Savings & Credit in Sub-Saharan Africa

Your social network is critical to saving

Savings clubs (chamas in KE, stokvels in ZA, and esusu in NG) are a big part of saving in SSA. They provide a variety of benefits - social pressure/accountability to save, access to better investments/yield (as the larger sum offers better investment opportunities), social connection that has emotional benefits as well as provides an economic saftey net, and more. A downside is the club could be mismanaged (organizer runs away with the money) and though legal formalization of these clubs has helped with protecting members, it's fall from solved the issue.

Your social network is critical to credit

If you ask 90% of SSA where they go to when they need to borrow money to make ends meet, their top answer will be family & friends. Moreover, for the few that can access unsecured consumer or business business loans, they often need a guarantor to sign off, hence going to friends and family for this.

Creditworthiness understanding continues to be a challenge

The informalness of the economy makes understanding creditworthiness difficult - incomes don't have a paper trail, incomes are often lumpy, and savings is wrapped up in land. While startups (US: Branch, Tala; China: OPay) hoped novel consumer information from their digital devices and elsewhere, the answer to the question of “did the user repay a loan we gave them already?” is head and shoulders the best predictor of them repaying the next loan.