Analysis: Will Informal Savings Groups Survive Inflation?
The crucial importance of savings groups to protect vulnerable and underserved groups in times of economic shock was evident throughout the pandemic: research showed a correlation between savings groups membership and food security at the household level. However, while individual resilience increased through membership of savings groups, the groups’ resilience suffered over the long term as they dipped into their pool of funds to help members cope. This threat is becoming far more apparent in the high-inflation environments that many savings groups operate in, especially as members experience spiking prices in food. Currently available interventions and solutions, including government programs and private-sector solutions, fail to adequately address the pressing issue. With the current economic downturn, the disintegration of some of these savings groups is not out of question.
Photo courtesy of WorldFish.