Financial inclusion efforts and savings groups are common interventions in humanitarian and development programming. Individually or combined they help promote savings, increase access to credit and ultimately, build self-reliance. With more commercial and mainstream financial services moving online, there are also efforts to do the same at the community level. With this in mind, Ugandan company Akaboxi developed a way to help digitise village savings and loan associations (VSLAs) and link them to banks and other finance institutions. Akaboxi hoped their innovation would not only help people save but also help them build a base from which they could access commercial financial services in the future.
The Response Innovation Lab (RIL) in Uganda was impressed with Akaboxi’s ideas and wanted to learn more about how the system would work in the Uganda refugee response and in similar rural settings. RIL supported a pilot rollout of the Akaboxi system with 15 VSLAs in Kiryandongo Refugee Settlement to gather information that would help Akaboxi and other innovators iterate and refine their approaches to financial inclusion and savings group digitisation.
In this blog post, we’ll look at the results of the pilot and what they mean for Akaboxi and other innovators as well as for organisations involved in financial inclusion and digitisation.
More about the Akaboxi system
The Akaboxi system has three elements: the device, the training and the support. The device is a handheld internet-enabled device (similar to a smartphone) used to record savings digitally through use of personal smartcards for each VSLA member. The training covers using the device, financial literacy and cross-cutting themes, such as gender. The support includes practical help with opening bank accounts and registering the VSLA, and troubleshooting problems with the device.
The Akaboxi device replaces a physical savings box and handwritten ledger, increasing safety, accountability and accuracy.
The Akaboxi device that replaces a physical savings box.
“Increased trust led to decreased disagreements, which increased morale and, in some cases, led to more savings.”
A farmer group participating in the training on the Akaboxi system
“Completing administrative tasks and establishing a bank account are valuable outputs and leave the VSLAs in a better position regardless of whether they decide to digitise…”
Pilot findings: what worked well
After completion of the pilot in December 2019, RIL staff visited the 15 VSLAs to find out and document their experience of using the Akaboxi system. Here we highlight three common responses from the savers about what worked well.
The digitised system improved accuracy and transparency: The smart device created more trust among savers due to its accurate calculations, stored records and automatic receipts. Groups reported that this increased trust led to decreased disagreements, which increased morale and, in some cases, led to more savings. Aber Farmer Group said that they increased their share value, the minimum amount a member saves per saving session, from 2000 Ugandan shillings to 3000 (around US$0.8). And the Odokomit Group was able to both increase its membership, from 25 to 32, and the average savings.
The digitised system reduced the time needed for saving sessions: The automated calculations and recordkeeping not only increased accuracy but also decreased the time needed to process savings and maintain records. Group secretaries had to spend much less time writing in the ledger, creating receipts and correcting errors! This more efficient process gives all members more time for other activities, such as income generation, building social networks and caring for family members. Ten of the 15 VSLAs in the pilot said using the Akaboxi system saved them time, with one group cutting their session time from 1.5 hours to 40 minutes and another reducing from 2 hours to just 45 minutes. However, it must be noted that these positive time savings only exist when the device connects easily to the internet. For the groups who frequently experienced connection issues, due to their location, the system didn’t save them time.
The practical support enhanced VSLA functioning: A lot of the focus of the pilot was on the device as this was the most visible change to the traditional VSLA set-up. However, RIL’s follow-up found that the practical support the groups received from Akaboxi to open bank accounts was very popular and had direct positive impacts. The majority of the 15 groups believe they wouldn’t have been able to navigate the bureaucracy of opening a bank account without the practical support. In the process of opening the bank accounts the groups were supported to finalise their registration, get authorisation letters from the Office of the Prime Minister (needed by groups based in refugee settlements) and establish or finalise the group’s constitution. Completing these administrative tasks and establishing a bank account are valuable outputs and leave the VSLAs in a better position regardless of whether they decide to digitise, with or without the Akaboxi device.
Pilot findings: what needs to be improved – and potential solutions
In its pilot follow-up, RIL found out that only 1 in 15 of the initial VSLAs were still using the Akaboxi device. Using the Qualitative Feedback Guidance Tool available in RIL’s Piloting toolkit, RIL staff found out more about the barriers to use and collected insights from the end users on potential solutions. Here we look at the top three barriers and potential solutions.
