Madagascar: Financial Inclusion of Vulnerable Populations in Rural Areas Through Savings Groups

Posted on Jul 27, 2023 by Nivoarizay Liva Razafindrakoto, Treasury Inspector – Head of Division, National Coordination of Inclusive Finance, Treasury Department, Ministry of Economy and Finance, Madagascar


In Madagascar, financial inclusion plays a particularly important role in the fight against poverty. Through Madagascar’s National Financial Inclusion Strategy (SNIM) for the period from 2018 to 2022, the Government committed itself to improving individuals’ access to financial services from 29% in 2016 to 45% in 2022. The SNIM was completed at the end of December 2022, and the evaluation should be done this year.

Banks and Microfinance Institutions (MFIs) are not easily accessible to everyone, especially to vulnerable populations in rural areas. These vulnerable populations struggle to make savings for emergencies and to accumulate productive funds due mainly to a lack of access to suitable financial services for their particular needs. As an alternative, savings groups offer this category of the population the opportunity for financial inclusion.

From Microcredit to Financial Inclusion

The first microcredit initiatives in Madagascar were launched before 1990 by the national rural development bank, Bankin’ny Tantsaha Mpamokatra (BTM), with 1990 marking the start of microfinance. From 1990 to 1996, we talked about the emergence of MFIs and, beginning in 2003, there was the restructuring and the implementation of the various development strategies of the financial sector. Thus, the state structure in charge of implementing government policy on microfinance was put in place: the National Coordination of Microfinance (CNMF). The CNMF is attached to the General Directorate of the Treasury within the Ministry of Finance.

In 2006, several Non-Governmental Organizations (NGOs) such as CARE International and Catholic Relief Services (CRS) initiated the establishment of savings groups for vulnerable, unserved, and underserved people in rural areas. The savings group was inspired by the Mata Masu Dubara model from Niger. With the advent of mobile money, financial services offerings have gradually evolved to be integrated into the broader field of financial inclusion.

In 2014, the CNMF became the National Coordination of Inclusive Finance (CNFI). The CNFI is responsible for the coordination, promotion, and development of financial inclusion in Madagascar.

The Financial Sector Landscape in Madagascar

Despite the diversity of existing financial institutions — banks, MFIs, financial establishments, electronic money institutions, insurance companies, Non-Banking Financial Institutions (NBFIs), and pension funds — the level of financial inclusion in the country remains relatively low and unequally distributed over the national territory.

Indeed, according to the results of the FinScope Consumer Survey Madagascar 2016, only 29% of adult Malagasy had access to formal financial services. In addition to this are significant differences in inclusion levels between urban and rural areas.

Barriers to Financial Inclusion

Socio-economic conditions make formal financial services inaccessible. The low level of literacy and infrastructural constraints (e.g., road, network, connectivity, electricity), combined with an underdeveloped payment ecosystem, make it difficult for formal financial service providers to reach the vulnerable population in rural areas.

The lack of trust in existing services and the low level of financial education are obstacles to financial inclusion. Without an understanding of the basic concepts of finance and the inculcation of a culture of financial management, the population is not well equipped to make financial decisions nor to make informed choices in terms of saving, investing, credit, insurance, payments, or money transfers.

As a result, Madagascar has one of the lowest rates of financial inclusion in Africa. According to the results of the FinScope survey, only 12% of adults use a bank account, and 46% of adults do not have access to even informal financial services.

Savings Group Models in Madagascar

Various projects aimed at promoting the financial inclusion of vulnerable populations have developed savings group models. These include ...

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