microcredit projects focus on the availability of credit, whereas the VSL approach involves savings as a central part, something that is needed to be able to build up assets and insurance for the future.

Helmore et al. (2009) indicated that

VSLA is hailed as being cost-efficient, self-sustaining, relying, on traditional economic systems, and not resources. Besides, VSLA is commended for its acclaimed potential to reach out to vulnerable households in society. There are linkages between VSLAs and poverty reduction and confirm other positive findings, membership of VSLA groups is found to contribute to increasing household assets, improvement in housing quality, and growth of members income generation activities.

Schola found that

VSLA membership increased social capital because it encourages a hard-working attitude and improved status within families and the community. Additional achievements found in other studies include short-term economic empowerment for women, higher profits in business enterprises, increased influence of women in their families, and community decisions.

Anyango et al. (2006) studied VSLAs and noted that some principal development institutions have applauded the VSLA approach for its incorporation of women into the financial system and its empowerment of the rural poor. Mochoge (2016) studied VSLAs and found that women form approximately 83% of the reported clients of village savings and loan (VSL) projects. He observed that the strength of VSL schemes was founded on women’s proper utilisation of funds, financial discipline and timely repayment of loans.

Teoh, in her studies on VSLAs in Uganda and Rwanda, noted that they play a significant role in providing financial services to rural areas of developing nations, where financial services are inaccessible. World Bank (2012) reported that there is evidence that VSLAs have contributed significantly to improvement in household income and increment in food security, health status and children’s access to education.

Methods

Description of the Study Area

The research was conducted in Chiradzulu and Blantyre districts. These districts were selected because the majority of the people of these districts live in rural areas. The literacy level is low, and the economies are relatively undiversified and poor (NSO 2012). Various organisations and government district councils have been promoting VSLAs in these areas for rural development, and the majority of these VSLA are working independently. Much of the district population depends on agriculture and animal husbandry for its livelihood. The food crops grown are mainly maize, sweet potato, beans and cowpea (NSO 2012). The major commercial cash crops grown are cowpea and maize. This study was conducted in (Traditional Authority) Kapeni Blantyre and Chiradzulu District Traditional Authority Maoni.

Research Design

This research was descriptive, as it sought to evaluate the contribution of VSLAs to women’s empowerment and resilience against vulnerability. The sample of this study comprised female members of VSLAs from Chiradzulu and Blantyre Rural districts. However, only members of groups that had been in operation for at least 2 years were included in the sample, and the target sample comprised current and past members of the VSLAs.

In this study, empowerment indicators, such as economic empowerment and social empowerment, were conceptualised as the dependent variable, while the VSLAs were conceptualised as the independent variables. For the independent variables, VSLA membership was measured using participants’ responses to relevant questions in the interview schedule. Besides, socio-economic factors measured were changes in VSLA members’ household economics, annual income and dwelling indicators of households. Descriptive statistics were used to obtain the frequency distributions of the variables and to explore some associations between them. In this study, a quantitative research design has been used because it offers a comprehensive description and analysis of research, without limiting the scope of the study and the nature of participants responses also can scientifically approach a situation of inquiries by delineating the objects being studied in numbers (Hussey 2003). Quantitative research involves placing value on inquiry, basing the inquiry on the theory or hypothesis used by the researcher and assuming an understanding of the associated reality issues (Sam 2012).

Sampling Method

A multi-stage random sampling method was used to select samples for data collection, involving the following steps:

Step 1. The Tradition Authority (TA) with the highest number of VSLAs and that with the lowest number of VSLAs were selected purposively. In this case, the TA Kapeni southeast constituency with the highest number of VSLAs was selected for the study. Chiladzulu district’s TA Maoni south constituency with the lowest number of VSLAs was also selected for the study.

Step 2. The constituency was divided into wards. The Blantyre Rural southeast constituency has four wards, and Makungwa ward was selected. Similarly, in the Chiradzulu south constituency with two wards, Mombezi ward was selected for the study.

Step 3. Makungwa ward in Blantryre has 10 villages and 13 VSLAs, out of which six VSLAs were selected randomly for the study. Mombezi ward in Chiladzulu has eight villages and seven VSLAs, out of which five VSLAs were selected for the study (see Table 1).

