Whither the Savings Group?
Saturday, March 21, 2015 at 2:32AM
Greg Pirie

In the introduction of a recent recruitment notice:

“…is proposing to set up a long-term Technical Assistance Facility in Sub-Saharan Africa that will support various financial services providers to extend financial services to the unbanked/underserved through innovative group savings mobilization products and other financial services, including credit, payments, and insurance, with the overall objective of improving household’s [sic] access to financial products and services. In particular, the Facility will focus on partnering with local institutions that utilize a number of financial products and innovative delivery channels to those facing the greatest financial exclusion, such as women, young people, small-holder farmers, and people living in remote areas.

“The Facility will support financial service providers (FSPs) as they design projects that include the following activities:

Is this the first activity to bridge the gap between the informal savings group and the world of the registered & supervised financial institution? Am I right in assuming this is a consequence of applying the concept of linkages to savings groups, initially to facilitate the group’s operations (e.g. by replacing a lockbox with a bank account)?

Will the targeting of new services to “…savings groups and their members” include those only relevant to the individual member? If so and if relatively successful, is this likely to threaten the cohesion of a savings group?

Perhaps more fundamentally, does this represent an important change in the relationship of the savings group with formalised market participants? As with a preceding phase amongst MFIs — in which creating commercial relationships with formalised financial institutions for services supporting their operations was followed by a widening of the range of products and services purchased by MFIs, which in turn was followed by the interest of the capital markets stimulating a pursuit of new legal forms for MFIs to better access capital, leading to the regulation and supervision of MFIs by mainstream market overseers — it may be argued the market may now begin to swallow savings groups in much the same way.

Of course savings groups must not be insulated or quarantined from the wider market within which they operate. To engineer such a segregation is patronising. Yet is there a risk of losing essential characteristics in the process of engaging with ever more market operators?

Article originally appeared on Savings Revolution (http://savings-revolution.com/).
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