The Power of Community: Savings Circles Empower Women in Africa
The Solar Foundation, in partnership with Radiical Systems, is spearheading a new initiative called Solar Savings Circles (SSC). The first SSC pilot project is a collaboration with our local community led partner, Helpers Social Development Foundation, in Nigeria and then we hope to develop an open-source sustainable MVP that can soon be piloted in Uganda. The initiative integrates traditional women's savings circles with a blockchain-based mutual credit platform, the Stable Credit protocol and the Good Standing app, to provide rural African women with access to clean solar energy and productive appliances for lighting, cooking and income-generating activities.
A key component of this emergent model is the traditional women's savings groups sometimes called merry-go-rounds or table banking. What are savings groups, and why are they common across many African countries?
In Nigeria, for example, savings circles are known as "esusu," "ajo," or "adashe," and play a vital role in the country's informal economy and social fabric. The groups are usually made up of 10-30 members, usually women from the same community. Members meet regularly, on a weekly or monthly basis, to save money and discuss financial matters.
Savings circles can operate in various ways. Sometimes each member contributes a fixed amount to the common fund, and perhaps more often, the participants contribute whatever they can. Then the total is distributed to the members on a rotating basis. The group may also provide small loans to members from the pooled savings and interest earned on the loans can then be shared among members as dividends. These groups provide a safety net for those excluded from formal banking, encouraging savings, fostering entrepreneurship and offering low-interest loans.
Women-only community savings groups are the most common, especially in rural areas, and they play an important role in empowering women financially and socially. They can also be a stepping stone to formal financial inclusion. It's interesting to note that in urban areas, there are more mixed-gender groups, and also that some community savings circles are based on shared occupations, e.g., farming or market vendors.
Beyond financial benefits, community savings groups strengthen social bonds and serve as platforms for community development and mutual support. While they have proven crucial for poverty alleviation and women's empowerment, the risk of member defaults and lack of formal regulation can lead to issues. To address these challenges, some groups are adopting mobile money platforms and NGOs are working to formalize these systems.
For the Solar Savings Circles, we believe that combining traditional women's savings groups with a modern, blockchain-based mutual credit system has the potential to create a hybrid open-source, sustainable model that's familiar to users and enhanced with digital tracking and management. We will be discussing mutual credit in an upcoming blog—stay tuned on our latest updates by following The Solar Foundation on X (Twitter).
