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Gravatar: Niklas Buehren with Malcolm Ehrenpreis and Rachel Dawn Coleman

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.

Financial Inclusion through Savings and Village Enterprises (FINISAVE)

24.11.2014Theopista Ntale Sekitto

Financial inclusion has become a contributing factor to the achievement of the Millennium Development Goals (MDGs), particularly MDG1, which promises to eradicate extreme poverty and hunger. The MDGs also include a gender-specific target for achieving full and productive employment and decent work for all. MDG3 is aimed at promoting gender equality and empowering women, and includes a specific reference to women's economic empowerment. Globally, women account for 66% of the labour force and have played a major part in the growth of small businesses. Women entrepreneurs, in particular, are contributing significantly to economic growth by creating jobs and generating revenues. Yet, women-owned businesses' access to credit remains difficult.

In rural areas of Africa, women constitute the largest percentage, 70% of the rural labour force that derives their livelihood from subsistence agriculture. A large number of these farmers aspire to employing better production techniques that can lead to increased output. However, they are dealing with challenges of access to capital that would enable them re-invest their businesses. Only thirteen per cent (13%) of rural people obtain loans from banks for re-investing in agricultural production. This lack of access to finance for the poor, particularly for rural women is attributable to a number of factors including, the location of their businesses and banks' perception of agricultural lending as risky business. Currently, there a few products for agricultural lending tailored to suit women's needs and to couple this, the lending criteria employed by banks is complicated for women. Moreover, the reality in most African countries is that women lack access to and control of land, which serves as collateral for bank loans. There exists also a fear by women to walk into banks and/or financial institutions due to the language barrier. The list can be endless: Mobility restrictions due to the geographic spread of homes across large areas; low levels of education and business training that hampers skills in record keeping, business plan preparation and general management of the business. All of these barriers affect the performance, growth and sustainability of women's enterprises.

In addition to these barriers, the New Faces New Voices (NFNV) Uganda Chapter, a Graca Machel Initiative, identified specific gaps for rural women in terms of access to finance including: little or no formal education, inadequate training on formal financial literacy, women being perceived as housekeepers and not fit to participate in economic activities and poor infrastructure in rural areas.

Against this backdrop, and in an effort to address the challenges of women's access to finance in rural areas, NFNV Uganda Chapter, in partnership with the Uganda National Entrepreneurship Development Institute (UNEDI) began implementing a Financial Inclusion model through the Savings and Villages Enterprises (FINISAVE), a financial cooperative model aimed at increasing the availability and size of finance in remote areas. The FINISAVE Model is based on two schools of thought: (i) People do earn some income but need to be guided on responsible spending and on investments that fall within their income; and (ii) collectively pooling resources together for improved household incomes while working hard on key productive value chains. The FINISAVE model was pilot tested in Lwengo District, with more than 125,000 women entrepreneurs, and a total of 250,000 men and women in 465 villages benefitted from this initiative.

We noted the following during implementation: (i) The sharing of costs through a public-private-civil society partnership has assisted in addressing the lack of infrastructure in women accessing financial institutions in rural areas; (ii) through the formation of savings and investment village based groups that is linked to a commercial bank via mobile banking, women in rural areas are able to work in profitable and sustainable investment cooperatives; (iii) the model underscores a paradigm shift in the cultural and traditional beliefs that a woman is a mere house labourer. This was done through a high-level business and financial literacy training programme, which encouraged communities to move towards self-discovery, a mind-set change, enabling a woman to identify opportunities around her. These women, who had previously not seen the inside of the bank, can now confidently walk into a bank with clear knowledge of the banking services, products and their rights as consumers.

Looking forward and from what we have learnt from this process, regulatory authorities and financial institutions should:

  • regulate agent banking services shifting from a corporate culture to a pro-poor service delivery that is context specific;
  • create rural women guarantee and production material subsidy funds;
  • embrace and highly promote the policy of public-private civil society partnerships in financial service delivery;
  • design products that can be accessed by all categories of the female clients especially those at the lowest financial strata;
  • build capacity to serve women as a special segment by developing new finance models specifically geared towards increasing access to finance. The proposed initiatives should address the gendered factors that constrain the growth and sustainability of rural women's businesses.
  • There must be a mind-set change and paradigm shift that the rural populace are merely recipients of corporate responsibility to financial institutions and that poverty is part of the package for rural communities in Africa. This will be a missed opportunity, as the rural populace are credible, vital contributors to the economies in Africa.

New Insights into the Financial Behaviour of Men and Women in Six African Countries

17.06.2013Sharissa Funk

Financial exclusion in Africa is high, but financial exclusion of African women is even higher: While about one third of the population is completely excluded from the financial sector in Botswana, Namibia and Uganda, this figure amounts to more than half of the population in Rwanda, Malawi and Zambia – and in all six countries more women than men do not have access to services such as bank accounts or payments.

