Impact Evaluation of Village Savings and Loan Associations in Malawi
Over the period 2009-2013, the Rockwool Foundation supported a microfinance project in Malawi implemented by DanChurchAid and the Malawi NGO SOLDEV. For more information about the project, click here.
The intervention was set up in such a way as to allow a quantitative impact evaluation to be carried out. The evaluation was based on a randomised controlled design. Random allocation of villages to participant and control groups ensured that the evaluation provides reliable documentation of the effects of the VSLAs in terms of a number of predetermined measurements, including measurements of food security and welfare. The evaluation was conducted jointly by researchers from the University of Southern Denmark, the University of Ottawa and the ROCKWOOL Foundation Research Unit. Internationally, it was among the first ever to publish the results of an impact evaluation of Village Savings and Loans Associations based on a controlled, randomised trial.
The evaluation was based solely on quantitative data. Before the project start, lots were drawn to determine which villages would be the first to run the project. The first 23 villages started in 2009, with the remaining 23 functioning as control villages until 2011, when they were also offered the opportunity to set up savings and loan groups. Before project start-up, a large-scale questionnaire survey was carried out among 1,775 households in 46 villages. Interviews were conducted again at the end of the project, and the effects of the project were measured by comparing the average changes between 2009 and 2011 in all the households in the participating villages with those in the control villages. The advantage of this type of randomised trial is that the participant group and the control group can be compared directly, and changes in the conditions of life brought about by the intervention can thus be established with a high degree of reliability.
Approximately 40% of the households in the participating villages enrolled in Village Savings and Loan Associations. The evaluation showed that after a two-year project period, all the inhabitants in the participating villages were eating on average one more meal per week and had increased their consumption by 3-4% between 2009 and 2011. One household in seven had extended the size of their house. This represents a significant improvement, especially given the very low costs of the project. The increased consumption meant that the project paid for itself after 100 days.
No effects were found after two years on income-generating activities, the length of the annual ‘hungry period’, or the quality of housing.
Our publications on the savings and loan groups are available for download below.
- Impact of Village Savings and Loans Associations: Evidence from a Cluster Randomized Trial, by Christopher Ksoll, Helene Bie Lilleør, Jonas Helth Lønborg and Ole Dahl Rasmussen. In 2016 the article was accepted for publication in the international journal, Development Economics Vol. 120 .
- Can Microfinance Reach the Poorest: Evidence from a Community-Managed Microfinance Intervention, by Jonas Helth Lønborg and Ole Dahl Rasmussen. In 2014 the article was accepted for publication in the international interdisciplinary journal for development studies, World Development Vol. 64.
- Småt men godt: Effekter af spare-låne-grupper. Evaluation summary published by the ROCKWOOL Foundation Research Unit (In Danish).