Beyond one-way inclusion: Mapping backward and forward linkages between informal savings groups and formal financial service providers among Lusaka marketeers

Abstract

This study examines financial inclusion as a bidirectional process by analyzing backward and forward linkages between informal savings and lending groups and formal financial service providers among marketeers in Lusaka, Zambia. While informal savings groups play a central role in the financial lives of marketeers, existing financial inclusion approaches largely frame integration as a one-way transition into formal finance. This study was anchored in financial dualism and the typology of institutional interaction developed by Helmke and Levitsky. Using a concurrent mixed-methods design, the study draws on survey data from 329 marketeers participating in informal savings groups, complemented by qualitative interviews and document analysis. Quantitative analysis using probit regression models shows that financial literacy, institutional trust, and group governance structures significantly influence adoption and use of formal financial services. However, the findings also reveal that existing linkages are limited in scope, largely transactional, and weakly institutionalized, delivering gains in access without translating into deeper financial inclusion outcomes. Evidence of backward linkages, where formal financial institutions adapt products or processes to informal savings group practices, is minimal. Bi-directional risks and constraints, including trust deficits, regulatory rigidity, and governance concerns, significantly undermine both forward and backward linkages. The study concludes that financial inclusion among Lusaka marketeers remains largely one-way and sustained by financial dualism. It recommends a shift toward bi-directional inclusion strategies that emphasize institutional adaptation, linkage depth, and negotiated engagement between informal and formal financial systems.