VSLAs: local solutions driving financial inclusion in Ghana

Ghana is the world’s second largest cocoa producer. The sector generates more than USD 2 billion annually in revenue and plays a vital role in regulating foreign exchange fluctuations, an important economic lever for improving living standards. However, access to finance is a significant hurdle for most of the country’s 800,000 cocoa-producing households, predominantly smallholder farmers. Without affordable credit, these farmers struggle to invest in their farms and additional livelihood opportunities, resulting in persistently low standards of living.

Hannah Quansah, a 48-year-old widow and cocoa farmer with four children, is one of these cocoa farmers. The administrative burden and requirements of formal financial institutions have kept her locked out of the system. With no external support, she has found it difficult to meet her family’s basic needs, such as healthcare, education, and food, let alone invest in her farm or in an additional income-generating activity.

No living income without access to finance

In Anomakwadwo, a farming community in Akim West Municipality in Ghana’s Eastern Region, Rikolto implements its Sustainable Cocoa and Coffee programme with funding from the Belgian Development Cooperation (DGD) and SUCDEN. As part of this programme, Rikolto aims to support cocoa farmers in achieving a living income by promoting sustainable production practices, encouraging income diversification, and improving access to finance.

‍Cocoa farmers’ initiative to tackle obstacles to funding

In Anomakwadwo, low literacy levels and limited access to reliable financial information further complicate things. Like Hannah, many farmers are excluded from formal financial systems and instead rely on informal lenders. These community-based money lenders often charge exorbitant interest rates and have unfavourable terms and conditions. “Some farmers end up handing over their cocoa beans as repayment for loans, pushing them deeper into debt,” Hannah explains. This affects their ability to invest in farm productivity improvement initiatives such as pruning, pest and disease control etc., directly affecting their yields and livelihoods.

To address this, Rikolto supports the establishment and strengthening of Village Savings and Loans Associations (VSLAs) in cocoa farming communities. VSLAs are community-based groups, usually with 15 to 30 members, who jointly agree on an amount to save for a period of a year. Members can take up loans of up to 3 times their savings. This way, VSLAs make it possible for members to invest in their farms, start small businesses, or meet urgent household needs such as school fees and medical expenses.  

In 2023, Rikolto introduced the concept of forming a VSLA to Hannah and a group of 27 fellow widowed cocoa farmers. The women embraced the idea enthusiastically and were supported with training sessions and a VSLA kit, which included a secure savings box and other essential materials, to begin their contributions. Rikolto worked closely with the group to develop its constitution, elect leadership, and agree on the price of a single share. A community-based volunteer, known as a community facilitator, was trained to guide the group through each meeting, keep accurate records, and ensure that the agreed procedures were followed.

Rikolto then leveraged the existence of the VSLA to provide additional support to the group members. The women received training in financial literacy to help them make the most of the loans they accessed through the VSLA. Income diversification training was also provided, to guide them in selecting potential income-generating activities to invest in. On-farm training, specifically in climate-smart cocoa production and agroforestry practices, were also part of the bouquet of trainings that Rikolto provided to the group.

Collective action for positive transformations

“Rikolto’s approach of using VSLAs as an entry point for its living income facilitation is starting to pay off,” confirms Alhassan Issahaku, Country Programme Manager of Rikolto’s Cocoa & Coffee Programme in Ghana. After two years of participation in the VSLA, Hannah and her group start to see that collective action really can transform cocoa growing communities. Hannah has accessed three loans of GHS 1,000 (approx. €62.50), GHS 1,500 (€93.75), and GHS 2,500 (€156.25), which she has used to invest in additional income-generating activities and in improving her farm maintenance.  

The impact has been striking: Hannah’s cocoa yields increased from three to seven bags in a single year, and her income grew by approximately 70%. She has also expanded and restocked her retail provision. This enabled her to provide a more diverse range of goods, attracting more customers. Through the group’s annual share-out, Hannah received GHS 1,362 (€85.13) on savings of GHS 1,040 (€65), a dividend of more than €20. The additional income she earns from her retail shop has allowed Hannah to cover her children’s school fees and enrol her first-born son in mechanic vocation training. It has also supported her to pay for professionalised labour services for the maintenance of her farm, rather than relying on her children for labour.

VSLAs are doing more than boosting financial inclusion; they are also contributing to complimentary interventions that improve the general well-being of cocoa farmers and their households. With funds from members’ contributions to the VSLAs, Hannah is currently leading a group initiative for cabbage farming in her community. This not only diversifies income but also improves household nutrition.

In the group’s first savings cycle, members bought shares at GHS 4 each (approximately €0.25), and together, they accumulated over GHS 30,000 (about €1,875). Fellow members have similarly accessed loans to invest in their farms or diversify their sources of income. “Hannah has experienced first-hand the power of the VSLA model as a tool for financial inclusion. Through her leadership, the group is taking meaningful steps towards financial independence”, explains Gertrude Nyaapoka, Project Officer of Rikolto in Ghana

With growing confidence and capital, the group has now opened a savings account with a local bank. This is an important milestone: not only does it secure their funds; it also positions them to access appropriate financing from commercial finance institutions. Several commercial finance institutions have already expressed interest in collaborating with them to develop appropriate financing products for the VSLA. “Hannah’s story shows how complex challenges can be tackled through simple, community-led solutions,” says Alhassan Issahaku.

Scaling up VSLAs in cocoa communities

Given the transformative potential of VSLAs, Rikolto is facilitating the scale-up of the VSLA approach across different cocoa-producing communities. In 2024, with the support from partners like SUCDEN, TOUTON, Seattle Chocolate, Danida, CISU and others, Rikolto facilitated the formation of 73 new VSLAs. These groups now support 1,734 cocoa farmers and have collectively mobilised over GHS 1.76 million (€110,000) in savings, with GHS 595,328 (€37,208) disbursed as loans.

From the middle of 2020 till the end of 2024, Rikolto has facilitated the establishment of over 200 VSLAs, reaching more than 7,000 cocoa farmers (50% of whom are women). While the volume of savings continues to grow, Rikolto is introducing digital tools and promoting the use of e-cash to reduce the risks associated with handling physical money. “As chairperson, I’ve learnt that no amount is too small. Even the smallest contribution can make a big difference”, says Hannah.

The VSLAs have become attractive to financial institutions in the area, who see a business opportunity in working with the farmers. A rural bank in the area, Mumuadu Rural Bank, has already approached Rikolto to link them to the VSLAs, so that they can collaborate with them to deliver commercial finance to individual members of the VSLAs. This demonstrates how local community action can attract investment into local communities. However, for farmers like Hannah, working with formal financial institutions still presents challenges. Hannah believes that the long processes and procedures involved in dealing with formal financial institutions are still a barrier to the group accessing formal financial services. Rikolto is actively engaging Mumuadu Rural Bank to design innovative financial services targeted at VSLAs. “Rikolto will continue to find innovative ways to make the VSLAs more efficient, enabling them to deliver tailored services that meet the needs of their members”, concludes Alhassan Issahaku.

Hannah’s story is a powerful reminder that food systems transformation starts on the ground, with empowered farmers, equitable access to resources, and community-led solutions. By strengthening financial inclusion and diversifying livelihoods, VSLAs not only improve resilience in cocoa-growing communities, but also lay the groundwork for a more sustainable, just, and inclusive food system.