FinDev Blog

The Path to Financial Inclusion Must Include Saving in Small Groups

Re-envisioning how to serve the poorest, building on their capacity to direct their own development
Woman carrying a container above her head

When the latest edition of the Global Findex Database arrived, I pored over the tables and graphs. I was not surprised to see that institutional financial inclusion – a bank account, a loan from a financial institution or using fintech - was growing. But this statistic caught my eye: in developing countries, while 42 percent of adults saved over the past year, 2.9 billion (52 percent) did not save at all. Without savings, the poor, and especially the poorest, face only bad choices – go hungry, take children out of school, delay urgent medical care, or turn to a family member who is probably as strapped as they are.

Savings are vital for people’s financial health, so these are the numbers we must pay attention to. To turn this statistic around, we need to give more power to informal savings through the millions of groups that already exist and whose leaders can help to form and train new savings groups.  At Grassroots Finance Action, we propose a re-envisioning of how to serve the poorest, not through financial institutions but by building on the capacity of small informal groups to direct their own development.

Why I believe in the power of informal savings

After two decades promoting Savings Groups in some of the poorest villages in the world, I appreciate how savings can put food on the table or launch a business to support a family. My transformation from microfinance believer, who designed, launched and evaluated MFIs in 34 countries, to informal savings advocate began in Nepal.

As the evaluator of the Women’s Empowerment Program (WEP), my team and I spent weeks talking to village women about their groups, learning about how they saved, borrowed, launched community betterment projects and redistributed lending profits among the group members. A follow-up study on WEP carried out eight years after ours showed that two-thirds of these groups were still saving and lending, and the leaders of active groups had trained new ones, making up the difference. The amount they saved had quadrupled. And not a penny of external funding from financial institutions had gone to these groups.

The Nepal experience rewired my brain from credit to savings. I never looked back.

ROSCAs, Savings Groups and Self-Help Groups

As we seek to multiply the number of people saving in informal groups, much of the groundwork is already in place. According to Global Findex Database 2021, 419 million adults save “semi-formally” in small groups - three times the 140 million borrowers of MFIs. Most semi-formal savers are members of different types of informal groups that help their members save and manage their finances, such as Rotating Savings and Credit Groups (ROSCAs), Savings Groups or Self-Help Groups.

In ROSCAs, group members contribute a fixed amount each week to the group fund, and each week the total collected is paid out to a different member until all have received their payouts. ROSCAs are based on centuries-old traditions of disciplined savings, mutual accountability and support. They have helped the poor survive and sometimes even thrive for generations. While to an outsider these groups may appear simple, the strategies behind selecting the right members and ensuring they make their payments require creativity, flexibility, commitment and hard work.

Immigrants around the world often use the informal savings traditions from their home countries to finance their businesses, buy homes, cover daily needs and send money home. Immigrant ROSCAs are an important source for the over $600 billion in remittances sent last year to low- and middle-income countries, triple the amount spent worldwide on development assistance.  

Besides ROSCAs, NGO-trained Savings Groups have grown into a 20-million-member movement. Savings Groups build on commonly understood ROSCA traditions, but add flexible savings and borrowing from the group’s fund. These groups abound in African villages and increasingly in Asia and Latin America. 80 percent of the group members are women. In my field experience, I have observed that Savings Groups do a better job of reaching the poorest than ROSCAs, whose members are often market vendors with a regular income. Recent research shows that savings groups save and borrow year after year, and even train new groups, with little to no outside support.  

Then there are the 72 million members of Self-Help Groups (SHGs) in India, many of whom have been trained by thousands of Indian NGOs since the 1990s. The SHG movement has not only given its members access to informal savings and credit, but has also provided a link to the Indian banking system through a government-supported bank linkage program.

Informal savings groups help members to think beyond day-to-day survival, as they grow their savings and form part of a supportive group that steps up in times of crisis.  Many launch and grow their businesses, expand their farms or travel to get a job. A woman I spoke to in Mali summed it up this way: “Now that we have food on the table and I own two goats, I don’t need to beg my relatives or my husband for a bit of money. Our life is much less stressful.”

​​Expanding the reach of informal savings groups

The key to exponentially expanding the number of the poor and poorest saving in groups is for the leaders of already established groups to train more groups.  Consider that there are a million Savings Group leaders and 20 million ROSCA leaders worldwide. Who better positioned to train and support new groups in their own and nearby communities? They understand how to organize and manage a group, they are trusted, and they live in the community and know who is reliable. Plus, they are often passionate about helping their communities.

If they received a small stipend (a dollar or two a day), they would train many more groups. This kind of incentive could motivate leaders to organize and support new groups, giving them the chance to meet with others doing the same work, exchange experiences, set objectives and help each other.

