Title: Household savings in informal social groups in Kenya: does accountability matter?

Authors: Jacqueline Agesa; Richard U. Agesa

Addresses: Department of Economics, Finance and International Business, Lewis College of Business, Marshall University, School of Business, One John Marshall Drive, Huntington WV 25755, USA ' Department of Economics, Finance and International Business, Lewis College of Business, Marshall University, School of Business, One John Marshall Drive, Huntington WV 25755, USA

Abstract: Social groups play a vital role in providing informal financial services in sub-Saharan Africa. This study offers the first examination of the impact of social group accountability on savings contributions to informal market social groups (Chamas) in Kenya. Specifically, we utilise a national dataset to examine the impact of accountability on household contributions to Kenyan Chamas. We find evidence that low-cost accountability initiatives such as securing Chama funds in a money lock box, or a bank account, and the separation of the Chama chair and treasurer positions increase Chama contributions. These findings provide insight into how low-cost accountability initiatives enhance contributions in informal financial markets. By contrast, registering a Chama with the Kenya government significantly reduces Chama contributions. Moreover, Chama registration is accompanied by non-trivial costs and members of registered Chamas are required to pay the appropriate tax liability on their portion of Chama generated income. Such findings serve as a cautionary tale that cost inducing accountability initiatives may inadvertently suppress households' willingness to contribute to informal social groups, possibly stifling households' propensity to save.

Keywords: Chamas; informal social groups; informal financial markets; rotating savings and credit organisations; ROSCAs; accumulated savings and credit associations; ASCAs; Kenya; Africa.

DOI: 10.1504/AJESD.2025.145454

African Journal of Economic and Sustainable Development, 2025 Vol.10 No.2, pp.132 - 146

Accepted: 11 Mar 2024
Published online: 01 Apr 2025 *

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