Village Savings and Loan Associations in Pastoral Livelihoods in East Africa: A Review of Challenges and Prospects

Abstract

Abstract

Village Savings and Loan Associations (VSLAs) have emerged as important community based financial mechanisms for improving financial inclusion, resilience, and livelihood diversification among pastoralist communities in East Africa. This review examines the opportunities and challenges of VSLAs within pastoral contexts, particularly among Borena pastoralists in Ethiopia and similar pastoral communities across the region. The study relied on a review of published and unpublished literature, including journal articles, development reports, books, and practitioner experiences related to VSLAs and pastoral livelihoods. Findings indicate that VSLAs provide accessible savings and credit services in areas where formal financial institutions remain limited due to geographic isolation, mobility, poor infrastructure, and weak institutional presence. Through collective savings and lending practices, VSLAs support household income generation, women’s empowerment, economic diversification, social cohesion, and resilience to climatic and economic shocks. Women and youth particularly benefit through improved financial participation, leadership opportunities, and engagement in alternative livelihood activities beyond livestock production. However, the review also identified significant barriers affecting the sustainability and effectiveness of VSLAs in pastoral settings. These include nomadic mobility, low literacy and financial education, recurrent droughts and environmental shocks, weak market access, and inadequate infrastructure. Such factors often disrupt group meetings, savings continuity, loan repayment systems, and financial management processes. The study concludes that although VSLAs represent promising locally driven financial inclusion mechanisms for pastoral communities, conventional VSLA models require adaptation to fit the realities of mobile pastoral livelihoods. Flexible governance arrangements, climate-responsive approaches, literacy-sensitive training, digital financial innovations, and stronger institutional support are essential for improving the sustainability and effectiveness of VSLAs in pastoral regions. Overall, VSLAs remain important tools for promoting inclusive rural development, community resilience, and socio-economic empowerment among pastoral populations across East Africa.