Arusha
This afternoon I attended a discussion on Savings Groups (SG) as part of a training course that I am attending at Arusha's Snow Crest Hotel, Tanzania. The panelists included Kuria Wanjau of Financial Sector Deepening (FSD), Francis Songela of Care Tanzania W -Power Project, Simon Karoki of CRS Kenya and Courteney O'Connell of World Relief (WR).
 |
Savings Group tool kit
|
There is no doubt that there is a SG revolution in Africa. SG are a group of self selecting individuals that come together for purposes of saving and lending to achieve their financial aspirations. Formation, training and mentoring of groups in an area is initially initiated by external agents such as International Non-governmental Organisations (INGOs), local NGO (could be faith based organisations or non faith based organisations) using various methodologies. Groups birthed out of these first generation groups either form spontaneously or are replicated by trained field agents, group members who have graduated from an SG and so on and so forth.
 |
| Savings Group at work in St. Theresa, Ibenga, Zambia |
In today's discussion some of the key issues on the table were: the pressure for results and meeting targets by implementing agencies (IAs) versus the quality of the trainings and sustainability of the groups; is linking SGs to formal banks the way to go?; are SGs really reaching the poor as claimed by many IAs? what is the future of the savings movement? What are some of the concerns?
These are some of the views expressed by the discussants:
- SGs are becoming attractive to formal banking. This will help in expanding the outreach of formal banking institutions into rural areas. Formal Financial Services play a complimentary role to SGs especially for security reasons e.g. when the amount of money in the 'box' is huge especially towards 'share out'. Opening an account with a bank would guarantee the safety of the funds.
- The financial market should develop products that are attractive to the SG.
- Linking SG to formal banking will give raise to issues of consumer protection. Information sharing with groups will be key in ensuring their interests are protected.
- The constantly changing operational environment is affecting quality of programme delivery.
- There is concern that government policy (or regulation) may dilute the original purpose of SGs e.g. by introduction of formal registration/taxation or promotion of conflicting approaches.
- Introducing service providers e.g. banks gives a wider choice to the SG and individual members.
- Lack of transparency e.g. trainers are in some cases taking advantage of groups and members leading to people losing money.
- Technology will improve the efficiency of SGs e.g. mobile phone technology can reach those who do not want to below to groups but would like to save/or borrow.
- There are opportunities for linking SG to other initiatives e.g. clean energy.
There is no doubt that many practitioners and keen followers of the savings revolution are eager to see what will follow. The most important thing is that the SGs should define how they will evolve so that the are not 'swallowed' by banks or other formal institutions. They should continue to re-invest themselves and to service their interests and those of their members above anything else. Their destiny is in their hands.
