Video: See how a community in Vietnam is coming together to save money and manage small loans to help them start businesses and look after their families.
Over 2 billion adults worldwide do not have access to formal financial services. The majority live in developing countries and are unable to set up bank accounts because they have little money, there are no banks nearby, they are unable to complete the paperwork or because they aren’t aware of the benefits.
People who do not have access to financial services are much less likely to save money and are therefore less likely to have the resources to keep their children healthy, safe and in school.
Savings groups are the first step to financial inclusion for these people as they provide a mechanism to save money while building financial knowledge and skills. They can play a vital role in achieving one of the Global Goals’ ambitions to end poverty in all its forms by 2030.
Since 2004, we have supported more than 1.3 million members in 59,000 savings groups in 28 countries. Of these, 82% are women. We also set up and support youth savings groups to help young people save money and learn key financial skills.
Through savings groups, people have the ability to mobilise small sums of money, save regularly in a disciplined way and manage their collective resources for the benefit of each other.
They are small groups of 15 to 25 members that have well-defined procedures, allow members to make basic rules about saving and borrowing, and operate in transparent and democratic ways. This leads to a secure system that inspires confidence and encourages use of the savings, borrowing and social insurance services offered by the group.
They are relatively easy to implement and do not require any levels of literacy. Once developed, they can be managed and replicated by community members themselves.
Not just economic benefits
Savings groups can work as effective vehicles of social and economic change. They can be used to deliver financial education, child-rights awareness, healthcare and agricultural training. They can also help communities sustain infrastructure such as water points or build resilience in planning for or recovering from emergencies.
Youth savings groups are a perfect ‘starter system’, allowing young people to learn about finance in a low-risk fashion.
An estimated 800 million young people live on less than US $2 a day and only 4.2 million have access to financial services. Saving groups are key to changing this and tackling youth unemployment by helping young people create their own jobs, by investing in a small business or their education. They are also perfect platforms for dispensing information, training and new opportunities.
As part of the process, young people learn to set savings goals, distinguish between good and bad options for borrowing and discover how to link with banks and microfinance institutions.
Microfinance gives young Ugandans a working future
In Uganda, we’re working alongside Accenture Development Partnerships and the Swedish International Development Cooperation Agency to deliver A Working Future, a programme that connects young people with access to financial services, teaches them work skills and links them to job opportunities.
As part of the project, savings groups are used to teach young people market-driven skills that help them get good jobs or spot gaps in the market to set up their own businesses. Over 12,000 youth have benefitted from the programme since 2012, increasing their income by an average of 621%.