Search results

The study examined the nature of the operation of informal savings groups. Emphasis was on their composition, the mode of financial transactions and sharing of financial proceeds, the impact of the savings and members loaning on the members' financial and business growth, and the perception of the members on the benefits of the savings. The study also profiled the significant challenges encountered by the groups.

The study adopted an exploratory research design. The point of saturation was achieved after 15 members of informal savings groups were interviewed. Data were analyzed using content analysis techniques with the aid of NVivo version 10 software, and verbatim tests were used to explain the emergent themes.

The findings indicate that informal savings groups are accessible, sustainable and inclusive financing alternatives for low-income earners. Group sizes range from 250 to 3 members. As a sign of commitment, a form of identification is required to join the group. Findings also indicate that group leaders are elected, and their term of service could be renewable. It was discovered that members join mainly to save in financial terms, and they have benefited both monetary and socially. The biggest challenge these groups face is that members default.

The study provides evidence that informal financial service providers are an effective alternative to business financing that leverage existing social structures that are predominant in Uganda.

The study provides a benchmark for understanding the dynamics, capabilities and challenges impeding the survival and growth of informal savings groups as critical components in Uganda's financial system.