Table 1.

List of Groups in Sample Villages

S. No.	Traditional Authority (TA)	Group Name	Village	Year Formed
1	Kapeni	Chisomo	Mangulama	2012
2	Kapeni	Titukulane	Manguzani	2016
3	Kapeni	Talandira	Misomali	2016
4	Kapeni	Chisomo	Mpangiwa	2014
5	Kapeni	Dyeratu	Nazombe	2018
6	Kapeni	Takondwa	Saukira	2009
7	Maoni	Tigwirizane	Somanje	2011
8	Maoni	Mbozi	Umodzi	2016
9	Maoni	Takondwa	Saukira II	2009
10	Maoni	Tigwirizane	Takhiwa	2006
11	Maoni	Titukulane	Titukulane	2010

Source: The author.

Sample Size Determination

The total population of VSLA members from Makungwa and Mombeza wards was 85. Using the formula given by Krajice and Morgan (1970),

x² NP(1 − P)

e²(N − 1) + X² P (1 − P)

Population size = 85

Margin of error = 0.5

Population proportion = 0.50%

Confidence level = 95%

Sample size = 70 respondents

Tools for Data Collection

A household survey was used to collect data with the help of a questionnaire and interview schedule. A questionnaire was prepared to facilitate two groups of participants: current members who had joined not less than a year ago and past VSLA members; 70 women participated—40 current members and 30 past VSLA members. After the survey, the collected data were checked for unanswered questions and were later thoroughly examined, processed and analysed. The results were tabulated in a computer to determine how the entire sample answered each question. Some statistical techniques, such as frequency and percentages, were generated using SPSS.

Hypothesis Testing

Pearson’s r test was used to examine whether there was a statistically significant correlation between two categorical variables. In the context of this study, Pearson’s r test was used to assess whether there was a statistically significant association between women’s economic empowerment and the upsurge in VSLA members’ welfare and their increased ability to support their households.

Ethical Considerations of the Research

Confidentiality

Crucial ethical principles of social research were essential for this research: respect for privacy, informed consent, safeguarding the confidentiality of data, voluntary participation and independence of research (Gilbert 2008). The participants were guaranteed prior to the survey that any information that was obtained would be for the study’s purpose only and that their identity would not be revealed without their consent. Names, and any other identification, would not be revealed.

Results and Findings

The main purpose of this section is to present the findings. It deals with the analysis of the results from the data collected and discusses them further. The findings were drawn mainly from the 70 respondents.

Demographic Details of the Respondents

Age of the Respondents

The results of the study show the distribution of the respondents’ age: 22.9% of the respondents belonged to the 15–32 age group, followed by 64.3% who were in the majority 35–54 age group, and 12% belonged to the age group of above 55 years. The results show that middle-aged women had partaken in VSLAs more than women of any other age group. Please see Table 2.

Table 2.

Demographic Details of the Respondents

Age	Frequency	%
15–34	16	22.9
35–54	45	64.3
Above 55	9	12.3
Total	70	100

Source: The author.

Table 3.

Education Status of the Respondents

Education Status	Frequency	%
Never attended school	1	4.2
Primary school	41	58.6
Middle school	9	12.9
Secondary school	16	22.9
Higher secondary school	1	1.4
Total	70	100

Source: The author.

Education Status of the Respondents

Education is one of the most important indicators of a household’s well-being. According to the results of the study, 4.2% of the respondents never attended school, followed by 58.6% with a primary school education, 12.9% with a middle school education, 22.9% with a secondary-school education and only 1.4% with a higher secondary school education. The results show that the majority had a primary school education. Please see Table 3.

Marital Status

The results of the survey on the marital status of the VSLA members show that 2.9% of the respondents were single, while the majority of the respondents, 77.1%, were married, 8.6% of the participants were widowed, and 11.4% separated, as shown in Table 4.

Table 4.

Marital Status

Marital Status	Frequency	%
Single	2	2.9
Married	54	77.1
Widow	6	8.6
Separated	8	11.4
Total	70	100

Source: The author.

