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The Power of Savings Groups

By Pete Parisetti

Last week I attended the Power of Savings Groups SEEP Conference in Kigali, Rwanda.  There were an impressive 460 participants. A good 80% of them were non-Western, and, of them, at least 50% were women. This triggered the personal reflection of how far the pendulum of local ownership has swung. Perhaps it has always been like that in development, but up to a decade ago in emergency aid proportions were essentially reversed.  It was great to see.

Two main themes cut across all the proceedings.

The first was the momentous transformation of saving groups (SG) into fully fledged agents of social and even political change, with a substantial broadening of their scope of action and reach, both in terms of issues they deal with and people they involve. Examples were presented of individuals using SGs as a political platform, to reach elected positions, or becoming social leaders with broad recognition from the community. Other examples were given of networks of SGs forming to tackle regional-level problems within a country. Other networks started engaging in social change advocacy campaigns. Many SGs were said to have organically grown into cooperatives, providing social protection, improving food security and promoting entrepreneurship. Some provide a platform for health education, and many are used for targeting of selected vulnerable groups.

I was directly exposed to one such example during one of the field visits after the conference, where I met the members of one of the VSLAs (Village Savings and Loans Association) we support through a Scottish Government grant. The group had approximately 50 people, all of whom were essentially entrepreneurs - all of them employ temporary labour and about 10% employ up to 5 full-time staff. Very interestingly, a local government official told us that the area where the SG operates ranks today at number 2 in the district in terms of health insurance and school enrolment. It is evident that the group is a having an impact well beyond its members.

VSLA Group
  (Pete visiting the VSLA group with partner members from Urwego Bank, CARE and district officials).

VSLA Group with Pete


The second, larger, theme of the conference was the role different stakeholders are going to play in a world in which, on the one hand, donor interest seems to be waning and, on the other, SGs are increasingly becoming part of governmental strategies, gradually becoming mainstream for economic development and financial inclusion.

The role of governments is undisputed as far as policy setting, regulatory frameworks, mainstreaming into national development strategies. In some cases like Rwanda, the government also plays a hands-on coordination role, whereby a comprehensive database of SGs and actors supporting them is maintained at central level and gaps and overlaps are tackled directly by the authorities. However, the role of the government in actually initiating the groups is considerably less clear.

Whilst the role of NGOs in the initial development of the SG movement is also undisputed, according to some their position in the long run may become unsustainable. NGOs are seen as catalysts but not necessarily as main actors of change.

At the end of the day there seems to be broad agreement, based on evidence and direct experience from a range of countries, that there is a role for everybody and no single actor should phase out anytime soon. NGOs remain important, primarily as promoters. The government as regulator and, possibly, coordinator, is essential. And Financial Institutions, including Microfinance Institutions, are needed to provide financial services.

The success story of the VSLA I visited in the Western Province captures this multiplicity of actors and roles really well. Under a clearly defined national policy, a very competently-staffed district-level savings and credit cooperative provided the environment in which we (an NGO) could promote a savings group. Group norms were established and adhered to and the group started working with all members making their weekly contributions. Savings were then withdrawn and used, in many cases, for business purposes, from buying sheep to setting up a transnational commerce with nearby DRC. At that stage, we introduced the group access a microfinance partner, enabling the group to access loans and financial training.  At the moment, the group is ready for a second round of loans and is evidently set to become a local powerhouse.


Pete Parisetti is a Programme Manager at Opportunity International

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