Saving groups lift vulnerable Rwandans out of poverty

women in savings group
A meeting of the saving group Abadahigwa, in the Musanze district. Photo: Alice Kayibanda / UNDP in Rwanda

Marie Claire is a young Rwandan woman living in Musanze district in the north of Rwanda. Living in poor conditions, she couldn’t even afford her own food and clothes. Getting a small loan from a formal financial institution for better livelihoods wasn’t easy, because loan conditions are a barrier for the poor.

“Before joining the savings group, I could hardly afford food, was not self-confident and too shy to talk to people.” Marie Claire says.


  • As of 2015, an estimated 14,000 savings groups were established with 280,241 members.
  • 78% of savings group members were female.
  • In 2013- 2104, US$ 91.1 million was provided in loans.

In Rwanda, only around 42% of adults have access to formal financial institutions. Poor people’s lack of collateral and lack of awareness or understanding of how financial products can improve their lives pose major challenges. Savings groups can address this challenge by lowering these barriers and making access to the financial domain easier and less intimidating.

Marie Claire is one of the 30 members who formed her community based savings group. “With the first loan I got from the savings group I invested in farming beans,” Marie Claire said. “After three months I harvested and sold my crop. After paying back the loan I bought metal sheets [for my roof]. For the second quarter, I asked for another loan and invested the money in maize farming…The following quarter I had my shares and from there I was able to build my own house.”

UNDP and the United Nations Capital Development Fund (UNCDF)’s Building an Inclusive Financial Sector in Rwanda (BIFSIR) programme supports the Government of Rwanda in its efforts to boost financial inclusion, especially for youth and women in rural areas. With support from BIFSIR, local NGO PAJER formed a number of savings groups across the country, built on community principles.

When members contribute, they are buying shares in the group. The maximum loan a member can take is three to four times his or her savings. At the end of the year, the members receive dividends and the group either starts a new round or shifts members. The members also contribute to a social fun, which provides credit to members who have experienced social or economic shock.

Marie Claire’s group has 30 members (20 women), with a total collective savings of RWF 470,000 (about US$ 650). The average loan size is RWF 8,000 (US$ 11). The money is small is but it made a huge difference in their lives.

One of the objectives of BIFSIR is to make sure that the beneficiaries see their participation in the savings group as similar to working with a formal financial institution. When receiving a loan, a beneficiary must invest in something to generate income, not only to make profits but also to pay back the loan within a maximum of three months. When the money is paid back, it gives the savings group the capacity to have more money for other members’ access to loans.

The results are extremely encouraging. PAJER notes that over 90% of the members have not defaulted. People have been able to build capacity to pay back their loans. Formal financial institutions are contacting the members, seeing them as potential partners.

Savings groups also serve to empower communities to help them get out of poverty by starting own business and improving daily livelihoods. With support from BIFSIR, over 10,000 people served by savings groups in 2013-2014 were able to enter the financial sector. Women are financially and psychologically empowered through participating in the group. Among the 10,000 new members, 78% were women and in most savings groups women outnumber men.

“Now I can eat what I want. I can afford clothes. I have confidence in myself. The group members nominated me as their secretary. Even though everything is not yet perfect there is no problem. I am so happy that I now have my own house. It feels so good!” Marie Claire said.

The BIFSIR programme is jointly funded by the Republic of Korea through RoK-UNDP MDG Trust Fund, UNDP and UNCDF and supports inclusive finance activities aimed at scaling up financial inclusion opportunities and entrepreneurship for the vulnerable population in Rwanda.

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