The high cost of commercial microfinance remains a barrier to financial services for the poor and, in particular, the rural poor. Some low-cost approaches, like community-based savings groups, have shown promise. However, these groups, armed with a strongbox and a ledger, are non-commercial, and therefore training and scaling is dependent on donor funding. Technology now allows for community-managed savings and loan activities to be done with less training, because the elimination of cash and paper record-keeping assures transparency. The Digital Savings Groups (DSG) approach offers the potential for commercial, or semi-commercial scaling of savings groups, based on mobilising new users into the digital ecosystem.
Developed and tested by the Aga Khan Foundation (AKF) in Tanzania with financial support from Financial Sector Deepening Tanzania (FSDT), the Digital Savings Groups solution is a new way for remote communities to gain access to a sustainable financial service on a self-help basis. The cashless, paperless “digital” offering removes the thorny issue of money security and engages the private sector in new ways that are commercially viable, thereby ensuring long-term sustainability. This is all done on simple “candy bar” phones.
The Digital Savings Group blended learning course is designed for those who wish to support the implementation of DSGs. Future ‘village agents,’ or trainers of DSGs, will use the same package of videos as a reference while training groups. Group training is done over a 40-week period, and village agents will then support DSGs as needed. They will also earn commissions based on the success of the groups that they train.
The course, available in English and Swahili, explains what digital savings groups are, how the digital savings platform works, and how village agents can train a group to function independently.