Economic benefits of savings groups in rural Mozambique
Abstract
Purpose
The purpose of this paper is to examine the impact of savings and loan groups (SGs), alone and combined with a rotating labor scheme (Ajuda Mútua), on the economic conditions of the rural poor in Nampula province in Mozambique.
Design/methodology/approach
Three pairs of districts were randomized into receiving SG, SG and AM, or no intervention. The study used a mixed-methods sequential explanatory design. Data from a longitudinal survey of 1,276 households were analyzed using difference-in-difference estimation to assess the impact of SGs on income and asset ownership. Thematic analysis of in-depth interviews with 72 program participants explored specific contributions of SGs to economic outcomes.
Findings
Survey results show that program participation had a significant, positive impact on income and asset ownership. Qualitative results indicate that SGs allowed households to bridge seasonal food consumption gaps and meet cash needs during crises. Accumulated savings supported asset purchases. Program activities supported agricultural activity, but enterprise development had limited scope. Challenges to economic development included cultural aversion to risk, inadequate agricultural inputs, low market integration, and limited business opportunities.
Practical implications
SGs helped reduce vulnerability to stress events. Programs should analyze the wider structural context to foster a positive enabling environment, and combine SGs with relevant enterprise development services for additional benefits.
Originality/value
The importance of savings is increasingly acknowledged, but the contributions and limitations of SGs are not fully understood. This paper also highlights the role of structural context, which remains undervalued in the literature.
Keywords
Acknowledgements
Funding for this project was provided by the US Agency for International Development (USAID) under the terms of associate agreement DFD-AA-00-07-00251-00, the Supporting Transformation by Reducing Insecurity and Vulnerability with Economic Strengthening (STRIVE) project. The contents are the responsibility of FHI 360 and do not necessarily reflect the views of USAID or the US Government. The authors would like to thank Save the Children for the use of the de-identified survey data they collected as part of their STRIVE implementation activity. The authors acknowledge Dr Laura Fumagalli and Dr Thomas Martin for their substantial role in the design and implementation of the impact evaluation analysis approach and Dr Samuel Field for additional contributions. We are also grateful to Victoria Shelus, Sónia Chilundo and Carolyn D’Alessio O’Donnell for their assistance with qualitative fieldwork.
Citation
Brunie, A., Rutherford, D., Keyes, E.B. and Field, S. (2017), "Economic benefits of savings groups in rural Mozambique", International Journal of Social Economics, Vol. 44 No. 12, pp. 1988-2001. https://doi.org/10.1108/IJSE-04-2015-0103
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited