What it the future of Savings Groups in Mozambique?

By: Katia Agostinho(FSDMoç Market Development Analyst)

According to the National survey on financial inclusion – Finscope 2014, the number of people with access to formal banking services has increased from 11.8% to 19.7% and the number of people served by other formal institutions (such as non-bank microfinance institutions And insurance companies) increased from 3.6% to 9.8%. The largest increase was among people using “informal financial services”, having almost doubled from 14.7% to 26.7%. Is within the informal financial services category that savings groups fit. So, among all available alternatives of financial services, family, friends and informal schemes are the ones mostly providing the convenience that Mozambican families need.

Globally, a growing and increasingly robust body of evidence suggests that participation in Savings Groups contributes to increased savings, access to credit, asset accumulation, business investment, consumption, food security, social capital and resilience.  Despite these achievements, the sector faces several constraints. Over the last 25 years, development organizations have trained a total of approximately 700,000 Savings Groups consisting of at least 14 million members in 75 countries.

In addition, Savings Groups are increasingly used as a platform for the delivery of other development activities, including health, education and formal financial services.  While promising, the combination of Savings Groups with other development activities introduces risks and good practices are not yet fully understood.

Most Savings Groups continue to operate for several years beyond the period of training and supervision.  However, a non-negligible number of groups disband for various reasons, including inadequate support services.  And the absence of formal rules, standards or regulation in the sector raises concerns with respect to consumer protection.

A key issue is the sustainability of these groups, that mainly promoted by development organizations through time and financial limited projects.

To discuss this and other issues, the SEEP Network and FSDMoç organized a stakeholder workshop that involved the central bank, government institutions, development organizations, donors, banks and MNOs with the objective of giving its contribution to the discussion of where the Savings Groups sector are heading, current experiences and to propose a new vision for the promotion of Savings Groups in Mozambique, based on a market systems approach – identifying current challenges, promising innovations and stakeholder priorities.

During the workshop, a series and presentations were made by the representatives of some these organizations on topics related to: savings groups training and operations as well as innovations happening in the sector. At the same occasion, FSDMoç shared the preliminary results of its study on savings groups in Mozambique.

To start the discussions through the day and to be able to feed the audience reflection on how can all relevant stakeholders support and deliver more sustainable interventions on savings grops, David Panetta representing the SEEP Network, delivered a presentation about the market systems approach (M4P)[1] how it could be applied to the Savings Groups. This approach defends that all required functions, namely groups formation and training, support services and access link to external services, are performed and paid for by market actors including private entities (private trainers, local suppliers, FSPs, etc.), public entities (national and local governments), Community-based structures (traditional leaders, faith-based organizations, etc.) and the Groups itself. This allows the possibility of the market to create and respond to the opportunities by itself while providing sustainability in the long term and services with quality to the savings group’s members. And this can happen with development organizations playing a more Market facilitator to Identify, reduce and eliminate constraints, catalyze opportunities, support market actors to test and learn and form strategic partnerships. The goal of the M4P approach is to create a systemic change in the sector in terms of capacity, processes and policies that will then remove constrains to better products and services for the beneficiaries.

As follow up, FSDMoç and The SEEP Network will disseminate a brief report on the lessons learned, stakeholder priorities and next steps identified through the workshop here:


And the study on Savings Groups in Mozambique, conducted by the FSDMoc, is in the final revisions and will be available on the FSDMoc website shortly.

[1] The market system (M4P) is an approach to support pro-poor growth that learns from the well-known problems of both state and market failure. M4P aims to accelerate pro-poor growth by improving market outcomes that matter to the poor in their roles as entrepreneurs, employees or consumers. M4P focuses on changing the structure and characteristics of markets to increase participation by the poor on terms that benefit them. It addresses the behaviour of the private sector and therefore reinforces the strengths of market systems, rather than undermining them. (http://value-chains.org/dyn/bds/docs/488/M4P%20Summary%20Description.pdf )

Editorial Team

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