KM INSIGHT RESEARCH BRIEF January 2025
Knowledge Management
Savings and Loans Access Strengthened Through Digitized Accounting Digital Book-keeping App Enhances Accuracy, Trust, and Efficiency for Savings Groups Research Overview In six African countries and Colombia, between April and October 2024, Opportunity piloted the DreamSave app for “digitizing” the financial records of savings groups. To facilitate financial inclusion for marginalized and low-income populations, Opportunity helps farmers and entrepreneurs to form and operate informal savings and loan groups. Bookkeeping for these groups can be time consuming and plagued by inaccuracy, which leads to mistrust and inhibits saving activity and access to loans. With the DreamSave app, leaders enter their group’s transactions into a smartphone and the app calculates account balances, enhancing accuracy, efficiency, and trust in the group. The DreamSave system also enables Opportunity to access savings group records electronically. Ultimately, it is designed to facilitate group access to formal finance. In the pilot program, in 2024, Opportunity introduced DreamSave to 749 groups with 16,420 members (70% female). Key Conclusions The following conclusions emerged from a survey and focus group discussions with members of groups using DreamSave: 1. Satisfaction with record keeping – high, moderately improved: The vast majority, 96%, of members were satisfied with their group’s record keeping using DreamSave, a modest increase of 6 percentage points over their previous practices. 2. Group cohesion – strong and improving: With the use of DreamSave, the portion of members experiencing frequent disputes over financial records declined by 14 percentage points to 29%. 3. Operational efficiency – DreamSave saves time: Most members, 65%, experienced shorter meeting times. The portion of members that felt their meetings times were too long declined by a substantial 26 percentage points, from 48% to 22%. 4. Challenges in using DreamSave – cost and connectivity: The main challenges facing groups adopting DreamSave were the cost of data/airtime, for 43% of members, and connectivity to back-up their data, 31%. 5. Willingness to pay – high and increasing: Participants’ willingness to pay for the smartphone and connectivity costs was high, 90%, having increased substantially once members had the opportunity to use DreamSave, by 21 percentage points. Although labor-intensive to introduce, DreamSave provides a good and efficient system for Opportunity staff to monitor, support, and report on savings groups, and DreamSave shows potential as a tool for linking groups to formal finance. Next Steps Opportunity plans to further test the DreamSave app to systematize dissemination, addressing operational challenges, and to pilot the use of the DreamSave system for linking savings groups to formal financial services, especially loans to expand the funds available for members to borrow, particularly during peak demand times such as the planting season.
RESEARCH CONTEXT Opportunity’s Work to Enhance Financial Inclusion Through Savings Groups. Opportunity International (Opportunity) provides financial soltions and training to empower people living in poverty to transform their lives, their children’s futures, and their communities. As Opportunity strives to eliminate extreme poverty, Opportunity strengthens informal finance, which is more accessible than formal finance for lower income, less educated, rural, and otherwise marginalized populations. The main tool Opportunity uses for informal finance is savings groups, which are informal community “banks” with around 30 members each. Opportunity forms and strengthens these savings groups in multiple contexts, including those in which Opportunity piloted the DreamSave app: the Agricultural Finance Program (AgFinance) in the Democratic Republic of Congo (DRC), Ghana, Nigeria, Malawi, Rwanda, and Uganda; programs facilitating financial inclusion for people with disabilities and refugees in Uganda; and, financial inclusion for urban entrepreneurs, many of whom are internally displaced people or refugees, in low-income and informal settlements in Cartagena, a city in northern Colombia. The Value and Challenges of Savings Groups. Savings groups provide financially excluded populations with vital access to savings and loans, but the groups face challenges with record keeping and low capital, challenges that inhibit their sustainability and effectiveness in delivering high-impact loans. Through savings groups, members meet and save regularly and then borrow from that pool of savings, paying interest. Generally, at the end of each year, the groups “share-out” their funds such that savers earn interest. These transactions are recorded in a group ledger, and in