Table 5.

Reason for Joining a VSLA

S. No.	Reason for Joining VSLA	Frequency	%
1	To improve social status	14	20
2	To improve economic status	14	20
2	To obtain financial support	39	55.7
3	To initiate group activities	1	1.4
4	Influenced by friends	2	2.9
	Total	70	100

Source: The author.

Reason for Joining a VSLA

VSLAs aim to promote savings and provide credit to members. There were many reasons why the respondents joined a VSLA. According to the findings of this study, 20% of the respondents joined to improve their social status, and another 20% joined to improve their economic status. The majority of the respondents (55.7%) joined to obtain financial support, 1.4% of them joined to initiate group activities, and 2.9% of the respondents joined a VSLA through the influence of friends. Please see Table 5.

Current Activities of VSLA Group Members

The researcher was very interested in capturing information on the occupation and economic activities of the respondents. The study findings show that the VSLA members were engaged in various economic activities through their VSLA; 65.7% of the respondents were doing petty business, followed by 32.9% that were engaged in agriculture and allied activities, while only 1% were engaged in other unspecified economic activities. Please see Table 6.

Socio-economic Changes in VSLA Members

Socio-economic Changes in Households After Joining VSLA

One of the study objectives was to assess the impact of VSLAs on socio-economic changes in its members. Participants were asked if any changes had occurred after their joining a VSLA. According to the results of the study, 91.4% saw changes after joining a VSLA, and only 8.6% of the respondents stated that there were no changes even after joining a VSLA. Please see Table 7.

Table 6.

Type of Economic Activities Carried Out by VSLA Members

S. No.	Economic Activity	Frequency	%
1	Petty business	46	65.7
2	Agriculture and allied activities	23	32.9
3	Others	1	1.4
	Total	70	100

Source: The author.

Table 7.

Socio-economic Changes in Households After Joining VSLA

Did Household Improve After Joining VSLA?	Frequency	%
Yes	64	91.4
No	6	8.6
Total	70	100

Source: The author.

Table 8.

Annual Income of VSLA Members

S. No.	Annual Income in Malawi Kwacha (MKW)	Frequency	%
1	150,000 MKW	43	61.4
2	150,000–200,000 MKW	23	32.9
3	>200,000 MKW	4	5.7
	Total	70	100

Source: The author.

Table 9.

Household Improvements in the Past 12 Months

Did the Household Improve in the Past 12 Months?	Frequency	%
Yes	64	91.4
No	6	8.6
Total	70	100

Source: The author.

The Annual Income of Members After Joining a VSLA

The study was also interested to find the annual income of the VSLA members, to assess the welfare status of the respondents and changes in their income. According to the findings, 61.4% of the respondents had an annual income of 150,000 kwacha, which is equivalent to USD 200, 32.9% had an annual income of 150,000–200,000 kwacha (USD 271), and 5.7% had an annual income above 200,000, kwacha (MWK). The majority had an annual income of USD 200 per month. Please see Table 8.

Household Improvements in the Past 12 Months

Participants were asked whether or not their joining a VSLA had resulted in changes in their lives in the past 12 months. The results are overwhelming, as they show that 97.1% have seen changes and improvements in their lives through VSLAs, and only 2.9% of the participants have not seen any improvements in their lives in the past 12 months. Please see Table 9.

Dwelling Indicator of Households

The questionnaire was designed and categorised into sections to assess the welfare status of the VSLA members’ household. Housing quality was used as an indicator of socio-economic status. Dwelling indicators of households in individual questionnaires included a variety of alternative indicators of welfare, including physical housing characteristics, such as the material of the walls in the house, the material of the roof, the floor material, the availability of electricity and asset ownership. During the analysis, all these variables were grouped and analysed to find the levels or categories of all the respondents. The dwelling indicators were categorised into three levels: high, medium and low. According to the results of this study, 57.1% of the respondents had a low level of dwelling indicators, 18.6% had a medium level, and 24.3% had a high level. Please see Table 10.

