Comparative Analysis of Village Savings and Loan (VSL) and Self Help Group (SHG) Financial Models amid Climatic Disasters in Malawi: Cases for Machinga and Chiradzulo

Abstract

This study provides a comparative analysis of Village Savings and Loan (VSL) groups and Self Help Groups (SHGs) in Malawi from 2020 to 2024, focusing specifically on trends in start-up capital, financial returns, and resilience in the face of climatic disasters. Findings reveal that SHGs benefitted significantly from external start-up capital, resulting in notable growth in financial returns, while VSLs operated independently without external financial inputs, maintaining stable but modest proceeds. A robust positive correlation was established between the level of start-up capital and financial outcomes within SHGs, underscoring the impact of initial investment on performance. Conversely, despite lower financial returns, VSLs exhibited greater resilience during climatic disruptions due to their self-reliant, community-driven operational structure. The study recommends a hybrid model that integrates the capital-strength advantages of SHGs with the autonomous resilience of VSLs, aiming to enhance financial inclusion and strengthen disaster preparedness in vulnerable communities.