Issues with charging: The Akaboxi device has a battery that needs to be charged, but all 15 groups in the pilot were based in locations that don’t have a power supply. Many groups initially travelled to places that provided charging, such as a shop or office, but over time this commitment became too costly in terms of the money and time spent. For example, the Odokomit Group found it could take up to two days for the device to be fully charged if the battery was completely depleted. Other groups used solar charging, but some found this to be slow and took power away from other devices. The challenge of keeping the device charged and ready to use was the most common reason groups stopped their move into digitisation.
Potential solutions: Some end users in the VSLAs suggested built-in or dedicated solar chargers, so that people didn’t need to already have solar panels and those with existing ones could continue to charge other devices and lights. Others suggested a charging service so the time and inconvenience cost of travelling to charge the device was minimised.
Issues with internet connection: To work, the device needs a stable connection to the internet. But many of the VSLAs were based in locations where data coverage is inconsistent and patchy. Because of this, some groups found a significant time cost in waiting for a connection while others found they couldn’t get a connection frequently or reliably enough to continue with the system. For some groups, such as Lubanga Ngeyo, the connection challenges were the main issue that led to the group not using the system. For others, it was the combination of connection problems and charging challenges that made persisting with digitisation impractical.
“The challenge of keeping the device charged and ready to use was the most common reason groups stopped their move into digitisation.”
Potential solutions: Some end users suggested an offline mode so that the VSLA could carry out its savings activities as scheduled, regardless of connection status. It’s also worth mentioning that the current installation of boosters in many settlements should help reduce this challenge.
Language and digital literacy barrier: For the pilot VSLAs, mastering the elements of savings group digitisation, such as dealing with banks and using the Akaboxi device, required a comfort with English and digital devices. The need for certain skills, knowledge and confidence excludes some members and means implementing digitisation can often rely on just one person. The pilot found that this reliance makes the system vulnerable if the trained person leaves or can no longer complete their tasks, and can create frustration from other members. For example, one VSLA stopped using the Akaboxi system because their secretary had to step down due to family commitments and no other group member understood English. For another group, some members were not confident to try to use the device as “it’s a computer” and they felt themselves to be computer illiterate.
Potential solutions: Most VSLAs would have liked more people in their group to have been trained on using the system and device, to reduce the reliance on just one person. Others suggested having the device instructions and interface in local languages to increase understanding and comfort. Some end users suggested that the digitisation process could use existing technology that more people are already familiar with, such as a smartphone, as this would decrease the learning curve and give more options for charging and troubleshooting. However, it must also be noted that a number of groups said that although they liked the idea of using a smartphone, they wouldn’t have wanted to lose the receipt printing function of the Akaboxi device.
“Have you been able to identify all steps from people’s current situation to where they can easily use and benefit from your innovation?”
Learnings for innovators and humanitarian and development actors
The findings of the pilot will be helpful for Akaboxi to iterate and refine the design of its device and system. But that’s not the end of their use—the findings also provide information and insights that can help other innovators and those working with them. Here we look at three prompts for discussion and research.
Consider the needs of device-led innovations: If your device needs power and internet, do these reliably exist, at a low cost, where your innovation will be most helpful? If not, can you adapt your design or collaborate with other innovators working on power and internet supply solutions? The pilot end users had some suggestions on potential solutions (see above) and there will be others to discover and consider. Does your device need knowledge of and comfort with a specific type of technology or ‘tech’ in general? If so, how will you ensure that a wide range of end users can benefit? How will you help potential users overcome confidence, cultural or language barriers to engaging with technology? Can you use a technology, system or concept that people already know as a starting point? Can you simplify or otherwise improve the interface to make it more user-friendly, including to people with low literacy levels?
A VSLA participating in gender-sensitivity training. Due to low levels of literacy, all training materials were picture-based.
Conclusion
The Akaboxi pilot not only created learning for the Akaboxi team but also for RIL, other actors in humanitarian and development responses, and innovators. The findings point to the fact that savings group digitisation has clear benefits but that not all geographical areas or all people are ready to make the move due to practical challenges and literacy levels.
Links to further reading and resources
You can learn more about Akaboxi on their website and in this Save the Children blog post.
Financial literacy training was part of this pilot, if you also run this type of training, read the new minimum standards for Uganda.
If you want to know more about digital savings groups, this learning brief contains information on going digital and the potential challenges.