Promotion of Rural Savings through Microfinance: The Experience of Sinapi Aba Trust in Ghana

This paper profiles the experience of the “Sinapi Aba Trust”, a microfinance agency in Ghana, in order to examine whether microfinance schemes can mobilize local capital for the development of the local economy. The paper states that:

• Sinapi Aba Trust observed that a majority of its clients had developed the culture of relying on loans for a long time and were even borrowing money to pay their compulsory savings required for loan security.
• The organization, therefore, introduced a progressive savings scheme that intended to help clients:
  • Accumulate more funds for their domestic and business needs;
  • Generate more funds to augment their loan portfolios.

The study assessed the performance of the scheme and its impact on both clients and the organization. It revealed that:

• The rural poor have the capacity to save substantial amounts progressively, if they are given the opportunity, motivation and a supportive institutional framework;
• Voluntary savings through the scheme increased tremendously within twelve months;
• The funds mobilized from the savings scheme constituted about 26% of the loan portfolio.

The authors conclude that the Sinapi Aba Trusts experience establishes the capacity of microfinance schemes to mobilize local capital and develop the local economy.