Airtel Uganda, Grameen Foundation and Plan Uganda today in Kamuli launched a new group savings solution to serve savings groups across Uganda. Airtel Uganda, in conjunction with Grameen Foundation, has developed a service that will allow Village Savings and Loan Associations (VSLAs) and other forms of savings groups, such as Chamas or investment clubs, to store their group’s cash as mobile money This was made possible by a grant received from the GSMA mWomen Programme, which works with the mobile industry to increase women’s access to and use of mobiles.
Plan Uganda has over the years supported the formation of Village Savings and Loan Associations (VSLAs) leading to the formation of close to 3000 savings groups with the aim of promoting financial inclusion. To date, these groups are using manual systems of transaction and record keeping. This new service will be rolled out across the country.
The 2013 Finscope survey on financial services needs and uses revealed that two-thirds adults in Uganda save money through informal groups. While some institutions have offered savings accounts to groups to provide a safe place to store cash and earn interest, most groups still face the challenge of distance, as few bank branches are located in rural communities where groups meet. Members carrying large sums long distances face the risk of theft and must account for the additional cost of transportation.
“Savings groups resoundingly request a better way to store and deposit funds,” said Stephen Waiswa, Corporate Sales Manager for Airtel Uganda. “At Airtel, we strive toward providing a safer and more convenient experience for our customers, including these savings groups.”
Announcing at the official launch of the group savings product in Kamuli, Mr. Nuhu Kanyike, Airtel Money Director, said that the Airtel group savings solution is a mobile solution that will reduce the groups’ reliance on cash and introduce the benefits of mobile technology. The service will incorporate the following tools:
- Group accounts: a group wallet to support safe storage of group funds as mobile money.
- Record management (mini statement): Regular mobile reports can be generated to summarize transactions during that period.
- Mobile banking: The Airtel Group Savings product can be linked to bank accounts at financial institutions to allow access to interest-bearing savings and credit. Credit will be dependent on saving history, and instalments can be paid from the group wallet.
Savings groups are an especially important alternative for the vast number of women who are unlikely to be served by brick-and-mortar financial institutions due to the lack of a savings culture. With all the successes and benefits of savings groups and mobile phone technology, combining the two creates the potential to improve each. A mobile phone has ceased to be merely a communication device. Instead, it has rapidly evolved into a safe and secure money transfer tool. It is also increasingly being used to conduct more complex transactions like settling utility and expense bills.
“Plan Uganda is currently supporting 400 youth led saving groups with funding from Swedish Development Agency, under a project known as A Working Future. This project has Village Savings and Loan Associations as the entry point. The new innovation of group mobile product will digitalize the transactions of the VSLAs, enhance possible linkages with formal financial institutions that can lead to employment creation.” Mr. Abebe Fikru; Country Director; Plan Uganda said.
Commenting on this group savings innovation, Grameen Foundation’s Director of Mobile Financial Services Lisa Kienzle said “Grameen Foundation is proud to partner with one of the leading mobile network operators in Uganda, Airtel, to develop this service, which has been specifically designed to help rural savings groups overcome the challenges associated with physical cash storage and transportation. This new product helps groups store funds safely and combat the risks associated with carrying cash.”
Savings groups are structured to prevent just one person from having access to group funds. These groups store money in a box protected by three locks. The group’s treasurer keeps the box and there are three additional key holders. These four individuals only come together with the box and keys during group meetings and group funds can only be access during those times.
The mobile product has been designed to replicate this system. The group wallet involves one individual who holds the group SIM, and three additional mobile users and PIN holders who are like the key holders. These three people will be notified when the SIM-keeper initiates a cash-in or cash-out transaction. The SIM Keeper can request a transaction, but all three must approve it before cash can be withdrawn. These individuals will receive a text message with an identification number indicating they need to approve the transaction before any money is moved.