Linking social capital and microsavings: Lesson from thrifty saving behavior of afar pastoralists of Ethiopia

Abstract

Pastoral communities are the most marginalized segments of the world's population. Their access to financial services is very limited. Properly designed financial service can play significant role in the development, risk management and mitigation strategies of the pastoral communities. Against this background, the current study examines the relationship between microsavings and social capital vis-à-vis the contribution of Pastoral Saving and Credit Cooperatives (PASACCOs). The study highlights the prominent role of social capital in securing loan for pastoralists by serving as collateral. It also shows a strong positive relationship between social capital and microsaving practices (P > 0.05). Hence, any developmental intervention on the financial inclusion of Afar pastoral communities should pay attention to the indispensable role of social capital.