A country assessment of community- based financial institutions in Eastern and Southern Africa

The focus of this paper is on six countries: Lesotho, Malawi, Mozambique, Uganda, Tanzania and Zambia. Attention has also been given to other programmes promoting similar models of time-bound savings groups.Each of these countries offers unique insights on particular aspects of the informal financial sector and savings groups practices. The paper covers the origins and context of the informal financial sector in the African continent. It also examines the operational  features of existing SGs through different models. It further highlights the state of financial  inclusion, with particular focus on FinScope surveys in the countries assessed. Although at different levels, these surveys reveal that there are common challenges in promoting  financial inclusion among rural households in sub-Saharan African countries.

Among its findings, the review highlights the critical role mobile money platforms play in  enhancing financial inclusion in Africa in areas where the formal financial sector is not  able to reach due to infrastructural and operational challenges.

The paper provides six recommendations:

  1. Linking CBFIs (SGs) to the formal financial sector requires that some factors be fulfilled.
  2. Aggregating CBFIs (SGs) so that they can access better services and effective market linkages
  3. The need for formal financial institutions to understand the informal financial  sector in order to better design products with features that add value to the users of informal financial services
  4. Enhancing the mobile money infrastructure to expand financial inclusion among the unbanked
  5. Establishing and supporting meso-level structures such as SaveNET in Zambia and the ASCA forum in Mozambique
  6. Linking the informal financial sector with other government and NGO programmes that provide additional financial and non-financial services such as adult literacy programmes.


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