Why is there a persistent gap in the usage of financial services by men and women? Do women find it harder to access formal financial services? What are the obstacles that women face when approaching these providers? What could be the reasons for choosing informal services over formal ones?

The recent set of country studies conducted by GIZ on behalf of the German Ministry for Economic Cooperation and Development (BMZ) can help us gain a better insight into the very different financial lives that men and women lead in each of the six countries.

The largest gender gaps were found in the usage of formal savings products, particularly in Botswana (14.6 % more men than women access formal financial services), Uganda (12%), Rwanda (9.5%), and Zambia (9%). Compared with credit and insurance, the difference in the ‘savings’ category is relatively high. Several reasons were identified in the course of the research: First, women tend to have lower incomes and higher expenses. They are often financially responsible for the whole family and therefore have less money available for savings. If they do save, they prefer informal savings groups over formal financial institutions. Women feel more comfortable talking about their financial matters to people they know, such as other women from the same neighbourhood who often set up these informal savings groups. It also is a question of trust: In some countries, people mistrust in institutions because of bad experiences in the past, e.g. of depositors losing money because of bank closures. In Zambia, only 22% of adults trust in banks. Besides, when income is irregular and excess cash is hard to find, flexible repayment schedules and regular small payments are very important advantages of informal services. The costs of transport and time for travelling to the nearest bank, particularly in rural areas, are other issues that can easily be overcome by using local informal services.

With the exception of Rwanda, the financial sectors in the countries researched have a very high concentration of foreign banks, mainly located in urban centres. Formal service providers, particularly these foreign-owned banks, find it hard to adapt to the local market. They still take a rather conservative lending approach, focusing on salaried employees with stable income, and requesting collateral. Since more men than women have salaried jobs, access to formal financial services is difficult for women. For example, by asking for payslips as precondition for loan appraisal, banks automatically exclude the self-employed and non-salaried segments of the work force. Obtaining significant assets that can serve as collateral (e.g. land property) is another major constraint for women, as customary laws still prevail in many regions of the countries studied. These laws can require that the head of the household (mostly the husband) is registered as the property owner, not his wife. Often customary inheritance laws are also found to be discriminatory against women.  

Similar constraints can be found with micro and small enterprises: formal banks tend to focus on medium or large businesses that have attained a certain degree of formalisation. Many women-owned enterprises tend to be small or micro, are often informal, and face severe difficulties in accessing formal credit – for example if they are not able to provide financial statements and proof of formal business registration. At the same time, almost no financial institutions target this niche of underserved potential clients – unmet demand among women-owned enterprises in sub-Saharan Africa ranges from an estimated 30% for medium-sized enterprises to more than 60% for micro enterprises.  

Insurance providers, but also banks and other formal financial institutions, fail to target women as a clientele; e.g. in advertisements that clearly address the male (working) population. Long and complicated claims procedures and a widespread perception that the costs are too high for no apparent (immediate) do not help to convince people to buy insurance either. Providers need to react by improving their marketing and costumer education and by making their processes more transparent.  

Action needs to be taken, not only by service providers but also by regulators. On April 25th 2013, Central Bank Governors and high-level political and private-sector decision makers from the SADC region were invited to the South African Reserve Bank to discuss the ‘Advancing African Women’s Financial Inclusion’ policy recommendations which were drafted during a MFW4A expert round table in 2012. Mrs Graça Machel, the founder of the New Faces New Voices network summed up the recommendations as follows: ‘Regulators and policy-makers need to play a more transformative or developmental role in deepening financial access for women, and financial institutions need to have clear strategies for targeting women in order to expand their access to financial services[…]”. The conference encouraged participants to take the discussions to the national level and push forward Women’s Financial Inclusion in Africa.  

If you would like to find out more about why men and women don’t use financial products in the same way and what should be put on the policy agenda in each of the countries, please have a look at our Synthesis Report or the detailed country reports:

Botswana Rwanda Namibia Uganda Malawi Zambia


Judith Frickenstein is financial sector advisor at GIZ’s programme Promoting Financial Sector Dialogue in Africa: Making Finance Work for Africa, where she is in charge of Gender and Agricultural Finance. Prior to her current position she led the economic empowerment component of GIZ’s gender sector programme, where she helped to design a regional programme in the MENA region and consulted economic development programmes in Albania, Montenegro and Uganda. Before joining GTZ (now GIZ) in 2007, Judith worked for the Retail Development Group in Cologne, Germany and for the German DEVK insurance company. She holds a diploma in economics from the University of Cologne and completed a vocational traineeship at an insurance company.

Sharissa Funk is part of the GIZ team supporting the Partnership MFW4A. She mostly focuses on gender finance issues in her work. Previously, Sharissa worked on agricultural finance with the Frankfurt School of Finance and Management and with Peruvian agricultural cooperatives and Microfinance Institutions for Oikocredit, a social investor. She holds an Economics degree from University of Tuebingen, Germany.


