Expanding the knowledge base on financial inclusion

Savings at the Frontier (SatF) is a five-and-a-half-year programme aiming to improve the financial inclusion of low-income individuals and communities across sub-Saharan Africa. Implemented in Ghana, Tanzania, and Zambia, SatF enables low-income individuals to access a broader set of products and services to better manage their financial lives, through both formal and informal options.

The connection between informal savings groups and the formal banking system is one of the three most promising opportunities for improving financial inclusion, which could bring an additional 70 million people in sub-Saharan Africa into the formal financial system. SatF seeks to fulfil this ambition by supporting financial service providers to build sustainable partnerships with informal savings mechanisms, their members and other organisations to improve access to a wider range of financial services.

By building an evidence-base on what does and does not work, SatF contributes to the wider knowledge base on financial inclusion, helping to distil and disseminate insights for effective, scalable approaches that open the door to meaningful financial services for excluded populations around the world.

Discover more about the programme in SatF strategy summary paper and SatF brochure.

What does the existing literature tell us about informal savings mechanisms?

While there have been efforts to explore the financial needs and practices of excluded and underserved groups, their financial lives and potential to use financial services have often been underestimated. This is especially true for low-income countries, where poor people tend to rely on informal tools to save money, such as cash savings and investments made in order to save, savings groups, and leaving savings with a person outside the immediate family.

SatF completed a comprehensive literature review, aiming to tackle the questions around which financial services and channels are most valued by the financially disadvantaged and what drives the business case for providers to serve them. The exercise helped to identify four key areas of interest, which the programme is exploring in depth through detailed research studies and drawing on the learning from the projects being implemented by partner financial services providers:

• What are the different segments of users/clients of informal savings mechanisms, and how do they differ from each other?
• How do the financially excluded and underserved informal savings mechanism users (e.g. women, young people, small-holder families and people living in remote areas) respond to linkage experiences and opportunities and what are the key benefits derived by these users?
• What can we learn from the SatF supported models on how best to serve the financially excluded and underserved?
• How can financial institutions best contribute towards and manage the formation and acquisition of informal savings mechanisms and users?

Find out more in the full literature review.

For additional information, see evidence visualisation outlining types of reviewed literature and identified gaps, and briefing note with key highlights from the literature review.

Photo credt: Savings at the Frontier team, Ghana 2016