A Conservation Cooperative member depositing in the Village Savings and Loans Program
Yayasan Planet Indonesia
Village Savings and Loans Program
As part of every CC, we help initiate and support a community-led savings and loans (VSL) program through initial start-up capital and financial literacy training to CC members. The purpose of our Village Savings and Loan (VSL) Program is to develop a community-led savings program that enables access to low-burden loans for CC members and addresses the barrier for lack of access to equitable financial capital for community members to rely on to meet their financial capital needs. As a result, this program enables access to an equitable source of capital for CC members that they can use to develop and diversify their livelihoods and improve their family’s wellbeing.
Once the VSL fund is operational, CC members can apply for a loan by submitting a proposal describing how they will use the funds and when they will return the capital along with other information. Based on the proposal and its merit, the CC committee on loans holds the authority to approve the loan to the requesting member. As loans are repaid, a small amount of a member’s profit (1-5%) is accrued in the community managed VSL program allowing it to grow and be sustainable in the long-run.
As the cornerstone of every CC and our commitment to community members, we provide a small seed money for each new CCs to establish their VSL program in exchange for their pledge to ensure the management and development of the fund. Another key enabling factor is that borrowers use the loans or a part thereof in productive purposes that provides the opportunity to improve livelihoods
We have learned that reducing the short-term opportunity costs of conservation is extremely important to sparking interest in long-term management. VSLs can help facilitate this by (i) providing direct access to short-term incentives, (ii) providing financial security in times of need, and (iii) enhancing collaboration at the community level. Since VSLs depend on group savings and group loans, this financial mechanism can serve as a platform to discuss wider issues, such as conservation area management. Monthly meetings with VSL groups offer important opportunities to discuss issues, enhance collaboration, and build participatory platforms for collective action. As effective community-led conservation often revolves around a common pool resource, these regular gatherings, incentivized through the VSL, are critical for equitable local management.