Traditional banking continues to struggle to provide low-cost financial services to low-income clients in rural areas. Informal savings clubs, ROSCAs, ASCAs, tontines, etc. continue to be used, especially by remote rural communities. With the advent of mobile banking and agent networks, access is not as much of an issue as is the challenge of developing customer-centric products and services which meet the needs of the target populations. The challenge remains twofold: 1) the need for development of products that bring the poor into the formal sector safely and responsibly and 2) the need for deep understanding of customer needs and desires. With the right products and services and a financially educated customer base, the issues of dormancy and account usage will decline, increasing the business case for FSPs and MNOs to serve rural customers. Informal groups offer an excellent platform upon which FSPs and other stakeholders like MNOs can access significant numbers of customers and their savings.

MicroLead’s earlier phases focused on savings mobilization by regulated FSPs. Phase I bought market leaders from the South into underserved LDC markets in DRC, South Sudan, Ethiopia, Laos and East Timor. Phase II focused on reaching remote rural communities with regulated deposit services, combining new technologies such as digital financial services, and alternative delivery channels, such as agent networks. Between the two phases, over 2 million customers have been served. In phase II the majority of the projects began working on informal savings which include international NGO- facilitated and local/traditional groups. This new phase will take the lessons learned and scale up informal group linkages, resulting in increased access and use of deposit services in rural communities. This will result in increased WEE, as the majority of members are women, and in increased food security, as most members are smallholder farmers. In rural areas savings are invested informally with family, friends, savings groups and/or household assets. “It’s no secret that savings groups are the lifeblood of the informal financial economy, especially for smallholder households in developing economies...Savings groups are seen as a social and financial safety net for those who weather seasonal hardships related to the variability of their harvest or unforeseen emergencies.”

June 2016
Financial Inclusion