Community-managed microfinance : a new model from Sri Lanka

The Village Savings and Credit Organization (VSCO) is a community-managed microfinance organization developed in Sri Lanka under the Community Development and Livelihood Improvement Project, or Gemi Diriya. VSCO is the financial services arm of the community-run Village Organization, which has the mandate of overall economic and social empowerment of the village, particularly the poorest. Within the short 2-3 year period of time since project inception, many VSCOs have demonstrated that they can provide a range of financial services demanded by their members while adhering to global standards of performance. This note describes the context under which the model was developed, identifies some key features of the model and outlines the benefits the system currently provides. Although it is too early to draw inferences on performance and impact of VSCOs, it is hoped that this note provides some initial lessons for interested stakeholders.