Investing in Women: A key Factor in Sustaining Growth in Africa

22.10.2012Daniels Nomsa

African women represent a huge untapped market as emerging business leaders, consumers and household decision-makers.  According to a recent Nielsen survey, 77% of women in emerging markets believe the future will be brighter for their daughters, noting that key areas where improvements will be greatest are education, careers, financial stability and purchasing power. These changes are already evident in many African countries as socio-economic indicators show an improvement in the living conditions of every-day Africans.    

When one looks at the position of African women today versus two decades ago, one can see distinct improvements in the areas of education, health, earning power and entrepreneurial activity.  In Uganda 48% of all small and medium-sized enterprises (SMEs) are owned by women.  In Kenya, the corresponding figure is 49%, and in South Africa 58%.  Motivated by economic necessity, better education and expanding job opportunities, African women have some of the highest rates of female labour force participation in the world.  Overall, 60% of women in Sub-Saharan Africa are in the workforce, with some countries such as Mozambique, Madagascar, Rwanda, Tanzania and Burundi having more than 80% female labour force participation.   

With better economic opportunities women’s incomes have increased as has their spending power, fuelling the rise of the African consumer.  McKinsey documents this trend in their study “Lions On The Move,” by showing that the numbers of people living in extreme poverty are falling and that there are more middle-class households in Africa today than India.  

The fact that women control or strongly influence many household spending decisions means that their power as consumers will drive demand for products and services in different sectors that is not to be taken lightly.  Globally, women spend close to $20 trillion as consumers and this figure is expected to reach $28 trillion by 2014.         

In the banking sector -  one of the sectors mentioned in the McKinsey report as poised for growth in the next decade - massive growth is taking place across the continent due to higher consumer demand and more business activity as the private sector expands. Despite enormous challenges in many countries such as inadequate banking infrastructure and high consumer costs, Africa’s banking sector has grown rapidly in the last decade with total assets of $669 billion in Sub-Saharan Africa, and $497 billion in North Africa. In Nigeria, total banking assets grew by more than 59% annually from 2004 to 2008. The downside is that levels of financial inclusion across the continent are still woefully low with the majority of Africans lacking access to formal financial services.  Women are particularly excluded with as few as 21% of women having an account at a formal financial institution.    

This lack of access to capital and a broad range of financial services is a big factor in restricting the growth of women-owned businesses. African women continue to face well-documented barriers in accessing finance that are gender-specific as well as those that apply to all SMEs, regardless of gender. As entrepreneurs, women struggle with issues of collateral, poor education and business training, a lack of understanding of how banks work and cultural biases which hinder their progress. This situation is made worse by legal and property regimes which often discriminate against women by preventing them from owning assets such as land, or having the right to administer marital property. 

A G20 study released in 2011 estimates that the funding gap experienced by women-owned businesses around the world who lack adequate access to finance is an astonishing $300 billion per annum, with African women facing a funding gap of $15-18 billion each year. Seen in another light, however, this SME funding gap represents a huge opportunity for commercial banks and other lending institutions that are willing to take this segment of the market seriously. Some banks are already coming up with specific products geared to the female market while others are experimenting with different types of collateral requirements which are more flexible and take into account women’s realities. These innovative approaches to SME lending are to be encouraged and will hopefully see more investment in women-owned enterprises to boost their growth.

There can be no doubt that one of the factors that will drive Africa’s continued high growth is how it treats its women and how it harnesses their enormous economic potential.  At the recently held African Women’s Economic Summit, which took place in Lagos, Nigeria, Dr Ngozi Okonjo-Iweala referred to women as the “third emerging market” noting the benefits of investing in women for themselves, their families and the continent, as a whole.  As she rightly points out,  “we are on the cusp of a very exciting phase in the life of African women. They are the new face of an Africa on an upward trajectory of growth and development.”  

Nomsa Daniels is Executive Director and founding member of New Faces New Voices, a pan-African organization which advocates for the empowerment of African women through the provision of better access to finance for women entrepreneurs, skills development and training for women in business and finance, and ensuring more women occupy leadership positions in the financial sector. Ms Daniels has worked in the investment business for the past 10 years, as Executive Director of Scientific Resource Management Holdings, an investment holding company that invests in start-ups, early-stage businesses, and established companies across different sectors in South Africa.  Prior to this, she worked as a Consultant in the Investment Banking Division of JP Morgan where she helped to analyze and identify new business opportunities for the bank and supervised special projects for the Managing Director. Before returning to live in South Africa in 1997, she worked for 10 years as Executive Director of the Professional Development Program, a not-for-profit organization based in New York City that provided management and leadership development training in the United States to black South African business professionals. She has a Bachelor’s Degree from the University of Toronto and a Master’s Degree in Geography and Environmental Studies from Hunter College in New York.  She serves on the board of the Graҫa Machel Trust, the African Leadership Academy and several investee companies.


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