Project – The Contribution of Community-Based Savings Groups to Women’s Household Financial Decisions: A Study of Selected Communities in Abakaliki, Ebonyi State

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Household financial decision-making is an important dimension of women’s economic empowerment because it determines the extent to which women can participate in decisions concerning income, expenditure, savings, investment, education, healthcare, food, housing and other household needs. In many developing societies, women contribute substantially to household welfare through paid employment, petty trading, farming, processing, caregiving and other economic activities, yet their contribution does not always translate into equal influence over household financial decisions. Household decision-making is therefore not simply a matter of who earns money, but also of who controls resources, participates in planning and determines how available resources are used. Research in Nigeria has shown that women’s participation in household decision-making can be affected by gender norms, economic circumstances, spousal relationships and access to resources (OlaOlorun & John, 2021).

One mechanism that has increasingly attracted attention in addressing women’s financial constraints is the community-based savings group. Community-based savings groups are informal or semi-formal associations in which members regularly contribute agreed amounts of money into a common pool from which members can obtain loans, emergency assistance or periodic share-outs. Different models exist, including rotating savings associations, savings and credit groups, Village Savings and Loan Associations (VSLAs), Savings and Internal Lending Communities (SILCs) and women affinity groups. These groups are particularly relevant to women who may encounter barriers to conventional banking and formal credit services. Evidence from Nigeria indicates that savings groups can provide access to savings, small loans, social support and financial opportunities for women who may otherwise have limited access to formal financial institutions (Lukwa et al., 2022).

The importance of community-based savings groups is also connected to financial inclusion. Formal financial institutions may not adequately serve low-income households because of documentation requirements, collateral demands, transaction costs, geographical distance and the relatively small size of many informal economic activities. Community savings groups can reduce some of these barriers by allowing members to save small amounts regularly within a familiar social environment. The Nigeria for Women Project, for example, has used Women Affinity Groups as platforms through which women pool resources, save, access loans and receive financial and business-related support. By 2024, the programme had supported hundreds of thousands of women through thousands of groups and facilitated substantial savings and internal lending, demonstrating the growing policy relevance of group-based financial mechanisms in Nigeria (World Bank, 2025).

Beyond providing financial resources, savings groups may influence the social and relational conditions under which women make household financial decisions. Membership exposes women to other members who may share information about budgeting, savings, business management, investment and coping with financial shocks. Regular group meetings can also provide opportunities for women to develop confidence, leadership skills, social networks and collective problem-solving capacity. Recent research on VSLAs in Nigeria found that these groups can strengthen financial and economic resources as well as social enablers such as solidarity, social networks, empowerment and financial knowledge. The same research, however, shows that institutional conditions can determine how far these benefits translate into broader forms of financial resilience (Angsten Clark et al., 2025).

An important area of interest is whether participation in savings groups translates into greater influence over household financial decisions. Women’s empowerment is partly reflected in their ability to participate in decisions about household expenditure, children’s education, healthcare, business investment, savings, major purchases and the use of income. Evidence from Nigeria suggests that participation in informal savings groups is associated with women’s decision-making power and asset ownership, although the observed relationship is relatively small and participation may be affected by dropout and limitations in the amount of capital available to members (Meysonnat et al., 2022). This suggests that membership alone should not automatically be equated with financial empowerment; rather, the nature, frequency and quality of participation, the amount saved, access to credit and the social environment of the group may all matter.

The relevance of savings groups became particularly visible during periods of economic disruption. Economic shocks can reduce household income, increase expenditure and make it difficult for families to meet basic needs. During the COVID-19 pandemic, savings groups in Nigeria and other African countries provided members with savings, credit and social support that helped some women and their households cope with economic difficulties. Evidence from Nigeria further indicates that households with female members belonging to savings groups experienced some improvements in food-security-related outcomes, although the evidence also shows that the effects were not uniform across all measures and that savings groups themselves faced financial pressures during the crisis (de Hoop et al., 2022).

The Nigerian context makes the study of community-based savings groups particularly relevant because women’s economic activities are often closely connected with household welfare and informal livelihoods. The World Bank has identified women’s affinity groups and other community platforms as important mechanisms for expanding financial inclusion, savings mobilisation, financial literacy and access to livelihood opportunities among women. Similarly, ActionAid Nigeria reported in 2024 that its VSLA intervention involving thousands of women across several Nigerian states was associated with increased financial literacy, stronger social networks and increased decision-making power within families and communities (ActionAid Nigeria, 2024).

