As part of an experiment, Copenhagen FinTech Lab and CARE Danmark formulated a challenge for Niger, which has been ranked the second least-developed country by the United Nations Human Development Index and has a large unbanked community making up 93% of the 28 million population, disproportionately women.

Like in many African countries, the limited access to financial services in Niger has been replaced by CARE’s informal saving and loans groups. The Village Savings and Loans Association (VSLA) formalized these traditional informal lending circles from 1991, significantly empowering women in economic decisions. The ingenious system allows the village members to take small loans from a common box of shared savings of the community.

However, in case of a crisis or a high demand of loans by the community members the savings box can’t provide its members with sufficient capital beyond the credit limit. As a consequence, many citizens take up microloans with high interest fees (40% on average) due to high cost of administration and high risk of default, which are difficult to pay back and make the population run into even more debt.  Especially women can´t access these lending services due to high costs of moving cash around as the money needs to be sent with an armed guard because of bandits and other potential dangers. Making this way of lending beyond the VSLA pot cost ineffective.