The Savings Group Movement

Oxfam America, Freedom from Hunger, CARE, Catholic Relief Services (CRS), Plan International, the Aga Khan Foundation, Pact, and many other international and local organizations have made the promotion of savings groups a central tenet of their development strategies. Today, there are savings groups with ten million members living in at least a hundred thousand villages in sixty-five countries. Six years ago, there were just one million savings group members. As Frances Moore Lappé describes in the foreword, the growth in savings group membership must have set a speed record. I know of no other development initiative that has grown so quickly and in so many countries that shows the broad applicability of this methodology across nations, cultures, and religions.

In 1971, Moira Eknes and her team at CARE developed the first savings groups in a remote corner of Niger. It was only decades later, in 2008, that a major investment by the Bill & Melinda Gates Foundation helped spur rapid growth in the field, attracting more funders, including MasterCard Foundation, USAID (the US government’s development agency), and the Inter-American Development Bank, as well as high net worth individuals and a number of smaller foundations.

This massive scale-up has been achieved not through building financial institutions, as microfinance has done, or by transacting finance in the cloud, as mobile banking is doing now, but by catalyzing the problem-solving capacity of the poor to lead their own development, with a little transitory support from an outside agency. Paying the local staff to train groups is virtually the only expense other than research, the training of trainers, advocacy, and developing new products.

Although savings groups are uniquely designed to effectively reach the world’s poorest, they aren’t able to address every financial need in these areas. Both microfinance and mobile money have a unique role to play in expanding financial inclusion. Savings groups are most appropriate for the rural or urban poor, who need a place to save more than they need a loan and are beyond the reach of financial institutions. Microfinance is best suited for those with a business large enough to benefit from a loan and in areas where there is more economic activity. Members of savings groups whose needs are greater than the group can finance often take out loans from financial institutions.

Between 1980 and today, microfinance has grown from a few scattered projects carried out by NGOs to two hundred million borrowers today. Credit unions reach a similar number. Mobile money facilitates remittances from workers in the city to their relatives in the villages and extends the reach of financial institutions. Everyone can work together to provide financial inclusion for the two and a half billion who need a better way to save and borrow. If nonprofits introduce this improved way to manage finances that savings groups represent in a scattering of villages throughout a region, we may learn that new savings groups have sprung up spontaneously to fill in the gaps between groups that were trained by paid staff.