Zooming in on Informal Savings Mechanisms in Zambia

The intention of this report was to provide the reader with new insights regarding users of informal savings mechanisms (ISMs), how they perceive their groups and formal financial service providers (FSPs), and what drives their decisions to use one service rather than another.

The study of ISMs and their users was conducted in three provinces of Zambia in 2019. It is qualitative rather than quantitative – that is, it was not designed to answer questions of how many or how much, but rather why. The study is primarily intended for financial service providers, though the authors expect it to be of interest and use to a wider audience, including donors, and regulatory and facilitating agencies.

Key findings from the report include:

1. Anyone approaching ISMs should expect a variety of groups.
2. ISM members also vary greatly.
3. ISM users are intelligent consumers who mix and match products from different providers to meet their needs.
4. ISMs offer a strong value proposition.
5. While users appreciate their ISMs, it is rare for ISMs to meet every need of all their users, and they do not find ISMs perfect.
6. Perceptions and reputation matter significantly.