Savings Mobilisation

Publication Date: 2000
Published by: FACET BV - Financial Assistance, Consultancy, Entrepreneurship and Training
Document Type: Paper

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For appreciable growth of savings, what method is best for mobilisation?

This paper presents the concept of savings, examining voluntary and compulsory savings schemes. Evidence suggests that when savings are compulsory, the savings mobilised grow appreciably. The paper states that savings constitute an important mechanism for basic survival of poor people and an important source for a country's future investment, which is essential for its economic development and growth. It reviews methods and types of savings. Specifically, it looks at various types of ROSCAs (group solidarity and lending model plus individual savings). Says some ROSCAs are originally intended to save in cash or kind and still operate within the framework, while some ROSCAs have taken on the secondary function of insurance and the provision of social services, in addition to credit-related functions. The paper also presents the factors that influence savings, which include:

• Interest rate;
• Confidence in financial institutions;
• Accessibility of financial institutions
• The range of services banks offer to the poor.