One of the key building blocks of resilience is financial stability. When a family member suddenly falls ill, having access to income, particularly savings, can make all the difference. But, for many of the world’s poorest people, this is nothing more than a distant hope. They not only lack access to the formal financial system, but also the knowledge and skills – such as financial literacy and numeracy – to plan for their future.
For many of the more than 2.5 billion adults who lack access to financial institutions, there are few viable options to save. When threatened by unforeseen hardships, they resort to taking loans from local loan sharks with high interest rates, further putting themselves at risk of financial instability.
For some, community-based savings groups, or village banks, provide access to even the most basic financial services, which are extremely limited in rural areas. These groups provide a secure place to save, the opportunity to borrow in small amounts and on flexible terms, and a network of support and solidarity. There are more than 7 million savings group members across Africa, Asia and Latin America who are a testament to their success.
For the past 20 years, Pact has supported more than half a million women across 15 countries through our own community-based savings group model, known as WORTH. The program integrates savings-led microfinance, literacy and numeracy, group banking, and micro-enterprise development, while strengthening social networks and empowering women to have a voice in their communities. The program offers no seed capital, matching grants or subsidized interest rates. The women are the true architects of their financial freedom.
One of our most effective poverty-reduction tools, WORTH places women at the center of their own solutions and helps them build multiple types of assets from diversified income streams.
But good is never good enough at Pact.
In 2016, we had an idea to leverage technology to address the financial exclusion that so many WORTH women experience by automating parts of WORTH. From more than 400 ideas and 130 proposals from around the world, Pact was one of four winners of Hewlett Packard Enterprise’s Living Progress Challenge. As a winner, Pact received services and support from HPE to build a new mobile phone app to digitize WORTH’s village bank accounting system.
The app, known as MyWORTH, works as a mobile e-ledger with a simplified accounting system. It collects digital records into a single dataset, so group-level recordkeeping can be made accessible for analysis and support future improvements to the application.
It also reduces calculation errors and decreases transaction time, leading to increased group productivity, improved management audits and faster turnover of the groups’ loan capital. Members can also request and be approved for loans in real-time, instead of waiting for weekly group meetings. Most importantly, it creates group and individual credit histories. With nearly one in every three women in the world — or 1.1 billion — excluded from the formal financial system, this is essential for financial inclusion.
The app is currently being piloted with more than 1,500 adolescent girls and young women in Tanzania who are participating in the USAID-funded Sauti project led by Jhpiego.
On International Women’s Day, we’re proud of this progress, and we are committed to mitigating inequalities to promote a society that equally values people of all genders and provides fair and impartial access to opportunities.