We are currently testing this methodology in Guatemala, El Salvador and Malawi, and we have found that each of those receiving a stipend will, on average, train and support five new groups per year. These “Community Champions,” as we call them, are selected, trained, supported and monitored by tested local NGOs with strong outreach into local communities.

Taking this effort to scale, we calculate that every $20 million invested in this type of initiative would translate into a million members, most of them women, organized into 50,000 groups. By saving between $0.50 and $2 per week, the groups would collectively save, lend and distribute between $25 million and $100 million per year. Half or more would launch or grow their businesses and expand their subsistence farms.

It is also significant to note that these 50,000 groups would record and track 75 million transactions each year, a costly function that financial institutions would need to support if they were the ones administering these savings and loan accounts. Informal savings groups serve those that even the most socially oriented MFI can’t reach, as there is no money to be made on $100 loans and $1 saving deposits.

As financial inclusion practitioners, we need to transition from the idea that financial inclusion means borrowing (and sometimes saving) in a financial institution.  If we are serious about financially including the poorest at a scale that makes a difference, our mindset must evolve from “we have the answers,” to serving as catalysts of solutions based on the good ideas of those we hope to serve – such as the informal savings circles based on traditions that go back generations. Our motto at Grassroots Finance Action is that “They already have the answers, just ask.” Let’s start asking and see what we find out.

Check out videos of Saving Groups from the following countries:
Dominican Republic


Comments on this page are moderated by FinDev Editors. We welcome comments that offer remarks and insights that are relevant to the post. Learn More

Richard sebaggala , Phd student,University of agder,Norway, Uganda
07 February 2023

This is true revelation of how savings groups can transform the lives of poor through capability enhancement

Ashenafi Tadesse , MEL, Ethiopia
26 January 2023

Thank you!

Wes Wasson , DreamStart Labs, United States
15 September 2022

Excellent article, Jeff. I'm a big fan of the community champion model for Savings Group replication and would love to see more donor funding specifically focused catalyzing programs like this at scale. I'll be looking forward to hearing the findings from your current pilots as you learn more, but my instinct is that you'll find comparable impact to today's NGO programs over time... at a fraction of the cost.

As an FYI, we're also piloting this model of self-replication at DreamStart Labs for digital savings groups using our DreamSave app. All of our groups by design have a "DreamSave Champion" as part of the group (typically a younger woman). We recently started a donor-funded pilot in Rwanda through a partner that will equip a group of these champions to form and train other groups in their community using our DreamSave app. The model is similar to what you describe in that the champions get a small stipend. It's still early, but the initial indications have been positive.

Jeffrey Ashe , Columbia University, Grassroots Finance Action ( , United States
22 September 2022

Hi Wasoon,

We should talk. Considering that over 50 billion every year goes into institutional financial incluson that in large part does not serve the village poor, a sliver of that amount could vastly increase the number with a safe place to save and access to useful amounts of capital in groups that they organize, fund, and manage themselves. Less than three billion dollars would create informal savings groups for the 135 million villagers, the same number who are current borrowers from MFIs. and with profits from lending returning to the members of the groups. The big difference with the community champion model is that instead of NGO staff training the groups, the already skilled leaders of these groups will train the new groups. NGOs will focus on selection, support, and monitoring.

What you are doing at Dream Labs could be an important part of this effort since recordkeeping and monitoring is a major challenge. We should talk - jeffaashe@gmail,com.

Wes Wasson , DreamStart Labs, United States
22 September 2022

Would love to collaborate on this, will drop you an email.

Achyut Hari Aryal , several organizations and passionate of informal savings group approach , Nepal
12 September 2022

Great article Jeff. I fully agree on your argument that the leaders of existing informal savings groups are the best trainer I have also found to replicate the informal savings groups which is very effective and very economical. I also applied this approach in several programs in several countries in South and South East Asia

Jeffrey A Ashe , Grassroots Finance Action, Columbia University , United States
13 September 2022

Dear Achyut,

Thank you for your comment and I know your work well. What has struck me as I have designed, directed, and evaluated savings group programs around the world is that it is the leaders of these groups who train new ones on their own initiative, more than making up for any groups that failed. Instead of us designing program, in a Grassroots Finance Action program we are carrying out in Lynn, Massachusetts with Guatemalan immigrants, our only programmatic input was "train more groups." They were already organizers of "cuchubales" the Guatemalan term for ROSCA. Our only input was a small financial nudge and periodic meetings by Zoom and in person. The outcome, the "cuchubales" they organized saved $411,000 in a single cycle. Of these only 20% had ever been members of a cuchubal, and 80% want to continue saving in their groups. They used their payouts productively, canceling debt, purchasing a car to get to work, adding to their fund to buy a house, and building up a reserve for savings. All this was accomplished without any connection to the formal financial network.

Leave a comment