Research News

Women in Mali Save, Invest, with No Banks Nearby

Lori Beaman evaluates role of savings groups in reducing poverty


savings groups
Women in Mali participate in a savings group.

They live in poor villages that are, on average, 14 miles from the nearest paved road. Traditional banking institutions are neither accessible nor affordable to them. As a result, women in Mali must find other means of saving and lending money. The newest and most popular saving and lending programs are “savings groups.” Women in each savings group contribute to a group fund every week, then collectively decide if they should loan money from the fund to other members of the group, to be repaid with interest at a later date.

In a recent IPR working paper, IPR economist Lori Beaman, with Dean Karlan of Yale University and Bram Thuysbaert of Ghent University in Belgium, evaluates the impact of these savings groups.

With implementation costs as little as $20 per household, the groups, which use the infrastructure of non-governmental organizations (NGOs) to promote savings and provide loans to an estimated 400,000 Malians, are far cheaper than typical microfinance programs. Beaman and her colleagues sought to investigate if they were effective at reducing poverty, despite their low cost.

The researchers surveyed nearly 6,000 households in 500 Malian villages; 209 of these villages participated in savings groups led by Oxfam America and Freedom from Hunger.

They found that women who participated in the savings groups did not increase their income tremendously, but they did use the money they saved to purchase food regularly. As a result, they “smoothed” their food consumption over time—rather than starving during lean periods and binging during the harvest, they saved money to purchase food throughout the year.

beaman
Lori Beaman

“Since we’re working in Mali, food security is a first-order concern for households,” Beaman said—particularly during the years of this study, when rainfall was low.

When savings group participants invested their money, they invested it in livestock. They did not invest money in health- or education-related expenses—a surprising result, especially since one component of the Oxfam and Freedom From Hunger programs is teaching malaria prevention skills. 

Beaman says this outcome might just attest to the dominance of food security, relative to other potential expenditures. Livestock, she notes, act as “buffer stock” in Mali, an ideal form of insurance against economic shocks.

“Maybe households just were not at a point where they thought their food security was solid enough to think about downstream investments in education and health,” she said.

While savings groups alone will not lift households out of poverty, Beaman said, the demonstrated benefits of these groups—especially in light of their low cost—make them a good option.

“It’s quite promising, savings being one component of many that can help households in poor countries become more resilient and hopefully—eventually— decrease poverty,” Beaman said.

Lori Beaman is assistant professor of economics and an IPR fellow. Read the working paper, “Saving for a (not so) Rainy Day: A Randomized Evaluation of Savings Groups in Mali” (WP–14–15).

Photo credit: Aude Guerrucci and Dean Karlan