Group Savings and Loans Associations – Impact Study

This paper analyzes the impact of group savings and loans associations (GSLs) on their users’ livelihoods and assesses the potential market for GSLs to inform a possible scale-up. The analysis and conclusions of this study adopt a framework to GSLs that is informed by transaction cost economics (TCE). The paper notes that GSLs are distributed widely along the trust continuum. Good management and governance matter to the quality of financial services they deliver. GSL members demonstrate a clear awareness of their household and personal savings priorities. Its other findings include:

• GSL members are more likely to be females and poorer with larger households as compared to other market segments;
• They are more likely to plan to save regularly, and appreciate the benefit of the disciplined savings regime afforded by their groups.
• They value accessibility to multiple loans throughout the agricultural seasons, cycle-end distributions, simple and instant GSL loans without collateral.

The study concludes that both franchise and faith-based incubation channels are proving their worth as innovations in achieving low cost GSL start-up in Kenya. It recommends that some attention should be paid to the problem of sustaining methodological compliance, so far as it pertains to institutional quality, during scale-up.