Definition
A savings account is a deposit account held at a financial institution that provides a modest interest rate. It is designed for individuals to save money while earning interest on their deposits. Savings accounts typically have restrictions on the number of withdrawals or transfers that can be made.
Lead Actors
Financial Service Provider
Target Demographics
Farmer Organisations; Farmers; Women; Youth
Objectives addressed
Farmer related
Increase climate resilience:
Savings accounts can increase climate resilience by improving the adaptive capacity of farmers in the event of adverse climate events.
Boost access to finance:
Savings accounts boost access to finance by creating a source of finance for farmers to use. However, farmers need to be able to accrue the capital themselves in the first place which may be challenging.
Business related
Lower credit losses:
Savings can reduce the risk of default by ensuring that farmers have a buffer to repay loans in weaker seasons.
Contexts Best Suited to
Sufficiently strong banking sector: means that deposited cash is safer.
Key Risks
Branch accessibility: Many smallholders operating in remote locations may not easily be able to access branches to deposit or withdraw money.
Lack of data: Smallholders may lack the required identification and data to be suitable as clients for certain financial institutions.
Lack of data: Smallholders may lack the required identification and data to be suitable as clients for certain financial institutions.
Environmental Impact
Limited:
For the credit balances that smallholder farmers have the environmental impact is likely to be limited.
Ambition level
Low
Time
Time to setup accounts generally limited; number of accounts needed to be set up may take time depending on checks.
Investment Need
Main costs incurred would be due to the checks around setting up accounts and any accompanying financial literacy.
