Trust and economic development : saving groups in areas affected by armed conflict in Colombia

Abstract

The access and use of financial services play a significant role in the economy. They are key to achieve of four of the United Nations’ Sustainable Development Goals. In poor countries and rural areas, financial services are mostly non-existent or hard to access. In those areas, the communities created informal institutions to partially solve the absence of services. Indigenous saving and credit systems were the first examples of informal financial rural services. Around the world these systems were used as a guide for formal methodologies of financial services, such as Rotating Savings and Credit Association –ROSCA – or Accumulating Savings and Credit Associations – ASCA –. Colombia is a country where SG could work, because it is a developing country, with more than 20% of population living in rural areas, which experienced for around 50 years an internal armed conflict that affected rural territories, displacing population to large cities, weakening social fabric, and augmenting distrust on society and institutions. Colombia’s government introduced the methodology of Saving Groups in 2008 in 30 municipalities. Since then, public projects and international cooperation initiatives, as CELI N/S implemented SG in different regions of the country impacting the territories and people’s lives. This study focuses on the formation of the groups, determining if trust is a condition or a result, and if the initial goals of the people participating in the groups are economic or social.