ROSCAs and household welfare in rural Africa

This paper investigates how participation in local financial savings groups – specifically, Rotating Savings and Credit Associations (ROSCAs) – supports household livelihoods and well-being, using cross-sectional data from nationally representative WAEMU household surveys. To address potential endogeneity in ROSCA participation, we employ multiple identification strategies, including selection-on-observables, Entropy Balancing, and instrumental variables. The results suggest that ROSCA membership enhances well-being, primarily through increased consumption of food and non-food goods, with stronger effects observed in rural areas. Policy implications include the potential for targeted rural interventions to bridge gaps in financial services and for poverty reduction programs to partner with ROSCAs to deliver accessible, community-based financial tools. Such measures can strengthen household resilience, promote sustainable livelihoods, and foster inclusive economic development across Sub-Saharan Africa.