Project Aim

The consortium’s goal will be to illuminate the pan-African phenomenon of savings groups through different lenses. The central lens will be that of formal financial services, with the other lenses complementing the analysis.

Inclusion and Formal Financial Institutions

Africa continues to be an underbanked continent despite the acceleration of formal finance services over the last decade (Verhoef, 2017). There is a gap in the literature on the link between savings groups and formal banking. In particular, we would like to understand whether participation in savings groups facilitates future use of formal finance services, and therefore serves the wider goal of financial inclusion. The link between savings groups and formal finance also meshes with one of the other goals of the research: to look at business outcomes and entrepreneurship. Inroads into linking savings groups with formal banking have been progressing with the collaboration between Kenya’s Equity Bank and several village savings and loan associations as an example (CARE, 2015). These associations are often located in geographically remote areas, which positions these collaborations between savings groups and formal banks well to make significant contributions towards financial inclusion. The Nigeria-based Diamond Bank in 2016 unveiled ‘Diamond eSUSU’ scheme, a digital version of Nigeria’s traditional savings system (AllAfrica, 2016). The Mastercard Foundation funded the Savings at the Frontier project, which aims to learn from ongoing work on the promotion of informal savings groups and their links with formal finance (Oxford Policy Management, 2018). In South Africa a variety of formal banking products to attract stokvel savings has met with some success (Verhoef, 2001; Rouse & Verhoef, 2017). The phenomenon of savings groups may also be looked at in the context of the rise of agency banking.
Until now no research project has been able to document the banking products in this area and their beneficiaries, and especially with a lens of looking at women, who are less likely to have a bank account in their own name than men. According to The World Bank, just 58% of women have access to financial services in comparison with 65% of men (Findex, 2014).


Africa’s female entrepreneurship rates are the highest in world (Disrupt Africa, 2017). However, entrepreneurship is a broad concept and should be differentiated. In many cases, entrepreneurship is a consequence of poverty and a response to a lack of alternatives. Many female entrepreneurs in Africa are struggling economically (GEM, 2017). Savings groups may be a vehicle for them to transform their entrepreneurial activities into something with a great added value for their families.

and Business Outcomes for Empowerment

Factors affecting entrepreneurial empowerment through savings groups in sub-Saharan Africa are placed in the context of a rapidly changing environment. For instance, the sub-Saharan financial sector has undergone major transformations during the past decade, as illustrated in various chapters of Redford (2017) and Rouse and Verhoef (2016). Particularly noteworthy is the rise of a vibrant fintech startup scene that is changing the very nature of finance, translating into revolutions of business models and how business is done – the rise of mobile payments if just one example. Africa is at the forefront of these technological advances. Fast-paced and revolutionary advances and developments affecting entrepreneurship must be factored into any relevant discussion of entrepreneurial empowerment through savings groups.

Urban and Rural Interventions

We will add to existing knowledge by looking not only at rural interventions but also at savings groups in an urban context as evidence that they can have a transformative power in the future developments of communities. The prevalence of voluntary savings organizations in urban locations amongst the rapidly rising urban middle class underlines two key aspects of twenty-first century urban Africa. The first is a persistent traditional notion of communality and ’ubuntu’ in facilitating permanency in the urban environment. The second is the sustained skepticism of formal financial institutions’ ability to address the financial and credit needs of the newly urbanized. Dedicated policy interventions in the urban context to mobilize the savings capacity towards empowerment in business in urban areas will be addressed in this research project. Similar interventions in rural areas focusing on the empowerment of rural enterprises, often are without collateral to secure access to credit, will also be covered. These policy considerations are mutually inclusive, because of the mobility of people between the rural and urban contexts. Evidence in these areas can have transformative power for the communities in which measures are implemented.

Social Capital
and Social Outcomes

Social capital and social outcomes are important dimensions to embed in the discussion of women’s empowerment. Savings groups are about more than just money and regular social encounters. Members become an active part of a real community that empowers people, with tangible social outcomes. Despite these many positive factors, which will be explored in the project, there are also issues and constraints that research has identified that merit further attention and will be brought out through the project. Negative externalities of an otherwise widely positive phenomenon (Di Falco & Bulte, 2011; Mayoux, 2001) range from peer pressure to situations where group members try to evade their sharing obligations. Mayoux (2001) in particular raises relevant questions in the context of women’s empowerment, which will serve as a guide on the various dimensions of this issue.