How Far Must FSPs Go to Link with Savings Groups?

In Benin, MicroLead partners Freedom from HungerALIDE (an MFI) and FadeC (an NGO) are experimenting with the investment/return balance for linking savings groups. What is the bare minimum that financial service providers (FSPs) must invest to create and maintain a successful linkage? And specifically, do savings groups need formal financial education to succeed? Or might a media campaign explaining the process suffice?

ALIDE and Freedom from Hunger plan to compare “control groups” of savings groups who receive the traditional financial education against groups which only receive their information through mass media. In order to ensure that members of the control groups don’t accidentally encounter the mass media ads, the two sets of groups are located in different parts of the project area.

The media campaign will likely be by radio and is planned to promote the benefits of savings linkages, information about ALIDE, and where and how to access the product. ALIDE will later compare the levels of pickup and usage in both areas. 

The experiment began in January 2016. Savings group linkages were a new process for ALIDE, so it began when ALIDE received field training in savings group operations at FADeC, another Freedom from Hunger partner. The engagement was so successful that ALIDE was inspired to start creating their own network of savings groups themselves, rather than merely partner with existing groups. To date, they’ve developed a group savings product, accessible through mobile phones. Users will be exposed to seven financial education sessions prior to opening an account, and the team is in the process of developing the financial education module. ALIDE will also develop a network of their own proprietary agents to facilitate access of their product to existing savings groups. They also plan to use a digital financial services (DFS) solution consisting of an existing platform being used in Benin. “In Benin,” says Christian Loupeda of Freedom from Hunger, “another MFI developed a transactional platform, CARNES, and is making it available for other MFIs on a fee basis. ALIDE already set up a deal with that MFI for the use of CARNES. So we’ve been structuring ALIDE’s new group product in a way that we can incorporate the use of that platform into our financial service.” ALIDE plans to start delivering these savings services in the first quarter of 2017.

Though the media campaign is still a work in process, ALIDE and Freedom from Hunger plan something significantly “lighter” than the full financial education sessions. Testing will begin in December 2016 and the final research and report will be available by year end 2017.

About MicroLead

MicroLead is a UNCDF-managed global initiative challenging regulated FSPs to develop and roll-out deposit services which respond to the rural vacuum of services. With the generous support of the Bill & Melinda Gates Foundation, The MasterCard Foundation and the LIFT Fund in Myanmar, MicroLead works with a variety of FSPs and technical service providers to reach rural markets, particularly women, with demand-driven, responsibly priced products offered via alternative delivery channels such as rural agents, mobile phones, roving agents, point of sales devices and group linkages. This is combined with financial education, so customers not only have access but can effectively use quality services.