Nanofinance going digital

The challenge

There are roughly 1.4 billion unbanked people on the planet. Without access to adequate financial services, people at the bottom of the pyramid are trapped in the vicious circle of poverty. This causes unnecessary human suffering and loss of economic opportunities.

Our vision and mission

Our vision is a world without extreme poverty. A world where the most disenfranchised can live in dignity, freedom and justice.

Our mission is to work with VLSA groups and VLSA federations to help them get a better return on their savings and make their money work harder for them.

Our approach

We want to address the two main challenges for the existing village savings and loan associations (VSLAs): cash surplus at the end of the annual savings cycle, and an empty box at the start of each new savings cycle.

In Africa alone, these savings groups have more than 20 million members and more than 80% of them are women. Moreover, in certain countries some of these groups are organised into VSLA federations, which is a useful group-of-groups mechanism.

Inclusive digital products and services tailored to VSLA groups and VSLA federations will help them to generate higher returns on their capital and support their entrepreneurial activities.

The journey of Savolution began in 2017 in Burkina Faso. Fortunat Diener, then country director for Swisscontact, was managing a development program financed by the Swiss government which included a VSLA component. Together with Jean-Paul Kiendrebeogo, and with the support of Hugh Allen, they revised the VSLA component of the program using the Market Systems Development (MSD) approach – formerly also known as M4P or Making Markets Work for the Poor.

Working together with one of the largest financial institutions in Burkina Faso, they managed to train 10.000 VSLA members in 1,5 years – a 7-fold increase in the number of beneficiaries compared to the initial project target! The “Mara Panga” project was a great success.

In addition to the VSLA component, the project also included a new
entrepreneurship training component for female micro-entrepreneurs.
Using this innovative method to create VSLA groups, Fortunat and Jean-Paul studied VSLA financial cycles in depth and came to the conclusion that there is room for innovation. By using a social enterprise approach, our objective was to develop additional products and services for VSLA groups that would allow them to increase returns on their savings and create a self-financing “project”.

With the idea of creating a group-of-groups approach that would use excess money available at the end of the VSLA group cycle as seed money for VSLA groups at the start of their cycle, Fortunat developed the idea of a “digital bank” for VSLA groups and designed the corresponding business model initially for Swisscontact Services AG in Zürich in 2019.