Fostering Savings by Commitment: Evidence from a Quasi-natural Experiment at the Small Enterprise Foundation in South Africa

Abstract: We study the effects of a pilot project that changed the saving incentive mechanisms set up by the Small Enterprise Foundation (SEF), a leading microfinance institution based in South Africa. The program aimed at introducing a stimulus to save in the form of the possession of “Goal Card” whereby clients owning this tool were asked to identify a saving goal and to commit to a regular saving amount. The experiment had quasi-natural approach, as it has been implemented by SEF in selected locations starting from May 2015. Diff-in-diff estimates show an improvement in the savings performance of the SEF customers treated with the program, compared to the counterfactual. Besides the evaluation of the program’s main effects, we investigate the clients’ understanding of the pilot and their attitude towards saving, as well as the quality of the pilot’s administration and its operational challenges, through the administration and analysis of surveys conducted on both the treated and control groups of clients.