Community-Based Financial Capability Intervention and Depression: A Quasi-Experimental Evaluation In Central Mozambique

Background: Poverty and its multifaceted effects contribute to survival-related stressors that intensify mental health challenges, particularly among low-income women. Community-based financial capability (FC) interventions, such as Village Savings and Loan Groups (VSLGs), have been shown to enhance mental health, financial and nonfinancial factors examined in this study, including household assets, food security, interpersonal functioning, and health, while also strengthening women’s agency and coping strategies.

Methods: Utilizing de-identified data from a February 2023 program evaluation in Central Mozambique, this study employed a post-test-only quasi-experimental design. The intervention group (N = 5,909) consisted of VSLG participants, while the comparison group (N = 2,814) comprised individuals on a waiting list. A random subsample of 653 participants (317 intervention, 336 comparison) was analyzed. Multiple linear regression and Structural Equation Modeling (SEM) were used to examine the effect of participation and duration in VSLG intervention on depression influenced by household assets, neighborhood social capital (NSC), general health, and household hunger, alongside theoretically and empirically grounded control variables.

Result: VSLG participants reported significantly lower depression scores compared to the comparison, non-VSLG sample. The SEM direct path analysis revealed a significant inverse relationship between both participation (β = -0.78, p < .05) and duration (β = -0.30, p < .01) in VSLG with depression. Participation in VSLG was positively associated with household assets and general health and negatively associated with household hunger. In SEM models 1 and 2, mediators showed that NSC and household hunger were positively associated with depression, while general health showed a strong inverse correlation. VSLG participation had significant direct and indirect effects on depression via general health (β = -0.08, p < .01) and household hunger (β = -0.19, p < .01). Similarly, duration of participation had significant effects through household hunger (β = 0.04, p < .05). SEM models 1 and 2 explained 51% (R² = 0.51) and 52% (R² = 0.52) of the variance in depression, respectively. However, the influence of VSLG on NSC and household hunger varied across models.

Conclusion: FC community approaches help break the cycle of poverty by improving individual outcomes and household living conditions, thereby enhancing overall community well-being. In Mozambique, FC interventions provide a critical strategy to reduce the burden of poverty affecting millions. Policymakers, particularly in rural development, should prioritize and scale up FC approaches such as VSLGs to improve life outcomes. By advancing both financial and non-financial outcomes, VSLGs represent a scalable, community-driven intervention that can alleviate psychological distress and enhance well-being in resource-limited settings.