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Leveraging informal savings networks

Instead of trying to replace informal financial services, learn how they can be leveraged.

Photo of Sabahat Iqbal
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In my professional experience, I have had the opportunity to conduct household level interviews on savings practices (2012).  Almost every woman I asked deferred to the man of the house whether that was her husband, son, or father implying that women are either uncomfortable speaking about finances or they are unfamiliar with it.  

However, this is belied by my personal experience. Women in Pakistan have long utilized the Rotating Savings and Credit Association (ROSCA) model.  Here, it works under the moniker of "committee".  Women who know each other within a community - either geographic, religious, or family - come together once a month for 6 months or so where they contribute an equal, set amount per person to create a "pot of money".  This pot of money is then distributed to one member of the committee for that month.  This is repeated until each member has received a pot of money.

It would be extremely insightful to understand the needs of these women - how they handle the transacting, missed payments, disputes, safekeeping etc etc.  This informal method of lending and saving has thrived for a very long time and there is a reason for that.  The benefits are very compelling to the women who participate. 

So far, all efforts to leverage alternative delivery channels for financial products (such as mobile money) to promote women's participation have been ineffective due, in no small part, to cultural hurdles.  In order to design and build more robust and effective formal financial services for this segment of the market, it is vital to understand how the informal financial services they already participate in can be leveraged in order to encourage women to move to the formal financial sector which is believed to be safer and more effective.  


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Photo of Meena Kadri

Fascinating to hear about your research, Sabahat – especially as I did similar research on ROSCA's and other savings mechanisms at Dharavi in Mumbai a while back. I also found this initiative interesting while I was there: I fully support your call to explore informal practices. I thought you might also be interested to join this conversation:

Great to have you onboard at OpenIDEO.

Photo of Sabahat Iqbal

Thanks Meena! Great article about an exciting initiative. I found this part esp insightful: "One of our informants....conveyed that.... its was reassuring to be visited by a trusted outsider with sound financial knowledge...." This sort of intangible benefit can have enormous returns but are rarely discussed in financial inclusion circles.

And the Ahmedabad story is a really interesting way to channel loose change that would otherwise get lost. It would be really great to know how they incentivised the at-first reluctant vendor to ensure his continued cooperation.

Photo of Meena Kadri

Great question to ask Simona over on the Women Together for Change post: Am sure she'll have some insights to share if you ask.

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