Capacity building of members of Village savings and loans associations (VSLAs) has been ongoing since 1991 when CARE first introduced the Methodology in Niger. CARE’sVillage savings and loans methodology proposes that once mature (after 18 months), groups can function with no external support. However, one of the challenges to sustainability of village savings and loans associations in Suba district is low levels of financial literacy. Little has been done with regard to establishing how capacity building impacts on sustainability of these associations. The purpose of this study was to examine the impact of Capacity building on sustainability of Village savings and loan associations in Suba district. The objectives of this study were: to establish how financial literacy as a component of capacity building impacts on sustainability of Village savings and loan associations in Suba district, to assess the extent to which Selection, planning and management as a component of capacity building impacts on the sustainability of Village savings and loans associations in Suba district, to examine how quality of trainer of trainers impacts on sustainability of Village savings and loans associations in Suba district and to determine how group quality as a component of capacity building impacts on sustainability of village savings and loans associations. The study adopted descriptive survey design where quantitative and qualitative data was collected. Using probability and non-probability sampling techniques, a sample of 109 respondents drawn from a target population of 130 individuals engaged in VSL activities and 3 informants from CARE WED project providing entrepreneurial skills to VSLAs in Suba district were studied. Quantitative data was sourced through the use of questionnaire and was administered to group officials who are also members engaging in saving and loaning activities. The study was delimited to Suba district, Homabay County, Nyanza province. Data analysis employed inferential statistics. Quantitative data was analyzed by use of statistical package for social sciences (SPSS) software/tool to generate frequencies, mean, and correlations. CARE’s GSL MIS was also used as a tool to generate financial variables that indicated group performance and quality. Hypothesis testing involved use of correlation tests at 95 % confidence level. Study findings revealed that there was positive correlation of 0.846 between Selection, planning and management and access of group loan fund which was an indicator that training SPM increases access to group loan fund, though it had no significant relationship. Results obtained also revealed that SPM is likely to have contributed to higher number of people engaging in Income generating activities, 98.2% indicated that they do engage in IGA and only 1.8% did not. The study also examined how quality of trainer of trainers impacted on sustainability of village savings and loans associations, 41.3% indicated that they knew a trainer who left before course package was completed, 58.7% indicated they didn’t know any, and that trainers completed the trainings. Finally, on group quality, the findings showed that majority, (95%), of members receive loan from group fund indicating that access of loan fund is high in VSLAs in Suba district. The study concluded that there is no significant relationship between financial literacy and sustainability of village savings and loans associations. Key recommendations include encouraging savings and loans associations to attend financial literacy trainings for the benefit of their groups. The study suggested that a study should be conducted to determine the influence of loan fund utilization rate on choice of income generating activities and influence of record keeping and loan loss
among village savings and loans associations.