Worldwide, it is estimated that approximately twelve million people are members of facilitated savings groups and millions more enjoy the benefits of informal financial groupings like ROSCAs, ASCAs, tontines, etc.  MFIs and other formal financial institutions have been working to leverage these groups, forming and linking them to their formal financial services and accounts. Typically, forming a savings group entails a good bit of financial education – both in how to manage groups and product-linked financial education. But is it worth it for MFIs?

This is the question that Freedom from Hunger and its MicroLead partners, Le Réseau des Caisses Populaires du Burkina (RCPB) and la Société pour la Petite Entreprise (SOFIPE) intend to answer. The two financial service providers (FSPs) are leveraging alternative delivery channels (ADCs) and Freedom from Hunger’s “Savings for Change” methodology as an affordable way to expand savings services to rural areas, with a particular focus on rural women.

Both FSPs are now completing the first phase of the project – forming and managing savings groups, developing a formal savings product, and providing financial education using a model developed by Freedom from Hunger. As of the end of June, RCPB has facilitated the formation and training of 850 savings groups, and SOFIPE has 935. In the second phase, the FSPs will pursue the financial education and formalize the linkages. Together, this represents over 40,000 rural women mobilized into groups during a nine-month start-up phase.

In both cases, the FSPs are using their own internal staff to supervise “community agents” directly responsible for forming groups and building linkages. This is an innovative approach when compared to the classic method of relying on an external, NGO partner that is in charge of creating and linking savings groups. “Savings groups are usually run by NGOs in West Africa,” says Christian Loupeda of Freedom from Hunger. “But we want to show that MFIs can strategically invest in savings group formation as a strategy to reach out to difficult-to-reach segments, and particularly to women in rural areas.”

The community agents are people from the community who are trained by the MFIs’ staff facilitators  to form savings groups in their own and neighboring villages. The use of these agents dramatically reduces the implementation costs to the FSPs. Community agents are compensated by the savings groups, receiving a small stipend from the groups to cover their time, transportation costs, etc. Potential community agents are identified by the FSP facilitators, who also supervise and train the agents in how to form savings groups.

The two FSPs are also utilizing mobile agents and digital financial services, though each went different routes. RCPB, a network of credit unions, is using its own digital platform, Intercaisse, an application initially developed to link its credit union databases. Intercaisse also has the capability of providing mobile money services, so savings groups can have access to their accounts wherever they are. RCPB is currently in the process of deploying its own network of agents equipped with cell phones to allow savings groups to do their financial transactions. Most of the agents are roaming agents, and all are proprietary to RCPB. However, RCPB expects that some existing Mobile Money agents may be interested in working with the institution. In this case, the design of the agent network must first be approved by the regulator. RCPB is currently engaging with the central bank in that regard, with a focus on the security of the network and agents.

SOFIPE decided to use an existing platform and network of existing MNO mobile money agents. The FSP partnered with Airtel, the largest mobile network operator in Burkina Faso. Airtel has over four million subscribers, and roughly a third of them utilize its mobile money solution. SOFIPE and Freedom from Hunger are working now to integrate the AirTel Money platform with SOFIPE’s core banking system.

Whatever route FSPs choose, if technology is involved, Christian warns that the devil is in the details. When considering any DFS solution, it’s important to think ahead to any potential changes in IT within the organization or the mobile platform. Technology upgrades may change the way the DFS platform integrates with the institution’s MIS.

While SOFIPE targets women, they’ve discovered high demand for their savings group formation and linkage services from men. So SOFIPE encouraged Community Agents to form male savings groups in villages where there is interest. To their surprise, in villages where they created male groups, they are attracting more interest from the women. Working with male groups has seemingly made it easier for them to expand outreach to women. “There’s an important gender issue there we’d like to further explore,” says Christian. “Even though we at Freedom from Hunger target women exclusively, maybe we should do something for men as well to make it more effective?”

About MicroLead

MicroLead is a UNCDF-managed global initiative challenging regulated FSPs to develop and roll-out deposit services which respond to the rural vacuum of services. With the generous support of the Bill & Melinda Gates Foundation, The MasterCard Foundation and the LIFT Fund in Myanmar, MicroLead works with a variety of FSPs and technical service providers to reach rural markets, particularly women, with demand-driven, responsibly priced products offered via alternative delivery channels such as rural agents, mobile phones, roving agents, point of sales devices and group linkages. This is combined with financial education, so customers not only have access but can effectively use quality services.