There are many reasons why poor rural households cannot access financial services and many reasons why financial service providers do not adequately service this large section of Zambia’s population. Lack of knowledge, understanding and financial confidence among consumers combined with the high cost of serving small communities in rural areas, and inflexible requirements for documentation and registration by financial institutions exclude many poor people from financial services.
Savings Groups (SGs) have proven to meet the financial needs of those too poor for banks or living in areas too remote to easily access formal financial services. They provide services on terms and in time frames more conducive to the needs of rural clients and with far fewer of the constraints and conditions that are such a barrier to accessing formal institutions. FSDZ believes that that community-based financial services are crucial to expanding financial inclusion, and that SGs are an efficient and effective means to achieving this goal. However, failure to achieve quality at larger scale means the largely donor-funded sector is not yet meeting the potential demand from some 2 million adults.
Our work therefore focuses on piloting and scaling technological innovations and implementing a comprehensive research agenda for SGs that includes primary and secondary research. Findings from these studies help FSDZ and its partners increase outreach to the poorest households in Zambia, improve the sustainability of Savings Group interventions and reach greater scale across Zambia. In addition to improving the cost and outreach of the Savings Group approach, these findings are also valuable to those facilitating on SGs around the world.