Innovations in Rural Deposit Mobilization

This brief paper suggests that rural deposit mobilisation harnesses the power of small amounts of public savings for the benefit of the community. By combining a large number of small deposits, greater sums can become more available to rural and agricultural enterprises that can use it most productively. The paper suggests that the benefits of rural deposit mobilisation to both rural and agricultural finance institutions (RAFIs) and RAF clients are many – most importantly they can provide a sustainable source of RAFI funding and offer clients a safe and liquid means in which to save.

The paper also notes, however, that several major challenges to mobilising rural deposits exist. The main ones cited:

  • Building rural inhabitants’ trust in the financial institutions, sufficient to encourage deposits;
  • Designing demand-driven, rural deposit services that can be delivered in a profitable manner;
  • Identifying investment opportunities in technologies to significantly reduce costs of doing business in rural areas, resulting from low population density and poor physical infrastructure.

This note aims to summarise several recent innovations to mitigate the common constraints to savings mobilisation by drawing on the experiences of USAID programs in Madagascar and the Philippines. It also highlights key lessons learned and their transferability to other country contexts.

The paper begins by discussing in more detail the key challenges in rural savings mobilisation highlighted above. Alongside this it sets out important recent innovations that can be used to help mitigate these issues:

  • Enhancing existing networks and institutional strength
  • “Piggy Banking” in the Philippines
  • Capitalising on remittance technology
  • Open source software
  • Real-time fund transfers
  • Personal digital assistants
  • Cell phone banking

The paper then turns to the key lessons learned and their transferability. These being:

  • Build on existing networks, local strengths
  • Respond to the needs and customs of rural clients
  • Extract the most value from costly technologies
  • Identify appropriate, tailored solutions to rural infrastructure problems
  • Resource type
  • Author USAID
  • Organisation
  • Year of Publication2005
  • Region
  • LanguageEnglish
  • Number of pages5 pp.
  • EditionRAFI notes

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