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Community-based Savings Groups

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Beyond Financial ServicesClick on the image to download the brochure "AKF Synthesis on Savings Groups – Beyond Financial Services", which includes Case Studies
(PDF, 968KB)
AKF Synthesis on Savings Groups – Beyond Financial Services summarises the findings of a Learning Initiative carried out by the Aga Khan Foundation (AKF) with support from The MasterCard Foundation, to study the integration of Savings Groups and other developmental activities.

The Other Activities (OAs) include:

- training provided to group members (separate from training for financial activities);

- products or services offered; cash or in-kind; linkages between the SG and service providers including financial institutions;

- creation of federations or networks of SGs;

- or any other product or activity in addition to the core financial activities of the SG (internal saving, borrowing, and insurance).

The Learning Initiative examined how Savings Groups are leveraged for other development activities, how linkages to other services take place, and the associated costs, benefits and risks to group members. This paper summarises the findings and conclusions of the Learning Initiative regarding the sustainability of Savings Groups and of the Other Activities, as well as the residual value or benefits of the Other Activities that may persist after the intervention ends. It explores the internal and contextual factors that influence sustainability, replicability and outcomes. Finally, it concludes with some preliminary thoughts about good practice and some areas where further research would be useful. It is hoped that the findings of the Learning Initiative will assist facilitating and funding agencies in considering how Savings Groups can be effectively leveraged to contribute to the achievement of their developmental goals.

Savings Groups, as discussed here, are time-bound, distributing Accumulating Savings and Credit Associations that distribute their assets to the members at the end of regular cycles, and then begin again. Savings Groups are widely believed to be a safe method for people to provide financial services to themselves, and one that is generally much less expensive per person reached than other approaches to providing financial services. Savings Groups often serve people who would not otherwise have access to a safe way to save, or a convenient place to borrow.

A Savings Group can be reliably trained in eight to 12 months through a series of visits from a trainer, usually someone based in the community where the groups are located. Trainers generally work under the supervision of Facilitating Agencies (FAs) whose role is not to provide financial services, but to facilitate the Savings Groupsin learning to provide the core financial services of saving and lending to their members.

The recognition that Savings Groups reach large numbers of people often living in remote rural areas, and do so in a low-cost, sustainable fashion, is creating growing interest in leveraging Savings Groups to achieve other developmental aims. FAs are increasingly introducing a variety of Other Activities to Savings Groups.

This has created some concern that the Other Activities may put members’ savings at risk or divert members from the core financial activities of the Savings Groups.

To maximise the effectiveness of its work and to better understand the expected (and unexpected) outcomes of participating in a savings group, AKF developed a monitoring, evaluation and learning (MEL) plan. The MEL plan relies on collecting and analysing information at various levels. Routine monitoring of data on the functioning of groups that are receiving support involves collection and analysis through a standard management information system (MIS). The MIS also enables tracking of a representative sampled of graduated groups for a 1-2 year period to help AKF monitor group survival after initial support ends.

Beyond routine monitoring, quantitative baseline and follow-up surveys help country programmes understand the status of savings group members along key indicators before their participation in the groups, and then three to four years later. Moreover, systematic qualitative studies help AKF better understand the ways in which participation in saving groups affects the lives and livelihoods of their members. The qualitative nature of the studies enables staff to delve deeper into the effect of savings groups on their members and the communities.

A collection of studies on the effects of Savings Group membership

A series of four qualitative studies, completed in Mozambique (2011), Madagascar (2012), India (2012) and Tanzania (2013) were conducted to better understand how group membership affects saving and loan-taking behaviour, responses to socio-economic shocks and household financial decision-making.

These studies can be accessed below (PDF format, English):

Community-Based Savings Groups in Bihar
Community-Based Savings Groups in the Sofia Region
Community-Based Savings Groups in Cabo Delgado
Community-Based Savings Groups in Mtwara and Lindi

Under the Learning Initiative, AKF researchers conducted a number of studies, either through field research or desk reviews, to learn from experiences to date and understand the potential to achieve broader developmental objectives by adding-on other activities. While eleven studies were completed, this paper draws on findings from nine studies focusing only on studies of Savings Groups combined with Other Activities. However, because Savings Groups are frequently compared with the large Self-Help Group movement concentrated in India, AKF also commissioned a comparative analysis of Savings Groups and Self-Help Groups to understand the similarities and differences between the two models and to situate Savings Groups within the context of other community based movements. The eleventh study was from India examining the experience of a private sector consumer goods company sourcing sales agents through Self-Help Groups. This study was excluded from the synthesis as an extreme outlier, in that the relationship between the private sector firm and the Self-Help Groups was very short-lived and tangential.

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