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From Cash to Accounts: Switching how women save in Uganda

04.05.2015Niklas Buehren with Malcolm Ehrenpreis and Rachel Dawn Coleman

In Sub-Saharan Africa, many women are keeping their savings at home where it is most vulnerable. Why not use semi-formal or formal institutions instead to better protect hard-earned cash?

Even the world's poorest women save to protect themselves in case of unexpected needs but often in ways quite different from wealthier women. What is common knowledge for many Westerners-that formal savings institutions provide better protection-is not accepted practice in many Sub-Saharan African countries.

One potential explanation among several is lacking knowledge of how to save in a more formal institution, and about the relative risks, costs and benefits of keeping savings as cash versus using a semi-formal or formal savings device.

In Uganda, BRAC, a development organization dedicated to alleviating poverty by empowering the poor, set out to study if information on how to use formal financial devices can impact women's savings behavior. I had the opportunity to work with the BRAC team to design a randomized controlled trial to rigorously analyze the effectiveness of the Saving Mobilization program-this work is exactly aligned with what we do in the World Bank's Africa Region Gender Innovation Lab (GIL) in trying to find solutions that really work to improve opportunities for women and girls. In the program, BRAC Uganda organized an informational campaign for groups of women in Kampala and Iganga that focused on the importance of savings in general and the different types of available saving services including more formal and relatively secure saving devices. The study produced several interesting findings that are important to consider when thinking about how to improve women's savings strategies.

First and foremost, the results show that there is an information constraint that is particularly pronounced for illiterate women and for formal savings options. Six months after the campaign, illiterate women were 19 percentage points more likely to be saving in formal institutions rather than keeping their savings as cash.

Additionally, the pilot found that theft is a prevalent issue for many of the women in the study (1 out of 4 women at baseline had experienced this in the past year). After the information campaign, women who had experienced theft or robbery in the past 12 months were 19 percentage points more likely to take up formal savings services.

Interestingly enough, however, the pilot found that, overall, women did not tend to move their cash into a formal savings option. Instead, the largest shift was in women reallocating savings to semi-formal savings options, such as Rotating Savings and Credit Associations (ROSCAs). Taking the step from saving informally to working with a group of individuals who agree to save and borrow together, rather than at a bank, appeared to be the preferred short-term path for women in this pilot. This, however, is a significant step towards a more formal and structured approach to savings.

It is important to note this pilot shows that an informational campaign is sufficient to address the allocation of savings but there is no evidence that it is enough to impact the total accumulation of savings. To increase total savings more powerful tools may be necessary, such as programs that improve the financial situation of households-helping them gain more income to potentially save.

To protect the large percentage of women who keep their savings in cash from theft and burglary, this pilot showed that implementing a relatively simple and cost-effective learning intervention focused on the value of moving along the spectrum to more formal savings options is enough to encourage women to transfer their savings from household hideaways to more secure community savings systems.

This experiment is part and parcel of GIL's work, which tries to provide more specific, actionable and rigorously tested advice to development teams who want to make their projects and programs more effective in increasing women's and girls' economic opportunity. Follow this link for details about the 40 impact evaluations GIL is carrying out in 20 countries in Sub-Saharan Africa.

This blogpost is based on the academic study Allocating Cash Savings and the Role of Information: Evidence from a Field Experiment in Uganda, prepared by Niklas Buehren, Impact Evaluation Expert within the Africa Region Gender Practice at The World Bank.

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