Going downmarket: Ghana's rural banks adapt informal savings methodology created by William Steel | B. Bubune Tornyie

A savings-and-credit scheme adapted by Ghana's rural banks from traditional informal methodologies is found to be effective in reaching unbanked clients and mobilizing additional domestic financial resources. Participation in the scheme transformed clients’ perception of the difficulties of saving and obtaining credit. Evidence indicated that accessing credit increased clients’ ability to purchase assets and support their household in education and health expenditures and decreased their tendency to spend on community social ceremonies. Nevertheless, the success of the scheme depends on methodologies used to mitigate risks of fraud and default: use of employees rather than autonomous agents; retention of savings of at least 50 per cent of loan amount; effective screening of loan applications, monitoring of both clients and mobile bankers; and good data systems.