Banking on Change
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More than 2 billion people in the developing world are ‘financially excluded’
This means they do not have access to basic financial services, such as savings, bank accounts, or credit.
Having access to these basic services can transform the lives of vulnerable individuals, especially women and young people, and give them the opportunities to fulfil their potential. It means they can manage their savings – helping them to plan for the future – and increase their incomes, enabling them to lift themselves out of poverty.
The Banking on Change partnership between CARE, Barclays and Plan was set up in 2009 to extend and develop access to basic financial services in order to improve the quality of life for poor and marginalised people.
Since it was set up, the partnership has enabled more than half a million people to gain access to informal financial services and be better able to manage their money. It does this by supporting people to set up informal savings and loan groups – known as Village Savings and Loan Associations.
Since the partnership began, more than 25,000 savings and loan groups have been set up, with members of the groups (most of them women) saving an average of nearly £40 a year – no mean feat for people with limited incomes.
It has empowered us, especially the ladies, to do business. I am able to earn a living. I can provide for my family, and my husband no longer has to provide everything. – Sarah Mutanda, Ugandan farmer
How it works
- Self-selecting groups of 15-30 people form a savings group
- Members meet regularly to save money and gain financial skills
- Savings are secured in a lockable cash box, with three keys and key-holders
- When the group has saved enough, loans are available for domestic and small business use
- Loans are paid back with interest agreed by the group
- Annually, members share savings which can increase by up to 60%
- Groups that are ready have the opportunity to link to formal savings accounts
- They gain added security for their savings and access to bank products
Linking people to formal financial services
The Banking on Change partnership has also successfully linked many of these savings groups to formal financial services – enabling the groups to bank their money and access the wider financial services offered by banks and formal financial institutions.
We’ve now created the Linking for Change Savings Charter to bring these opportunities to even more people. The Charter sets out principles for effectively and responsibly linking informal groups of savers to formal banking products and services, and we’re calling on other banks and financial institutions to sign the Charter and commit to developing products and services for the poorest communities in the developing world.
Breaking down the barriers facing young people
Youth unemployment is a major issue for developing countries – but financial literacy, and access to financial services, is a key factor in enabling young people to improve their economic opportunities or to succeed as entrepreneurs. Banking on Change is therefore working to develop a youth savings group model as a foundation for increased financial inclusion and as a contributor to youth economic empowerment.
A model for private sector partnerships
Banking on Change has been awarded a Big Tick by Business in the Community and was highly commended at the 2014 Ethical Corporation Responsible Business Awards for best business/NGO partnership.
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