Impact Assessment of Savings Groups: Findings from three Randomized Evaluations of CARE Village Savings and Loan Associations programs in Ghana, Malawi and Uganda
This randomized evaluation of Village Savings and Loans Association (VSLA) programs in Ghana, Malawi, and Uganda examines two questions: Who joins savings groups? And, what is the impact on households from programs that promote savings groups? Over 15,000 households in almost 950 communities were surveyed. The surveys covered a large variety of topics, including health, education, income-generating activities, asset holdings, food consumption, non-food expenditure, intra-household decision making, and community involvement. At the time of the endline survey, after an average of two years of program implementation in the three sites, one third of respondents had joined a VSLA group. On average, members had been part of a group for 15 months and 61% of members had gone through a full savings cycle, normally lasting between 8 and 12 months. The evaluation should thus be thought of as assessing the relatively short-term impacts of the intervention.
Savings group participation increases substantially in treatment villages compared to control villages. Moreover, VSLAs do not seem to be dominated solely by the better-off community members, although wealth, education, age and business ownership are correlated with participation.
We find evidence of replication of the savings group approach across villages, with little evidence that replicated groups lose quality relative to the groups formed in targeted villages.
VSLAs substantially increase the portfolio of financial services available to participants. More people have access to savings and loans, and average deposit and loan volumes increase as a result of the program.
Saving balances increase significantly, even after subtracting outstanding debits. The increased access to financial tools, and perhaps the social aspect of the VSLAs, helps women invest in their businesses. We find that women with access to VSLAs are much more likely to take out a loan for commerce and are significantly more likely to own a business. Income from businesses increases as well. However, this increase in business activity is accompanied by an increased likelihood to experience business failure. This is consistent with savings groups helping to enable more businesses, even though some do fail.
The presence of savings groups leads to improvements in women’s intra-household decision-making power, but we observe little change in women’s involvement in the community.
We see no significant changes in households’ ability to mitigate economic shocks, but we do witness some small improvements in food security, with households less likely to reduce the food consumption of adults in the household.
We find that households access more credit for a variety of investment purposes, including for agriculture, health and education. There is some evidence, although not robust to alternative econometric analysis, that the intervention increased the enrollment of children of primary-school age.
We do not detect changes in agricultural production, livestock holdings or the accumulation of household assets. In addition, use of health services and health expenditures remain unaffected, and we see no impacts on housing conditions, food consumption or non-food expenditures.