In Abakaliki, Ebonyi State, where many households engage in agriculture, petty trading, food processing, small-scale enterprise and other informal economic activities, community-based savings groups may constitute an important avenue through which women mobilise resources outside conventional financial institutions. However, the extent to which participation in these groups affects women’s actual influence over household financial decisions cannot simply be assumed from their access to savings or loans. Factors such as the amount and frequency of savings, access to group loans, financial knowledge, length of membership, group leadership opportunities, household income and prevailing gender relations may shape outcomes. Consequently, there is a need for context-specific evidence on how community-based savings groups contribute to women’s participation in household financial decisions in selected communities in Abakaliki. This study therefore focuses on the contribution of community-based savings groups to women’s household financial decisions, with particular attention to savings participation, access to credit, financial knowledge and women’s involvement in household financial choices (Angsten Clark et al., 2025; Meysonnat et al., 2022).

1.2 Statement of the Problem

Despite increasing recognition of women’s economic contribution to household welfare, many women continue to experience limitations in their participation in household financial decisions. In some households, women may generate income or contribute labour to household production without having equivalent influence over how household resources are allocated. Decisions concerning major expenditures, savings, investments, children’s education, healthcare and business activities may be influenced by established gender roles and unequal control over economic resources. Evidence from Nigeria demonstrates that women’s participation in household decision-making remains an important area of concern and that interventions intended to improve women’s agency need to address both financial and relational dimensions of household life (OlaOlorun & John, 2021).

A second problem concerns the limited accessibility of formal financial services for many women operating within low-income and informal economic environments. Requirements associated with conventional banking and credit can make formal financial services difficult to access for women with irregular income, limited collateral or small-scale businesses. Consequently, women may depend on informal savings arrangements and community-based financial groups to mobilise money, obtain loans and manage emergencies. Although these groups have expanded financial opportunities for many women, the extent to which financial access obtained through savings groups translates into greater authority and participation in household financial decisions remains insufficiently established at the local level. Nigerian evidence indicates a statistically significant but relatively small association between informal savings-group participation and women’s household decision-making power, suggesting that the relationship requires closer investigation rather than assumption (Meysonnat et al., 2022).

A further problem is that the benefits of savings groups may vary according to the structure and quality of group participation. Savings groups can provide members with opportunities to save regularly, borrow money, develop social networks and acquire financial knowledge, but members may also experience challenges such as inadequate savings, limited loan sizes, financial pressure, irregular participation and weak institutional support. Research on Nigerian VSLAs indicates that such groups can strengthen financial resilience through economic and social mechanisms, while institutional constraints can limit the extent to which members achieve more transformative outcomes (Angsten Clark et al., 2025). Similarly, evidence from women’s groups during the COVID-19 period showed that savings groups supported resilience but also experienced declining savings and depletion of group resources. These findings suggest that membership in a savings group does not automatically produce uniform financial outcomes for every woman.

The specific problem addressed by this study is therefore the limited empirical understanding of how community-based savings groups influence women’s household financial decisions in selected communities in Abakaliki, Ebonyi State. While national and development programmes have demonstrated the potential of women’s savings groups to improve savings mobilisation, access to credit, financial literacy, social capital and economic empowerment, evidence from broader Nigerian programmes cannot automatically explain the experiences of women in particular communities of Abakaliki. There is a need to determine whether participation in community-based savings groups is associated with greater involvement in household budgeting, expenditure decisions, savings, investment, education and healthcare decisions, and whether access to group loans and financial knowledge contributes to such involvement. This study is therefore designed to provide empirical evidence on the contribution of community-based savings groups to women’s household financial decisions in selected communities in Abakaliki, Ebonyi State (World Bank, 2023; ActionAid Nigeria, 2024).

1.3 Aim of the Study

The main aim of this study is to examine the contribution of community-based savings groups to women’s household financial decisions in selected communities in Abakaliki, Ebonyi State.

1.4 Objectives of the Study

The specific objectives are to:

1. examine the extent to which participation in community-based savings groups influences women’s involvement in household budgeting and expenditure decisions in selected communities in Abakaliki;
2. determine the contribution of access to savings and group loans to women’s participation in household financial decisions in selected communities in Abakaliki;
3. assess the influence of financial knowledge and skills acquired through community-based savings groups on women’s household financial decisions in selected communities in Abakaliki; and
4. examine the relationship between membership in community-based savings groups and women’s involvement in household savings, investment, education and healthcare financial decisions in selected communities in Abakaliki.

