Savings groups and “Chilimbas” are the most inclusive mode of banking in Zambia, a new Financial Sector Deepening Zambia (FSDZ) Report has revealed.
The study titled: “Savings groups: the gateway to financial inclusion in Zambia”, recommended that efforts to make formal financial services more user-friendly to those who have less education should be promoted.
There are around 15,700 savings groups in Zambia, popularly referred to as village banking savings groups, with cumulative savings amounting to K53.1 million as at the end of last year, according to SaveNet data.
“The aim of this study was to identify the financial service (or services) that are most inclusive, i.e., the service (s) for which use is least dependent on household assets, education and being a man. Applying the simple protocol set out above leads us to conclude that savings groups and chilimba’s are the most inclusive. This, combined with the fact that savings groups offer their members more flexibility and potentially greater efficiency gains, indicates that investing in savings group interventions should be the preferred strategy for policymakers interested in promoting financial inclusion,” the report read.
“In addition, our analysis reveals that, even after accounting for household assets and income source, all financial services other than chilimba’s and savings groups are used less by less educated people. Finally, our analysis reveals that, even after accounting for household assets, income source and education, women make less use of all financial services other than chilimba’s and savings groups. Here, further research is needed into why the gender gaps exists and whether and what innovations in financial product design and access can close the gap.”
The report added that there was need to support further research on financial inclusion for women.
“Based on these findings, we recommend that policymakers: consider savings groups to be the appropriate entry point to significantly expand financial inclusion; promote efforts to make bank accounts and other formal financial services more user-friendly to those who have less education; support further research on financial inclusion for women and innovations in financial product design and access, especially for women,” read the report.
And speaking during the launch of the briefing paper, Monday, FSDZ chief executive officer Betty Wilkinson noted that savings groups could continue to be an entry point to financial inclusion for Zambians living in remote areas.
“FSD Zambia has contributed to scale by supporting the creation and growth of 7,900 savings groups with over 129,000 members saving on either a weekly or monthly basis, amounting to millions of kwacha. With a potential 2 million more Zambians to reach, it is safe to say that savings groups can continue to be an entry point to financial inclusion for those in remote areas. With savings groups recognized as one of the key pillars of rural financial inclusion, let us collectively keep encouraging and educating our people to use the services that savings groups offer in the right way to change their lives for the better. We recognize the importance of savings groups in our economy and communities, as such, implore our various partners and stakeholders to grow savings groups and make them even more efficient and accessible so that the social and economic impact that these groups have in the various communities can be realized,” she said.
She further noted that FSDZ was honored to have been part of the development of the National Strategy on Financial education, which was recently passed by Cabinet.
“We are pleased that considerable work with the Ministry of General Education and iSchool on the financial education curriculum grades 1 to 12 will move to pilot testing and validation early next year. We anticipate that our engagement with Zazu on financial education through simple cell phones will expand beyond the 1.1 million Zambians already reached. Engagement in out-of-school youth financial literacy is also growing fast. FSD Zambia provision of financial education through traditional leaders, savings groups and other community organizations will grow. We look forward to expansion of media and digital means of financial education as appropriate for a client-centric orientation,” said Wilkinson.