Banking without banks


Across Africa and other continents, people organise in groups to save up together and give each other loans. This social form of banking is a strong, but hand-held system. Jamiipay is digitalising this process.


Long before banks where invented as an established system, people would help each other save up and take loans. This is still the case across the developing world, where people use their network to help save up and lend to each other. One form in which this happens is known as savings groups. Communities across the continent of Africa have been organising in savings groups for hundreds of years.

More than 30 years ago, NGOs formalised this process across Africa. Weekly meetings, a metal box with three padlocks, and paper ledgers were introduced to keep accounts. The model is similar to a cooperative structure where people would save up by buying shares and be able to take out loans with a service fee. This allow the groups access to credit during the savings cycle, as well as an interest on their savings coming from the service fee paid to the box when loans are repaid. If loans are repaid, the share value increases, so everyone benefits from all in the group repaying their loans. This particular type of savings structure is commonly referred to as Village Savings and Loans Associations - VSLAs.


Today, NGOs alone serve more than 100 million group members in VSLAs across the African continent. They lend more than 8 million euros each year and they have a repayment rate of over 97%. Impact evaluations have shown positive effects from access to VSLAs on household food. This is possibly linked to increased agricultural investments.*


Taking savings groups to the next level

The savings group structure is strong and has an important impact* on the world’s poorest, unbanked population. However, these groups are faced with a challenge. The box only contains what little money a group of very low income households can put aside for savings. For this reason there is often very little money available for loans. People who would have used their loans for education, expanding their business, or emergencies, are often left waiting for months before getting a loan. In this sense, the savings groups are missing out on the advantage of the ecosystem of the financial system. This is the gap Jamiipay aspires to contribute in closing.

With Jamiipay the data from savings groups meetings can be collected and used to provide more loans so nobody is left waiting

Jamiipay is providing a digital platform for savings groups to register their saving and loans activities. We use this data to connect groups to formal loans providers to get access to loans.


*Ksoll, C., BieLilleør, H., HelthLønborg, J., and Rasmussen, O. (2016) Impact of Village Savings and Loan Associations: Evidence from a cluster randomized trial. Journal of Development Economics. Volume 120, May 2016, Pages 70-85.


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