I don’t even remember the first time I was in a bank, although I do recall a certain fascination with the drive-through teller windows when I was about 6. Unlike most Americans, many women in Africa have never been to a bank, and believe they only exist for rich people. It can be pretty overwhelming to get started, especially if the bank employees are not all that convinced that banks can be for poor women. The LINK Up program in Kenya and Tanzania works to change all that by connecting Village Savings and Loan Associations (VSLAs) with formal bank accounts.
After her first experience at a bank in rural Kenya, one woman went home to tell all of her neighbors that a wall gave her money, and they should try it, too. In the words of the community facilitators, "When she saw the money coming out she was very excited and surprised to count the money and find it was the exact amount she had requested. Upon return to our community, she shared her experience with anyone who would listen, saying that she saw a wall give her money…"
The LINK Up program was funded with the generous support of the Bill & Melinda Gates Foundation for $2.4 million. It reached 322,000 people in Kenya and Tanzania.
What did we accomplish?
- Increased the return to VSLA members: Savings group members who had their savings in a formal bank account made $40-$55 more per member than those without an account.
- Helped women’s empowerment: There was a 45% increase in women’s control over financial resources, and a 19% increase in being involved in household decisions.
- Made money safer: 75% of VSLA members said that they felt their money was safer in the bank accounts instead of in a cash box. Women especially said that having the money in the account made it easier to resist impulse buys or peer pressure to lend money.
- Improved resilience: There was a 31% increase in the ability to rely on savings to cope with a shock. The ability to rely on the group’s social fund for an emergency doubled.
- Reduced social inequality: Banks said that now they pay attention to poor rural women they used to ignore, and consider them valuable customers. Women said now they feel that they can access banks, and that they are not just for the rich.
- Improved business for banks: Banks opened 93,000 new accounts, got an increased $2.4 million in deposits, and made up to $14 per bank account.
- Get banks to take the poor seriously: All of the financial partners have included financial inclusion for the poor as part of their key strategies for growth. More and more banks are buying in, as proved in the 2016 Nairobi Summit. In fact, in 2017, banks in East Africa now expect $15 million in revenue from savings groups alone.
How did we get there?
- Partner with the private sector: CARE partnered with 4 private banks: NMB, Access Bank, Equity Bank Kenya, and KCB Kenya to create financial products that worked for VSLA members.
- Prototype and adapt: Fast and low-cost prototypes—even when they were not perfect—were an important way to convince the banks that working with poor rural women was worth it. Early wins with imperfect products got banks to spend time and energy customizing financial services for these new kinds of client.
- Build trust: Word of mouth was very important for potential bank customers. 76% of groups said they recommended the services they were getting to other people and groups. Similarly, the banks said they could rely on a CARE VSLA stamp like it was the title deed for land.
- Train groups: The 13,165 CARE-trained groups were slightly more expensive because of the training process, but were much more successful by bank standards. For example, on average they had twice the average account balance and were 17% less likely to let an account go dormant.
- Put women in charge: Groups that had 85% or more women in their membership had nearly twice the return on savings as groups that were 70% or less women.
What did we learn?
- Working with the rural poor is viable and now proven for banks: The banks were very clear that before this project they would have ignored rural women and VSLAs, and now see them as a viable customer base.
- Digital doesn’t always work: While the theory was that mobile banking would be a big way to open doors for women, 70-90% of transactions still happen in person. The fees on mobile banking cut into the return on savings, and between connectivity problems and unclear processes, many people did not trust mobile banking.
- Costs are still an issue: Only 1 of the 4 partner banks felt that they made enough profit to be willing to invest in the kind of training CARE does with VSLAs, because the training costs are still very high. CARE was able to drop training costs by 40%, but most banks would rather work with already-trained groups than train new groups themselves.
- Joint outreach helps: CARE and the banks worked together to create communications campaigns to advertise new products and attract savings groups.
- Accompanying group members is important: For many VSLA members, this was the first time they had ever been in a bank. They were unaccustomed to things like armed guards and frustrated by long wait times. Supporting women through these new experiences helped them have a better reaction to the innovation.
Want to learn more?
Read more on the LINK Up project page.