Rays of hope in village savings

Edith Kawona from village head (VH) Chapotera in Traditional Authority (T/A) Kunthembwe in Blantyre had resisted joining village savings and loans (VSL) despite numerous sensitisation meetings by various organisations.

She thought she could not manage given her poor financial background to manage savings.

But she changed her decision after noting that her colleagues owned herd of cows.

Today, through weekly savings, Kawona still manages to buy more shares as is the case with other women. The initiative has since liberated her family from poverty to financial independence.

“I had lagged behind in terms of human development as compared to other villagers. My colleagues built better houses and sent their children to decent secondary schools,” says Kawona.

In such VSLs, women keep money in a cash box with three locks kept by three women with the cashbook kept by another right in their villages. The money is used by women to start small-scale businesses or support their farming needs each growing season.

Kawona is a member of the Kasena VSL group which shared K1 345 000. There are 28 members in their group, which was formed two years ago.

Based on what she saved, Kawona pocketed K75 000 and begun a fish-selling business.

Studies show that small businesses provide employment to about 1.7 million people in Malawi, translating to 38 percent of the total labour force. Not only that. Small businesses contribute 17 percent to the country’s growth domestic product (GDP).

Kawona further boasts that she can now buy fertiliser and live a decent life with her family.

“I can confirm that my social life has changed,” says Kawona.

As she spoke, another woman, Joyce Banda, explained that she has bought cattle, goats with dividends she has been getting over the years.

“I pity those that do not want to join VSLs. I no longer depend much on my husband’s finances. We instead share financial responsibilities,” says Banda.

Banda has also invested in irrigation farming together with members to have food throughout the year. Initially, Catholic Development Commission (Cadecom) is providing technical assistance towards the irrigation farming as it is close to Shire River.

During a visit to the area, local leaders, officials from the banking sector and those from Cadecom had an opportunity to see how communities have prospered in both animal and crop production as a result of the village savings.

“You can also borrow and refund later with an interest. People with emergencies are also allowed to borrow. We also have clearly set rules which members follow to avoid conflicts. Our local leaders are also aware of the agreement members have to sign before they join,” says Banda.

The catchment areas of T/A Kunthembwe and Kuntaja have seen a robust desire for more VSL groups after observing how other women have become self-reliant.

The groups, which comprise 20 members, such as Kusena A and B last year shared K121 000 and K134 4000 respectively.

Other groups Chimpango, Chigukha, Chazemba and Kunthembwe also shared K700 000, K800 000, K642 570 and K695 000 respectively last year in October.

The introduction of VSL is as a result of what Chancellor College law lecturer Ngeyi Kanyongolo describes as failure by lending institutions to reach the remote areas.

Kanyongolo noted most women have the drive to engage in meaningful economic activities, but their efforts are thwarted because of gaps in micro-financing systems and laws to support them.

The research further reveals that apart from lack of access to loans, women have little information as to how and where to get loans.

Additionally, with micro-finances becoming limited since 22 percent only have formal and informal access likewise commercial banks, village savings and loans are said to be the solution.

This is the reason why Cadecom is championing VSL to remove such problems.

For Cadecom, which is championing such initiatives in Blantyre Rural and Phalombe with assistance from Caritas Australia, the future is bright for communities who use what they share positively.

The NGO wants to improve lives of people by equipping them with critical knowledge agriculture, business, human rights and good governance and democracy, among others.

The organisation is implementing similar projects in Mulanje where widows, less privileged and poor are grouped to form village banking groups.

Cadecom programmes coordinator Mandinda Zungu says the idea to train women to form groups is aimed at equipping with financial management skills.

“Without such skills, village savings have no future. We need to ensure that they know how to manage shares and distribute the money and their families. We monitor the aspect of sharing for the sake of transparency. All members are also present when sharing dividends,” says Zungu.

Members say their shares are distributed close to the rainy season for them to buy farm inputs.

Both chiefs Kunthembwe and Kuntaja have hailed the initiative, saying women are self-reliant.