Association for Public Policy Analysis & Management

Sustainable Development Goal 11 commits to making cities and human settlements inclusive, safe, resilient and sustainable. To achieve these qualities, human settlements must have a set of basic infrastructures to meet their inhabitants’ needs. In this equation, financial services constitute another type of infrastructure which must be equally provided in cities to all citizens due to their enabling –or hindering- role in facilitating access to basic necessities such as food and housing.

This paper explores the role of ‘informal’ financial practices in shaping resilient urban communities. To do so, it looks at different types of financial transactions and services, and studies in detail ‘informal’ mechanisms, particularly Rotating Credit and Savings Associations (ROSCAs). These institutions serve as substitutes or complements for the deficient access that populations have to formal financial services and become part of their safety networks to be resilient in the face of external circumstances like economic shifts, failing policies, or natural disasters.

The findings show that, while such institutions address safety and resilience needs of their members in the short term by forcing them to save and giving them access to large sums of money at low-cost, the risks entailed decrease their potential to entrust them with resilience in the long term. However, given their persistent and organic nature over time and contexts, they can provide valuable lessons for stakeholders in cities to address those gaps, either through capacity building or by designing technologies that can leverage the benefits and balance out the risks.