A Bridge to the Modern Economy
‘Savings groups’ are informal associations of 15-30 members, predominantly women, who purchase shares at weekly or biweekly meetings until they have enough money to begin lending among themselves. Since CARE adapted the model from the informal sector two decades ago, developing the first ‘village saving and loan associations’ (VSLAs), savings groups have extended saving and loan services to millions of villagers around the world.
These groups work in very poor (and often very remote) rural areas where other financial institutions cannot. After an initial training program they operate entirely with money and skills drawn from villagers themselves. Because they act as an informal forum in which members learn modern financial skills, savings groups offer a basic bridge from the oral world of small numbers and saving in-kind into the modern economy.
Designing A Better Bridge for More Traffic
OIM solutions address two challenges with savings groups. The first is that many members, if not most, cannot understand the transactional records. The result is visible disempowerment: members give up on navigating through written records. The OIM approach begins by integrating clear navigation cues and signals into all written records, so oral users can feel sure of finding information about their financial transactions. The natural strength of savings groups as learning forums can then kick in: the record-keeper of the group can supervise members as they learn how to write their balances in their passbooks, supported by OIM place value guides and mnemonics.
The second challenge is that savings groups with text-based information systems and large illiterate memberships experience many disputes about records and rules, making meetings less pleasant and reducing stability and sustainability. Savings groups respond by weeding out illiterate members and centralizing power with literate leaders, which erodes members’ rights as shareholders and financial consumers, and pushes groups ‘up-market’ towards the less poor and less financially excluded. The OIM approach addresses this challenge by making the share-out process, which is a major source of disputes, more transparent and more participatory.
Towards Digital Savings Groups
Record-keeping apps for savings groups have been designed, with the intention of facilitating linkage for formal financial institutions. My Oral Village is developing OIM versions, to ensure that in the rush to technology, the bridge from oral to literate is not inadvertently replaced with a bridge from literate to digital.