Measuring the Empowerment of VSLA Members

Economic Empowerment

Economic empowerment was measured using various indicators, such as increase in personal assets, increase in access to microfinance and increase in the ability to make decisions regarding the utilisation of money and income. All these indicators were grouped and computed in SPSS to categorise the levels of economic empowerment of the participants. The results of the study indicate that 32.9% of the participants had a low level of economic empowerment, 37.1% had a medium level, and 30% had a high level. Please see Table 11.

Social Empowerment

Similarly, the level of social empowerment of the VSLA members was measured by assessing the various indicators such as increase in decision-making for families, increased support during a social crisis in the family, increased recognition in the community, etc. These indicators were grouped and categorised into levels to determine how members experienced social empowerment. The results show that 67.1% of the respondents experienced a low level of social empowerment, followed by 32.9% who experienced a high level of social empowerment through their VSLA. Please see Table 12.

Table 10.

Dwelling Indicator of Households

Level of Household Dwelling Indicator	Frequency	%
Low	40	57.1
Medium	13	18.6
High	17	24.3
Total	70	100

Source: The author.

Table 11.

Level of Economic Empowerment of Respondents

Level of Economic Empowerment	Frequency	%
Low	23	32.9
Medium	26	37.1
High	21	30
Total	70	100

Source: The author.

Table 12.

Level of Social Empowerment of Members

Level of Social Empowerment	Frequency	%
Low	47	67.1
High	23	32.9
Total	70	100

Source: The author.

Table 13.

Pearson r Correlations Between Economic Empowerment and Increased Ability to Support Family

Item	Economic Empowerment	Increased Ability to Support Family
Economic empowerment	Pearson correlation 1	0.654*
	Sig. (two-tailed)	0.000
	N 70	70
Increased ability to support family	Pearson correlation 0.654*	1
	Sig. (2-tailed) 0.000
	70	70

Source: Author’s estimation based on a field survey.

Notes: *Correlation is significant at the 0.01 level (2-tailed).

Hypothesis Testing

The Pearson correlation test results clearly indicate that there is a significant correlation between the economic empowerment of VSLA members and their increased ability to support their family. Please see Table 13.

r (df) = −2 = 68, r (68) = 0.65 and p = 0.00

Discussion of the Results and Conclusion

This section presents a discussion of the findings of the study and also provides conclusions and recommendations.

Socio-economic Changes in VSLA Members

According to the study findings, the hypothesis is validated. Overall, the results show positive impacts for women who were members of VSLAs in the area of economic empowerment and their ability to support their families through their participation in the savings groups, as a symbol of their economic empowerment. VSLAs have fairly changed the status of women socially and economically, playing an important role in providing financial assistance, helping women make family decisions, helping other members of the group educate their children and enabling women to improve their relations with the family. VSLAs have transformed into an effective participatory mechanism for promoting socio-economic development.

The study reveals that VSLAs have positively impacted the lives of their members. The loans taken by members have been mainly used to establish small businesses, improve farming and livestock and buy other essential household assets. The study finds that VSLA members in Chiradzulu and Blantyre Rural are very actively engaged in income-generating activities. Women in a VSLA are better able to eliminate poverty in their families. For example, beneficiaries gain employment by starting up their businesses. The microfinance system plays a noteworthy role in empowering women through VSLAs.

The study shows that VSLAs make a huge contribution in promoting women’s empowerment and touch the lives of individuals and poor women living in rural areas. It was found that the women in VSLAs gained confidence for their economic empowerment, self-sufficiency and self-reliance.

Increased Access to Microfinance

VSLAs are formed to address capital issues through savings and asset-building approaches, whereby a group of people save their money and work hard to make it grow by engaging in various businesses. It was found that female VSLA members have no access to microfinance loans from external organisations or banks. Besides, there is a lack of training among the VSLA members, as shown by the results of this research. The VSLA to thrive, it is partly depends on savings from members and the loan demand of VSLA members surpasses supply, the government mustlink the VSLA participants with microfinance institutions. This linkage will have a twofold effect. On the one hand, participants will be able to access micro-loans to expand their small businesses and take a giant step out of poverty. On the other hand, the participants, in addition to the VSLA, will get an extra convenient spot to save more money in small amounts in a microfinance institution.

