Why is it that some people are excluded from financial systems?

Financial exclusion is widespread in Africa. The reasons for financial exclusion are many. The lack of education, technological skills, and access to banks are just some of the barriers that small businesses face in Niger.

The most basic reason is that the people that develop financial systems don’t think of people who are not already financial included. Small businesses in Niger are not all registered.

Entrepreneur in Niger

In rural areas in Niger most of the unregistered businesses are run by women. 70% of the population in Niger is 70% illiterate and according to CARE the illiteracy rate in Niger is 86 percent for women, versus 58 percent for men. And the average school length is two year.

Often you need to be able to read and write in order to understand and use the financial systems, which doesn’t apply to many of the women in small communities running a small business in agriculture or in the informal sector in Africa.

Second, you need to be creditworthy to become a customer of the bank. In most cases that proves almost impossible for the women since they don’t even have identification papers and let alone historical credit history to prove that they are creditworthy.

Third, the financial systems are not made in order to help small business owners but are in itself a business – trying to make money from it’s customers. Therefore it costs money to get access to the bank and the interest rates are high – requirements which the women have a hard time to meet.

One thing is the financial systems themselves. Another thing is most of these women live in small urban communities working in agriculture or in the informal sector and the cities where the banks are, are far away. And even if the women had the opportunity to go there, all the challenges with identity and credit worthiness comes into play.

Community savings groups

Before women in Africa became members of savings groups like the VSLA, Women entrepreneurs in Africa working in agriculture or in the informal sector didn’t have a safe place to store their money. The little money they had in spare went under the mattress or into the community and were not being spent on insuring the business or growing the business – making it even harder for the women to scale.

The Savings groups try to take these things into consideration and group the women together. They become each other’s safety net. Instead of each woman having to make her own savings, securing her own business – VSLA groups unite the women, helping each other out and insure each other in case of an emergency. For the women to grow their business money is needed. Being in savings groups consolidate the number of women able to grow their business.

VSLA meeting in Niger

Before the savings groups the women often relied on informal external lenders who would collect interest rates. However, with the introduction of VSLA savings groups, women in the community have become each others investors. The money made in the community goes partly to a community insurance for emergencies. The rest goes into the saving pot where the women are able to lend money for a small interest rate and thereby grow their business – benefiting the whole community.

With the rules enforces in the savings groups it creates a stability for the community and set the ground for a track record on the money flow in the community

Financial inclusion

Providing the women in the savings groups with a tool as eArziki to show their credit history digitally is one step to educating the women at the same time as creating a credit history for these women – in the end a way for them to get more access to capital so they can grow their business.

Hiveonline are aware of the challenges with a tool that runs on a mobile and therefore demands some kind of connectivity and electricity. We have tried to make the solution as simple as possible making sure that women’s participation and contribution to the savings groups are captured but in the simplest way as possible to ensure minimum use of internet usage which also costs money.

By getting the women’s business behaviour on a platform using blockchain we create a transparent credit history that these women can take with them wherever they go, giving them the possibility to go to a bank or other lending opportunities ensuring that middle men wanting to explore vulnerable women gets cut out and in time you create a credit history and a personal identity