Policy Brief Issue 11 | July 2015 FROM CASH TO ACCOUNTS: 98924 SWITCHING HOW WOMEN SAVE IN UGANDA Niklas Buehren KEY MESSAGES • In Sub Saharan Africa women are often not protecting GENDER INNOVATION LAB their savings through formal devices but instead keeping The Gender Innovation Lab (GIL) their savings in more vulnerable savings options. conducts impact evaluations of development interventions • After participating in a savings promotion program, women are more in Sub-Saharan Africa, seeking likely to save in semi-formal savings options. Participants moved their to generate evidence on how cash to semi-formal saving options, such as ROSCAs, but did not go as to close the gender gap in far as moving to regular bank accounts or other formal savings options. earnings, productivity, assets and agency. The GIL team • The pilot identified subgroups that may be especially is currently working on over receptive for informational savings campaigns. Women 50 impact evaluations in 21 countries with the aim of who were illiterate or had been robbed or stolen from in the past building an evidence base one and a half years show significant increases in take-up of with lessons for the region. formal savings options after participating in the program. The impact objective of GIL is • The Savings Mobilization Program resulted in reallocation increasing take-up of effective rather than accumulation of monetary wealth. policies by governments, development organizations and the private sector in order In Sub Saharan Africa, many women are keeping their savings where they are to address the underlying most vulnerable: at home. Even the world’s poorest women save to protect causes of gender inequality themselves in case of unexpected needs or for future investments, so why not in Africa, particularly in terms use semi-formal or formal institutions to better protect hard-earned cash? of women’s economic and social empowerment. The lab One potential reason is a lack of knowledge among women of how to aims to do this by producing and delivering a new body of save in a more formal institution, and about the relative risks and costs evidence and developing a of keeping savings as cash versus using a semi-formal savings device. compelling narrative, geared This is an important issue because access to financial services, including towards policymakers, on what more formal saving devices, is an important building block to many works and what does not work in promoting gender equality. strategies concerned with fighting poverty in developing countries. For more information visit us at: http://www.worldbank.org/en/programs/africa-gender-innovation-lab SO WHAT TO DO ABOUT IT? The Savings Mobilization training sessions were conducted during or after the regular weekly BRAC BRAC is a large development organization based in microfinance group meetings. The savings sessions Bangladesh dedicated to alleviating poverty through a were run by savings promoters who were selected from range of development approaches that include education, the pool of microfinance members in the intervention healthcare, and financial services. BRAC Uganda, which areas. The promoters had to have experience operating houses BRAC’s largest microfinance presence in Sub a bank account and had to attend a two-three day Saharan Africa set out to study if providing information program on the objective of the savings promotion on how to use formal financial devices could impact program. Outside of the group meetings, promoters women’s savings behavior. Researchers from BRAC and were also asked to provide assistance to members the World Bank’s Africa Gender Innovation Lab designed during the process of applying for a savings account. and analyzed a randomized controlled trial to measure the effectiveness of the Savings Mobilization Program. The pilot study included baseline data collection and a six month follow up survey. So, the impact The pilot aimed to see if women would capitalize on assessment provides conclusions on the short- the knowledge shared during the Savings Mobilization run effects of the Savings Mobilization Program. Program and move their savings to more formal and secure savings devices. Underlying this objective is the rationale that many Ugandans may not possess HERE’S WHAT WE FOUND adequate knowledge of the existence, the functionality Results indicate the success of the savings and the process of accessing saving devices offered by promotion program in switching women from formal institutions. It was BRAC Uganda’s conviction informal to semi-formal savings options. that in particular the rural poor are intimidated by the Interestingly enough, however, the pilot found that, level of formality featured by many financial institutions. overall, women did not move their cash all the way Thus, this pilot attempted to study the constraint of into a formal savings option (the increase below in missing knowledge through an informational campaign. the graph is not statistically significant). Instead, the largest shift was in women reallocating savings HERE’S WHAT WE DID to semi-formal savings options, such as Rotating The impact evaluation put in place by BRAC Uganda Savings and Credit Associations (ROSCAs). Taking studied promoting secure and affordable saving the step from saving informally to working with a services to relatively poor microfinance clients. group of individuals who agree to save and borrow This Savings Mobilization Program also provided together, rather than at a bank, appeared to be the information on how to access and operate these preferred short-term path for women in this pilot. As more formal and fairly secure savings devices. depicted below, the six month follow up results show a higher proportion of women who participated in The pilot study was set up in both the outskirts of Uganda’s the Savings Mobilization Program (approximately 9.9 capital Kampala and around Iganga, one of the major cities percentage points) hold savings at these institutions in Uganda. All beneficiaries of the program were female. compared to women who did not participate in the The randomized control trial methodology included 270 program. Additionally, ownership of savings at semi- microfinance groups who received the program and 135 formal institutions increased by about 29% among microfinance groups who did not. The microfinance groups individuals after participation in the program. typically consisted of between 20 and 35 members. SAVINGS OF WOMEN IN SEMI FORMAL & FORMAL DEVICES (SIX MONTHS AFTER THE PROGRAM) SEMI FORMAL Treatment 39% Control 29% FORMAL Treatment 49% Control 46% Note: The figures in the chart above are slightly different from the working paper because this is based on a linear estimation. The study identified subgroups that may be the study had in fact been stolen from in the past year especially receptive for informational campaigns (1 out of 4 women at baseline). Formal savings devices such as the Savings Mobilization Program. are generally perceived as safe saving devices, which Two subgroups were particularly impacted by the is an important factor in the switch between informal knowledge sharing of the savings program: illiterate and formal savings services. A robbery or a theft in women and women who have been robbed or the past one and a half years increased the take-up of stolen from in the past one and a half years. formal saving services by almost 19 percentage points for women participants in the Savings Mobilization For illiterate women, a lack of knowledge of Program. In comparison, savings held at semi-formal savings options impacts their use of formal savings or formal institutions are unaffected by robbery. mechanisms. Illiterate women are about 19 percentage points more likely to save at formal institutions six The Savings Mobilization Program resulted in months into the Savings Mobilization program. Similar reallocation rather than accumulation of wealth. to findings from the Cole et al. (2011) investigation Participants did not increase the amount of their on a financial education intervention in Indonesia, savings when prompted with information on the this study found that in comparison to their literate value of more formal savings mechanisms but they peers, illiterate women in the treatment group had did move their savings to more secure formal saving a much higher take up of formal savings devices. mechanisms. To increase total savings, more powerful tools may be necessary, such as programs that increase Additionally, women who had been robbed or stolen income and thus improve the financial situation of from in the past, were more responsive and moved to relatively poor women to potentially save more. more formal savings devices. Many of the women in CONCLUSION Implementing a relatively simple and cost-effective learning intervention focused on the value of moving along the spectrum to more formal savings options is enough to encourage women to transfer their savings from household hideaways to more secure community savings systems. This study provided evidence that an information constraint in reference to savings options particularly exists for women who have experienced theft or robbery in the past and for illiterate women. Forthcoming study in the World Bank Working Paper Series: Allocating Cash Savings and the Role of Information: Evidence from a Field Experiment in Uganda, Author Niklas Buehren FOR MORE INFORMATION, PLEASE CONTACT Markus Goldstein mgoldstein@worldbank.org Rachel Coleman rcoleman1@worldbank.org 1818 H. St NW Washington, DC 20433 USA Photo Credit: BRAC/Jaky Iyell