Change in Vulnerability

The results show that VSLAs have increased access to assets, helping households cope and maintain a sustainable livelihood. They have helped build assets in households with VSLA members, and this was assessed by looking at various indicators. VSLAs are capable of helping women come out of vulnerability and improving the ‘socio-economic’ empowerment of women in Chiradzulu and Blantyre. Despite the positive outcomes of women’s economic empowerment, there was a little achievement, social empowerment of women the results of the study have shown slight improvement of social empowerment among VSLA members.

Recommendations

VSLAs work successfully in the lives of the women associated with them. However, certain weaknesses require special attention for better sustainability and success of VSLA groups.

There is a need for training for these groups to be successful. The VSLA promotes the practice of saving, and loan facility, the opportunity for entrepreneurial development, and increase the income-earning capacity can be exposed through conducting a large number of awareness programs. It is the duty of the government, through community development facilitators and the other non-governmental organizations concerned, to arrange for various types of training and awareness programmes. The VSLA enlightens its members about the important to participate in training program to develop their entrepreneurship skills, increase their employment opportunities, and generating income earning capacity. The study identifies that the need for capacity building, awareness creation of VSLAs and creation of ways to attract more community members in the process of their implementation are crucial. Hence, it is recommended that regular, timely and needs-based capacity-building workshops for VSLA participants are provided and that a sound working environment that will attract more frontline players is created.

The community members specifically a woman who has an interest in starting micro-enterprises, especially women are to be identified and they should be encouraged in participating VSLA.

The author suggests that the government and civil societies working in the development sector jointly make efforts to advise the members of VSLAs on the proper utilisation of savings.

Effective supervision over the utilisation of savings should also be done and maintained, which would be beneficial in the long run.

Conclusion

As shown by the study results, VSLAs have positive impacts on the lives of their female members in the area of economic empowerment and increase their ability to support their families through their participation in the savings groups. It is also noted that inadequate entrepreneurship skills are a major challenge facing VSLAs. It is recommended that the government and organisations promote VSLA training to consider including entrepreneurship skills modules in VSLAs right from the beginning, so as to leverage the impact of VSLAs on their members and hence increase their sustainability and the sustainability of activities done under their auspices. The VLSA approach is paramount in enhancing women’s economic status. By saving and accessing micro-loans through VSLAs, women can invest in small-scale businesses and farming, which would result in improving their children’s education level and the livelihood status of their entire family.

Policy Implications

This study’s findings will help institutions and the government to design a suitable policy to improve the social and economic performance of women through VSLAs. The government should put in place strategies that would help to incorporate women’s aspirations, eagerness and involvement in microfinance. It is foreseen that VSLA groups can play a vital role in such strategies.

Active intervention by the government through local councils, professional bodies and voluntary organisations is prerequisite for the successful formation of microfinance groups in terms of provision of skills and training. The micro-credit movement has to be viewed from a long-term perspective under the VSLA framework, which underlines the need for deliberate ‘policy implications’ in favour of guarantees in terms of provision of loans from commercial banks. The concerned authorities (government) should take care to fulfil the targets set. Rigorous supervision should be maintained by the facilitators in charge, so that the loans are properly utilised. VSLA members should be given the necessary training and guidance for the successful operation of the groups.

Limitations of the Study and Scope for Further Research

This study was restricted to rural areas in Blantyre and Chiladzulu districts and focuses on the social–economic development aspects of rural women. Therefore, the results may not apply to urban areas. The sample of the study was restricted to rural women only, due to time and cost constraints. There was very little literature available on VSLAs and women’s empowerment in Malawi.

A similar study using the same methods should be done in the future in other parts of Malawi, which can help to facilitate a proper understanding of the effectiveness of VSLAs in rural areas. Documenting the experiences of female members can also help in getting a clearer idea of the efficacy of the VSLA model in facilitating the journey of women towards their empowerment.

Footnotes

Declaration of Conflicting Interests

Funding

The author disclosed receipt of the following financial support for the research, authorship and/or publication of this article: This research did not receive any specific grant from funding agencies in the public, commercial or not-for-profit sectors.

ORCID iD

Andrew Maganga

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