1.5 Research Questions

The following research questions will guide the study:

1. To what extent does participation in community-based savings groups influence women’s involvement in household budgeting and expenditure decisions in selected communities in Abakaliki?
2. To what extent does access to savings and group loans contribute to women’s participation in household financial decisions in selected communities in Abakaliki?
3. How does financial knowledge and skills acquired through community-based savings groups influence women’s household financial decisions in selected communities in Abakaliki?
4. What relationship exists between membership in community-based savings groups and women’s involvement in household savings, investment, education and healthcare financial decisions in selected communities in Abakaliki?

1.6 Research Hypothesis

The following null hypothesis will be tested at the 0.05 level of significance:

H₀: There is no significant relationship between participation in community-based savings groups and women’s involvement in household financial decisions in selected communities in Abakaliki, Ebonyi State.

1.7 Significance of the Study

The study will be significant to women who participate in community-based savings groups because it will provide evidence on how group membership may contribute to their participation in household financial decisions. The findings may help women understand the potential importance of regular savings, responsible borrowing, financial knowledge and active participation in group activities.

The study will also be useful to community-based savings groups and their leaders. The findings may provide information that can be used to strengthen group governance, savings practices, loan administration, financial education and member participation. Such evidence may help group leaders identify areas where members require additional support.

Financial institutions and microfinance organisations may also benefit from the study. Evidence concerning the financial behaviour and needs of women participating in community savings groups may help financial institutions design products that are more appropriate for women engaged in informal economic activities.

Government agencies and development organisations may find the study useful in designing women’s economic empowerment and financial-inclusion programmes. Existing Nigerian initiatives demonstrate the policy relevance of women’s savings groups as platforms for savings mobilisation, financial literacy, access to credit and livelihood development (World Bank, 2023).

The study will further contribute to academic knowledge by providing community-level evidence on the relationship between savings-group participation and household financial decision-making among women. While existing Nigerian studies have examined savings groups and women’s empowerment at broader levels, a study focusing on selected communities in Abakaliki can provide contextual evidence that may support further research in Ebonyi State and other parts of southeastern Nigeria.

1.8 Scope of the Study

The study focuses on the contribution of community-based savings groups to women’s household financial decisions in selected communities in Abakaliki, Ebonyi State.

Content scope: The study covers participation in community-based savings groups, savings mobilisation, access to group loans, financial knowledge, financial skills and women’s participation in household financial decisions. Household financial decisions will include budgeting, expenditure, savings, investment, children’s education and healthcare-related financial decisions.

Geographical scope: The study will be conducted in selected communities within Abakaliki, Ebonyi State, Nigeria.

Population scope: The study will focus on adult women who are members of selected community-based savings groups within the selected communities.

1.9 Operational Definition of Terms

Community-Based Savings Groups: These are locally organised groups in which members regularly contribute agreed amounts of money into a common fund for savings, lending, emergency assistance and/or periodic distribution of accumulated funds.

Women’s Household Financial Decisions: These refer to the extent to which women participate in determining how household financial resources are earned, allocated, saved, spent or invested, including decisions relating to food, education, healthcare, business, savings and major household expenditures.

Savings: The portion of a woman’s income or available financial resources that is deliberately set aside for future needs, emergencies, investment or other purposes.

Group Loan: Money borrowed by a member from the pooled savings of a community-based savings group, usually under agreed conditions relating to repayment, duration and interest or service charges.

Financial Knowledge: The understanding of basic financial concepts and practices such as budgeting, saving, borrowing, investment, expenditure management and financial planning.

Financial Empowerment: The increased capacity of a woman to access, control, manage and make informed decisions concerning financial resources.

Household Financial Participation: The involvement of a woman in discussions, planning and decisions concerning the allocation and use of household financial resources.

Community: A geographically defined area in which people live and interact through shared social, economic and institutional relationships.

1.10 Organisation of the Study

The study will be organised into five chapters. Chapter One presents the introduction, background to the study, statement of the problem, aim and objectives, research questions, hypothesis, significance, scope and operational definitions of terms. Chapter Two will review relevant literature relating to community-based savings groups, women’s financial inclusion, financial empowerment and household financial decision-making. It will also discuss the theoretical framework and review relevant empirical studies. Chapter Three will present the research methodology, including the research design, population of the study, sample size, sampling technique, instrument for data collection, validity and reliability of the instrument, method of data collection and method of data analysis. Chapter Four will present and analyse the data collected from respondents and test the research hypothesis. Chapter Five will contain the summary of findings, conclusion, recommendations, limitations of the study and suggestions for further research.

Project – The Contribution of Community-Based Savings Groups to Women’s Household Financial Decisions: A Study of Selected Communities in Abakaliki, Ebonyi State