In a country with a teetering level of poverty and unemployment, the findings of a recent independent study of savings group impact are very encouraging. The study, done by Khulisa Management Services, concluded that SaveAct’s method enables people to build resilience and positively change lives and communities.
SaveAct was started in 2005 as a response to the plight of rural women, using an enhanced version of the village savings group model that is found all over Africa. Over time this model, which includes financial education, has been refined, with basic training in agroecology farming and enterprise development offered to members.
The study was commissioned by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to determine how savings groups (SGs) that follow SaveAct’s methodology are building resilience to extreme events such as Covid or climate change. Thirty-three savings groups comprising 293 members were sampled, from urban, peri-urban and rural areas of Gauteng, Eastern Cape, and KwaZulu-Natal.
Key elements that contribute towards resilience are:
- The range of financial services provided by SGs, that includes access to affordable loans and cash lump sums from annual share-outs;
- Pooling of financial resources that results in members earning interest on their savings;
- Financial security and less indebtedness;
- The camaraderie developed in SGs, providing added support when needed.
The study found that the work SaveAct does with savings groups contributes towards a just transition, and the principles of the Financial Sector Deepening (FSD) Framework.
When faced with financial hardship, members have immediate, stress-free access to loans. This facility also makes it possible for them to increase their financial options and adaptability by starting one or more side hustles. Overall, communities with savings groups have less indebtedness which makes it more possible for them to weather storms, whatever the cause.
The report identified the range of training and information that SGs receive as being significant in building resilience. “Equipping individuals and communities with the necessary tools to make informed decisions, adapt to changes, promote inclusivity, and address conflicts contributes towards working for a more equitable and sustainable future where no one is left behind,” said the report.
It concluded that these groups are powerful forces contributing to resilience and how we can define an effective just transition framework. “These groups, formed at the grassroots level, have demonstrated their potential to bring positive changes in communities and individuals. As the world faces many economic, environmental, and social sustainability challenges, Savings Groups offer some hope,” said the report.
Anton Krone, SaveAct founder and director, said whilst thrilled, he was not surprised at the findings. “It is widely known that savings groups (especially those that access financial education and good systems training) are amongst the most sustainable and resilient institutions found anywhere. The economic opportunities presented to members places them at a distinct advantage in navigating poverty and the complexities of surprise shocks,” he said.
He added that climate specialists have identified savings groups as a critical enabler for people in Africa towards achieving resilience (see W. Leal Filho et al. (eds.), African Handbook of Climate Change Adaptation, https://doi.org/10.1007/978-3-030-45106-6_127).
“Khulisa’s study confirms these assertions and places a big responsibility with SaveAct and other savings group promoters to equip stakeholders to embrace and scale these methodologies before it is too late,” he said.