Informal resilience in urban Mozambique: How savings groups protect households from shocks
This policy brief examines how savings groups act as the primary financial safety net for households in Beira and Dondo, where formal insurance and bank credit are largely unavailable despite frequent shocks. Members are more likely to borrow from their groups during emergencies, but when resources are limited, many households resort to harmful coping strategies such as reducing meals, withdrawing children from school, or selling assets. The findings suggest that policy should strengthen the emergency lending capacity of savings groups, use them to monitor local shocks, and target support where needs are greatest.
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Cecchi-Charrua-Leeffers-Policy-Brief-June-2026.pdf
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- In Beira and Dondo (in Sofala Province), about half of savings group members experience a shock every two months, most often illness, the death of a relative, or theft. Formal insurance and bank credit rarely reach them.
- Savings groups are the de facto safety net. Almost all member borrowing occurs through the group, and members are around 8 percentage points more likely to borrow in a given month when they experience a shock.
- Most groups maintain an emergency social fund and lend for emergencies, so a contingency function already exists, but it operates without external support.
- When buffers are thin, households cope by cutting meals, withdrawing children from school, and selling assets, with lasting welfare costs, especially in more rural Dondo.
- Policy should strengthen and monitor these groups rather than bypass them: back their emergency-lending capacity, use them as a high-frequency monitoring channel, and target support locally.