The savings group sector spends a remarkable, and depressing, amount of time recording, collecting, verifying, consolidating, reporting, and analysing data.

It all starts at the group level with passbooks or ledgers – some of which contain genuine errors. While groups learn to record savings quickly, everything else, including tracking loans and repayments and calculating share-outs, is much more difficult. In fact, these transactions are often beyond the capacity of groups to do themselves and lead to indefinite visits from trainers.

After training, the trainers or their supervisors make periodic visits to collect data from the groups’ records. In many cases, outside auditors or evaluators visit samples of groups to test the agreement between the reported data and the field observations. The data from the field are entered into a database, and often sent off to the Savix site, where the accuracy and representativeness of the data are sometimes debated. This long process is so expensive, error-prone, and time-consuming that it has been called the trail of tears. 

FSD Kenya and The Software Group are in the process of developing a mobile app – provisionally called e-Recording - that hopefully will enable groups to leave the Trail of Tears for good. The app, which runs on Android phones, initially guides a group through a set-up process, during which the group records the names and group numbers of all members, names of the officials, and specifies who is authorized to enter data into the app. It also guides the group in writing those parts of the constitution that have to do with financial transactions – things like the interest rates on loans, how much each member can borrow in relation to her savings, loan periods, penalties, and similar details for the savings and social funds.

Once the group records are set up and the constitution written, the group record keeper can use the app to record attendance, fines, and every other financial transaction. The app is flexible enough to allow for the various ways that groups treat early withdrawal of savings, fines, different uses of the social fund, and transfers into and from an external bank account. 

The group decides which members are authorized to enter information, and each selects their separate password (usually their mobile phone number) and PIN.. The app records every transaction and keeps a permanent record not only in the phone but also in a remote database (the cloud), so that if the phone is ever lost, the records are secure. Even members who are not authorized by the group to enter information can check their balances on the phone used by the group, through the Internet using a smart phone or a computer in a cyber café, or by sending an SMS and waiting an instant for a reply.

If the group chooses, it can specify their facilitating agency – whether a local NGO, or CARE, CRS, AKF or others. The identified agency, but no one else, will have read-only access to the consolidated group records (not individual member records). Each transaction is tracked, with the date and time at which it occurred. It is possible to do many sorts of data analysis that simply can not be done in other systems. For instance, one could compare the savings, borrowing, loan repayment, and attendance behaviour of men as contrasted with women. Or one can produce a savings and credit history of individual members, which financial institutions might take into consideration in loan analysis. 

At the end of a savings cycle, the app computes the share-out using proportional distribution, a process that can take a full day or more when done by hand, but which the app can do in just a few seconds.

e-Recording is in beta testing now in six savings groups in Western Kenya: three CRS SILC groups in Eldoret, and three CARE GSLs in Nyanza. The groups are using Huawei smartphones that cost KShs. 8,500- about USD100. The groups that are piloting the phones are enthusiastic. They love going digital and are now looking with some disdain at the old analogue way of keeping records. Members state that they appreciate the speed and accuracy of the app, which sometimes catches errors that the group might otherwise not see. For example, if the group has decided that members can only borrow three times their savings, the app instantly points it out if the secretary tries to enter a non-conforming loan.

While most groups love the app, they ask hard questions about it also, and have many suggestions. These are being taken into account and the app has been repeatedly tweaked, although it is now in a close to stable version and is essentially feature-complete.

FSD Kenya anticipates that the app will be out of testing, and ready to release to the public domain, in 2014; in the meantime, a beta version will be posted on the Google Play for testing. Watch this site for more news.

And, this is just version 1.0 of e-Recording. In future, it will be greatly enriched. An obvious addition would be to enable members to save with a bank through the app; one can imagine e-Recording asking each member at share-out how much she would like to transfer into long-terms savings.  Members of the test groups have said they would like to have phones that speak the amounts of transactions (“Mary, member number 12, saved 1200 shillings”) Others would like to have the app show a photo of each saver and borrower as a cross check, and still others would like a place to record the group’s minutes. Future versions will likely include a help function, and even a phone number for contacting a specialist to help them. Finally, future versions might include a social networking function through which groups can communicate with other groups, post and share success stories, and conduct business.  Why not?

e-Recording, or perhaps other apps like it, will change the nature of how savings groups operate, and will have an equally great impact on the time requirements and cost of forming groups; much of the time that is spent dealing with the “trail of tears” of data recording and collection can be eliminated. If managed well, this should reduce training time, and lead to lower Cost Per Member.

Future versions of the app may even include pre-recorded training films in local languages, so that a group of people who wanted to form a savings group could pop into their local shop and buy a smart phone pre-loaded with the e-Recording app and training materials – everything they need to form a group in a hundred-dollar package.

Of course, some have questioned whether we want to go in this direction at all. Will the app dictate group procedures? Does the use of a digital device necessarily reduce social empowerment? Are we opening up groups to some massive risk by going digital? These are all good questions, and it’s important to find the right answers and not rush blindly into the digital future. However, it is hard to imagine that the painful manual data entry of the Trail of Tears will not be replaced by something much more modern, and this is bound to happen soon.

Lastly, we appreciate the need to identify the app with a more appropriate name - suggestions are more than welcome…..

Savings Revolution is delighted to co-publish this post with FSD Kenya. Check out their site here.

Reader Comments (2)

In its infancy stage, it is difficult to predict the outcomes of the E-Recording. Nevertheless, I congratulate FSD Kenya and Software Group for providing an innovative response to the "trail of tears".

Information management in the savings groups sector is indeed costly and overly burdensome. However, I am troubled by the claims regarding the inaccuracy of group records. Over the past 10 years, I have had the pleasure of collaborating with well over 100 projects in over 20 countries - all using a variation of the VSLA passbook-based or SFC oral-based record-keeping system . And the vast majority of groups that I have visited have transparent and accurate records, which they manage independently within less than 6 months.

In the few instances where I have witnessed a general case of poor record-keeping or over-reliance on programme staff, these weaknesses have been the direct result of strategic decisions to strip down group training and supervision to a fraction of what was delivered only a few years ago. While the efficiency gains of the sector in the last few years have been remarkable, our insatiable drive for a continuously lower CPM has led to greater variances in programme quality and some questionable cost measurement practices.

If the purpose of the E-Recording is to improve information management in the sector and link groups to each other, markets and financial institutions - as described above - then I welcome the innovative experiment. However, I am quite concerned if the rationale of the E-Recording is to simply reduce the CPM and group training requirements - as suggested towards the end of the post. Most programmes will transfer the development and hardware costs to the communities and exclude these cost from the reported CPM. Moreover, group training requirements for the successful adoption of the system will increase compared to the simple passbook- and oral-based systems. Whether these additional costs will be offset by the savings in data collection, entry and quality assurance costs will surely depend on the specifics of each programme - including geography, scale and staff capacity.

Tue, July 9, 2013 | David Panetta

Great thoughts there David, I tend to worry with you on whether the call to lower costs per member will negatively affect the quality of service provision in savings groups. Paul - am reminded of the debate on this during the Arusha savings group.

Wed, July 17, 2013 | Indefatigable