New to Savings Groups?


Modern Savings Groups go by a lot of names: Village Saving and Loan Associations,Saving for Change GroupsSaving and Internal Lending CommunitiesCommunity Based Savings Groups, and others. They are generally groups of 15 to 30 men or women who meet regularly to save small amounts of money. Once the members have saved enough, they start lending to themselves. 

People have been saving and lending in similar way in villages around the world for a long long time. Since the 1990’s and especially in the last ten years, there has been a surge of interest in improved techniques for managing these groups. These techniques make the difference between traditional groups and modern Savings Groups.

Major international non-profit organizations, like CARE, Oxfam, CRS, Aga Khan Foundation, and Plan International have started programs to introduce Savings Groups relying on the new techniques to large numbers of people in Africa, and increasingly in Asia and Latin America. Important donors, 

including the Bill and Melinda Gates Foundation, The MasterCard Foundation, USAID, UNCDP, Canadian CIDA, and many others, have backed these efforts. Now, increasingly, competent local organizations are able to run savings groups programmes themselves with little or no outside technical assistance.

Here are some of the principles that make modern savings groups successful:


Transparency  To be sure that money is not mismanaged, members of Savings Groups meet regularly - usually weekly - and all financial transactions take place at the regular meetings in front of all the members. To make sure that records are not tampered with between meetings, all records, and all spare cash, is kept in a lock-box with three locks. Three members of the group each keep a key, and agree to open the box only at the regular meetings.


Safe lending  The group makes loans to its members from the collected savings. All members must approve every loan, and because the loan is made with the members’ savings, they are very careful to make sure they trust the potential borrower. They also set limits on how much any one member can borrow - usually three times the member’s savings.


Democracy  Members write a constitution together as part of their training, and elect officers with clear responsibilities. Meetings are disciplined, and everyone has a voice.


Annual distribution  Most groups set a date after about a year of saving at which they will share out all the money that has been saved. Each member gets his or her savings back, and the interest earnings are distributed according to a pre-agreed formula.


Social support  Groups often establish a social fund and other ways to support members who have health crises, deaths in the family, or other urgent needs. Many groups take on projects to improve their community. 


Learn more…

Aga Khan Foundation made this excellent video that shows savings groups in action. It gives a lot of good information in seven minutes.

This article - Savings Groups - What are they? - by Hugh Allen and David Panetta, was commissioned by SEEP and is a comprehensive overview of the field.

And, of course, the Guides and Manuals section and OnLine Library on this site each have many reference materials for those who still want to learn more.