Informal financial savings practices to facilitate formal financial inclusion

This review continues the exploration of the role of informal savings mechanisms, such as the group-based savings system called Ajo or Esusu in the south-west of Nigeria, in promoting financial inclusion in Nigeria, and particularly among women. Ajo/Esusu, which is a traditional form of cooperative savings and lending, is deeply rooted in many African communities and has proven effective in providing a sense of belonging and financial access to individuals excluded from the formal banking sector [31]. According to [1], these informal savings mechanisms have the potential to bridge the financial inclusion gap by offering an accessible, tested, trusted, and community-based platform for saving and borrowing. Despite significant efforts to enhance financial access, a substantial gender gap persists, with approximately 30% of adult women excluded from formal financial systems [36]. This study highlights the importance of informal savings as a viable alternative for fostering economic empowerment within communities of trust amongst marginalized groups, even in developed economies. Thus, the discourse on integrating traditional group-based savings practices with formal financial services can create a transformative pathway for increased participation in formal financial services systems. The study also assesses the impact of Ajo/ Esusu on women’s financial behavior, access to formal banking services, and their economic livelihood based on their adopting a group-based micro savings culture. It provides insights into how informal savings systems drive financial inclusion and seeks to inform policy recommendations that harness the potential of informal financial practices for the benefit of low-income women and broader economic development objectives.