Rural SPEED1 is a USAID-funded program managed by Chemonics International designed to improve access to financial services in the rural areas of Uganda. One of Rural SPEED's primary objectives is increasing savings in rural communities.
Read this interview with Terri Kristalsky and discover how Rural SPEED is working to enhance savings from both the supply and demand side of the savings mobilization equation.
1. A 2005 Rural SPEED study showed that 81% rural Ugandans save in some fashion...
This study showed that a large majority of rural Ugandans save. But of the 81% who do any kind of saving, only 13% save with a formal financial institution. They lack access to formal savings options, but they also tend to be wary of financial institutions.
People save cash in pots at home. A 2006 FinScope Survey showed that 80% of Ugandans do save, but 33% of savers keep their money in a secret hiding place.
Given the dramatic floods that occur in the country and wipe out homes, it is quite likely that there are millions of Ugandan Shillings drifting down the Nile.
2. How is Rural SPEED trying to deepen and strengthen Uganda's financial sector?
Savings options for poor people in Uganda's rural areas are limited: Commercial banks only focus on "corporate" clients while microfinance deposit-taking institutions (MDI) tend to operate around the main cities. Community-managed financial institutions are the only savings options for the rural poor, beside informal organization in rural areas.2
Rural SPEED faces two challenges: (1) people are unaware of the benefits of saving in a secure institution, and (2) community-managed savings structures are unevenly safe and professional. This is why Rural SPEED has a two-pronged approach. On the one hand, we promote savings through major promotional campaigns, while on the other, we invest time and money to strengthen SACCOS and MDIs.
Broad-based savings promotion campaign
In 2006 we launched the first savings promotion campaign in Uganda to promote the value and opportunities of formal savings. around the themes "Save Today, Better Tomorrow" and "Wise Saving, Better Living". This campaign had an enormous outreach. As a result, we launched the second campaign in March 2007 and included the previously war-torn north area.
Our savings promotion campaigns start with several weeks of radio advertisements and programs. We also put-up billboards, road signs, and posters and distribute flyers. Then the big road show begins. A truck loaded with HI-FI equipment ventures far into rural areas. Small but useful presents are handed out. The coin-purse with the message "Savings pays in many ways" is always very popular. We also have little notebooks that explain what to look for in a financial institution. During the road show we organize music, games, and plays that highlight the risks involved with inappropriate savings methods. We have funny plays with stories about the poor guy who saves in a wooden box and sees his savings eaten-up by termites or about evil men collecting savings in villages and then running away with the money. The campaigns are designed to encourage people to save in secure institutions.
Combining all these marketing techniques makes it difficult to escape the savings messaging. I have never seen such a comprehensive campaign elsewhere.
Strengthening SACCOS
SACCOS are the main financial institutions active in the rural areas that Rural SPEED targets. But all SACCOS are not equally good; and there are some serious governance and performance challenges with some of them. Rural SPEED's approach is to closely support a few organizations with strong potential outreach, while also strengthening the sector as a whole. We evaluated over a hundred existing SACCOS—analyzing their financial performance and location—and chose 10 partner organizations. These partner SACCOS are located in rural areas, perform well, and have a strong potential outreach.3
We train, mentor, and offer individualized support to our partner SACCOS. We also invite non-partner SACCOS to our training sessions on governance, financial management, delinquency management, treasury management, savings and loans product development. We have also developed SACCO-specific tools that are hopefully useful to the sector as a whole.4
3. Cooperatives seem to be increasingly popular with government and funders...
Yes. The government realizes the value of promoting savings services for poor people. However, funders and government should be cautious about creating ad-hoc member-owned financial organizations. The track record shows that organizations that emerge through natural entities tend to be more sustainable. Caution is required with injecting funds, because community-managed loan funds are more successful when they remain savings-based.5
4. Have you learned any lessons on savings promotions campaigning?
We have learned a lot.
Right place, right time
The time of year is crucial. It's useless to launch a savings promotion campaign at Christmas time, but harvest is a good period to deliver a savings message. It's efficient to organize the road shows to coincide with preexisting events that attract a lot of people. For example, we focused on the trading and market days in each location.
Right attitude
Road shows are a great opportunity to reach potential clients. Financial institutions represented at the road show should mobilize their staff to make the most of this opportunity. Collectively our partners opened over 200 accounts on the spot during the road shows with thousands signed up to come during office hours…and they did. But SACCOS must be aware of the benefits of the campaign in order put all their energy in active marketing. During the first road show, staff members were not very enthusiastic about the event and a smaller number of accounts were opened. For the second road show, staff were sensitized to the benefits of the campaign beforehand. We also granted money for our partners to develop their own presents and leaflets. This increased ownership and enthusiasm for the second campaign.
Right medium
Campaigns should build on popular local media. In Uganda, we knew that newspapers had practically no outreach in the rural areas but that 46% of the population has radios. This is why we used radio channels. As a first step we organized a workshop with radio producers and managers to develop their understanding of broad savings-related issues in order to ensure the quality of the radio programs. For the second "Save Today, Better Tomorrow" campaign we had programs aired over 3 months in 8 local languages and on 14 radio channels.
5. Do you already see results from the "Save Today for a Better Tomorrow" campaign?
We modeled the road shows on the marketing events that are organized for sodas and laundry detergents. We didn't know if this kind of approach could work for something far less tangible like savings.
But so far the results are amazing. During the first campaign our partners increased their number of savers by 22%. After the second campaign, they gained 46% of new savers and saw a 17% increase in the total value of their savings.6
Several of our partners are organizing their own mini-marketing campaigns with plays and small presents that emphasize savings messages. This means they see a value for it.
Rural SPEED partners have reached over 300,000 new savers in 3 years. This might not seem big in absolute terms, but in a country of 30 million people, knowing that 1% of the population has gained access to an established and secure financial organization already feels like some kind of a success story…Something well-worth the effort.
Related links:
- CGAP study: Uganda Country-Level Savings Assessment
- Rural SPEED study: Savings Habits, Needs and Priorities in Rural Uganda
- Rural SPEED tool: Treasury Management for SACCOS: Procedure Guidelines and Training Manual
- FinScope study: Uganda FinScope Survey 2006
Terri Kristalsky works for Chemonics International as Chief of Party for USAID-funded Rural SPEED. She is a banking, microfinance, and a small and medium enterprise specialist with over 20 years of experience in microfinance, commercial finance, business/bank training, project design and management, and technical assistance. Prior to working in Uganda, Terri was the Microenterprise Initiative Team Leader for USAID-funded AMIR Program in Jordan; she established a full-service business development center and developed a women's business forum in Russia.
1 Rural Savings Promotion & Enhancement of Enterprise Development
2 Rotating Savings and Credit Associations (ROSCAs), accumulating savings and credit associations (ASCAs), Village Savings and Loan Associations (VSLAs) and savings and credit co-operative societies (SACCOS)
3 We wanted our partners to have least 2000 members. Our largest partner SACCO currently has 7000 members.
4 See Rural Speed resource center here
5 For example, see Community-Managed Loan Funds: Which Ones Work? CGAP Focus Note No. 36, May 2006.
6 This probably means that they are now reaching out to more small savers than before.