Savings to the Last Mile – Why Location Counts
  • September 09, 2016

Digital financial services have made tremendous inroads in expanding savings services to the “last mile” of women in remote, rural areas. But what do financial service providers do if the mobile infrastructure and take-up hasn’t reached critical mass yet?

In Rwanda, financial exclusion has dropped dramatically – from 27% in 2012 to 11% in 2015 according to the 2016 Finscope report. A large part of that decrease has been due to Umurenge[1] Savings and Credit Cooperatives (U-SACCOs) and savings groups. 

The U-SACCOs are part of the Rwandan government’s Vision Umurenge Program. Umurenge SACCOs were initially established by the government in 2009 in each and every Umurenge (or sector) of the country. WOCCU, in partnership with UNCDF’s MicroLead program, has collaborated with the Government to update and share new policies and products with 90[2] of the 416 Umurenge SACCOs to promote increased sustainability of these small institutions. At the same time, WOCCU has been supporting the government’s initiative to merge the U-SACCOs from 416 sector level SACCOs to 30 regional institutions.  The Government’s plans also include automating the U-SACCOs so members will be able to enjoy multi-branch and digital services in the future.

During the course of the project, WOCCU discovered that the 416 U-SACCOs included 138,505 savings groups and other informal group entities among their members across Rwanda. Of the 90 within the MicroLead portfolio, there were 33,424 active savings group accounts. The savings groups are primarily composed of women in rural areas involved in agriculture – either production or sales (of rice, maize, and vegetables). Some of the savings groups were started by INGOs, some were started informally, and some by the Government. But the surprise was that in many cases, savings groups were approaching the U-SACCOs to formally link, rather than vice versa.

Typically, creating linkages requires a good bit of marketing and financial education to connect savings groups to formal institutions. But in Rwanda, it was happening spontaneously at the U-SACCOs. Why?

WOCCU credits location.

“The U-SACCOs didn’t have to do much to get the groups,” said WOCCU’s Stephanie Grell Azar, Program Manager. “And the U-SACCOs don’t have much staff or much transport to reach out to groups. But one thing I found is they rely on the village hierarchy. These U-SACCOs are strongly connected to the village representatives who advocate for the U-SACCO.”

U-SACCOs are located near health centers, which also tend to be nearby a school and a market. These are all a draw for the local, rural women. “When you go [to a U-SACCO],” said WOCCU Rwanda’s Jean Thiboutot, “you see groups of women either waiting to be served at the U-SACCO or to be seen by the health services, and they sit together and they talk.

“At the national level, there are several projects in Rwanda trying to link savings groups to banks. But the difference is lower down, at the sector level, everyone knows each other and knows where the U-SACCOs are.”

Location isn’t everything, but it’s important. “To encourage linkages,” continued Jean, “we’ve also worked on the products to make it easier for group members to access loans.” Three years ago, WOCCU analyzed the U-SACCO members and discovered that extensive paperwork was a barrier to saving and borrowing. So they simplified all the forms, making it easier both for the clients and the U-SACCO. For example, U-SACCO staff can now make a loan decision without going to a credit committee. WOCCU supported the development of different products, (e.g. 90-day, interest-earning savings certificates) to better adapt savings services to the saver’s needs (e.g. for school fees, agriculture, and small business needs). In most of the U-SACCOs, the loans to savings groups have increased, and so has the savings.

In Rwanda, cash is still king. “Mobile operators are gaining,” says Jean, “but just to conduct the transaction, group members must still all save into their savings group account, and then the money must travel to the bank and back. In rural areas, you need agents nearby and must make sure the agent has cash on hand. If it’s a mobile network operator or merchant, they don’t always have the cash flow. The users are not always ready to pay the fees. The U-SACCO is a brick-and-mortar kind of expansion. This goes against the mobile money theory. People seem to value more the U-SACCO when it has a building and when it is attached to their community, providing everyone with services, and providing loans to those who can qualify.”

The SACCOs are not yet automated to manage digital financial services (DFS). But DFS is not being ignored. To improve performance and better serve their members, U-SACCOs are also engaged in a merger and automation process. When completed, district SACCOs will be linked to a national Coop Bank and serving their members with digital based services. Some SACCO members are already using mobile money among themselves, sending money to each other, and some of the U-SACCOs are serving as mobile money agents.

The changes have had an impact. There has been an overall savings increase of 85% between December 2012 and December 2015 – a growth from $14,383,337 to $26,498,689. Purpose-based savings products or term deposits such as those mentioned above, went from $258,000 to $889,060, 244% growth over the same period. By focusing on client needs, U-SACCOs have expanded access to savings services in rural Rwanda.

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.


[1] Rwanda is made up of 416 Umurenge administrative sectors and the Umurenge SACCO program established a SACCO in each Umurenge.

[2] Access to Finance in Rwanda (AFR) funds WOCCU’s work with an additional 90 U-SACCOs.