In Southern Tanzania, the Nema Digital Savings Group started as a cash-based savings group in 2012. At that time, it consisted of 25 members (15 women and 10 men), gathered together after a mobilisation meeting organised by the Aga Khan Foundation and the village’s executive members. Before, community members simply stored their cash in their homes. However, many saw the value of a cash-based savings group because they believed it ensured greater safety of one’s money, and because it enabled access to loans that many hoped to use for school fees and their small businesses selling vegetables.
When the transition to a digital platform began, many group members found it hard to follow along. Uncertainty around decision making and using the platform often resulted in frustration, as the USSD (a mobile system that uses text messages to move money) refreshed and returned to its home screen whenever there was a delay or lack of action. This design flaw also made each meeting longer. Despite the challenges, Rashidi Omari says that everyone was eager to learn and was patient with the education process.
Aga Khan Foundation staff visited and coached group members about the platform and helped to boost trust and knowledge about the system. The group reports that 60% of its members were able to adopt the digital platform easily. The remaining members sought extra support from the early adopters for help as the group made the shift.
Growing pains included an aversion to risking too much by immediately giving up cash-based savings completely. Members started by saving just a little via the digital platform – approximately TSH 3,000 per month, as opposed to an average of TSH 32,000 per month when the group was using a cash box. After the first nine month cycle finished, the digital share-out went as expected, and this bolstered the group’s confidence.
Technology has often been a leveler and an enabler for opportunity. At the heart of the digital savings group is a commitment to democratic decision making and knowledge transfer. At the beginning of each cycle, the group makes decisions collectively to set the group constitution, including minimum payment at each meeting, the loan service charge, the maximum duration of a loan, and the election of a chair person. This group decision making ensures shared alignment and ownership in the process, reducing complaints. Nema Group members chose to establish a system under which the interest rate increases as the size of the loan increases, a significant change from the cash-based savings group approach, where groups typically set an interest rate of 3% on each loan.