Savings Groups: How could they link to banks?

Are there benefits to linking banks with savings and credit groups? This was the topic of a recent workshop co-hosted by SaveAct, FinMark Trust and the Centre for Inclusive Banking in South Africa (CIBA). Held in Johannesburg, the July 15 workshop was attended by a range of players and organisations in the finance and development sectors and was the first open workshop to be held in South Africa to introduce savings-led development work.

hugh allen
Hugh Allen,
founder and CEO
of VSL Associates

Explaining the concept of savings and credit groups in Africa was Hugh Allen, one of the key figures in the savings movement. Founder and CEO of VSL Associates, Allen has done much to put the savings and credit model on the global map. Now with some seven million members in Africa alone, the financial services model is being characterised as facilitating a “savings revolution”. South Africans – through organisations such as SaveAct which now has over 24 000 individual members in functional and sustainable savings groups in three provinces – are starting to join that revolution.

The good news is that the model is accessible to the very poor, and can reach even the most remote rural areas that other financial services struggle to get to. In SaveAct groups, the average return on savings is between 30 to 40% per annum. Many members go on to invest in enterprise and agricultural development.

The workshop also explored additional financial service needs of savings groups. For short periods in their annual cycles the groups experience excess liquidity and need accessible places to deposit and withdraw money to manage this better.

There was vibrant discussion about options to assist groups to manage this phenomenon and while the logistical challenges are acknowledged, it was generally recognised that an opportunity exists for innovation – for the design of systems and social infrastructure to work with savings groups which are amassing considerable volumes of capital.

A copy of the report from the workshop can be downloaded here.

Copies of the presentations may be downloaded as follows:

Savings Groups, what are they? by Hugh Allen of VSL Associates
Savings Groups, broad trends and impact – learning from the ground in South Africa by Nolufefe Nonjeke-Dlanjwa of SaveAct
Defining the relationship between savings groups and formal financial services by Timothy Hobden, Marcel Jakubec and Brendan Meehan of Genesis
Building Financial Capability – Embedded Financial Education by Kim Dancey of FinMark Trust.

The list of participants can be found here.

SaveAct, CIBA and FMT wish to thank the SAB Foundation for their generous sponsorship of the event.

- Updated 5 August 2013.