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KNOWLEDGE MANAGEMENT
SPOTLIGHT Digitization of Savings Groups May 2023
SUMMARY Challenge: VSLA groups
often collect weak, arduous paper records, leading to lengthy group meetings, and low confidence in the reliability and security of the records.
Opportunity’s Solution: Digitization of VSLA transactions.
Evidence of Success: u Increased confidence
in groups’ records
u Reduced meeting
times
u Reduced cost of
external bookkeepers
Next Steps: Development of wider ecosystem of related apps designed, among other things, to link groups to formal financial services.
THE CHALLENGE: DEEPER FINANCIAL INCLUSION FOR WOMEN Despite efforts to increase financial inclusion, many low-income individuals – especially women – continue to be excluded from formal financial services due to various barriers such as literacy, geography, and social norms. Semi-formal savings groups, such as Village Savings and Loans Associations (VSLAs), have been an essential source of financial services for many – especially women – who are unable to access formal finance. VSLAs are a simple and secure system for communities to save money, receive loans, and secure emergency insurance. The typical recordkeeping consists of a group ledger and individual passbooks, with calculations performed by hand or with a calculator. While this record-keeping is very transparent, it is also time-consuming, prone to error and manipulation, and vulnerable to natural disaster. Good records are essential to guarding trust within the savings groups. Trust is the key to the social cohesion that keeps the groups functioning. In addition, good records can be a gateway to linking with formal financial institutions to further safeguard savings and to capitalize loan funds because good records demonstrate to banks that groups are reliable and provide visibility into the group’s finances to banks can easily judge a group’s credit worthiness.
OPPORTUNITY’S INNOVATION: DIGITIZING VSLAs As part of a larger program to strengthen VSLAs, Opportunity has developed an app to digitize VSLA record keeping. The app digitizes the transactions that are normally recorded in the group ledger, including – u Attendance u Shares purchased u Savings deposited u Interest earned u Loans disbursed u Loan payments collected
The app is being tested among VSLAs in Malawi. The pilot program included 503 members from 20 VSLAs in two districts. Each group received a smart phone and power bank to operate the digital app.
RESULTS: DIGITIZATION IMPROVES RECORD KEEPING To evaluate the pilot program, Opportunity carried out a baseline, mid-point, and endline evaluation involving a survey and focus group discussions. The evaluation showed very positive results. 99% of members reported having received training from Opportunity on digital record keeping. Other positive results included –
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