Savings Groups are informal Community Based Financial Institutions (CBFIs) providing access to financial services by rural people who are financially excluded.
Traditionally, Savings Groups have been using a Box to keep their money under the custody of their group Treasurer. The Box poses various security risks such as theft and fire, given that most rural homes are grass thatched.
Since inception in 2014, RUFEP through the Innovation and Outreach Facility (IOF) matching grants supported Savings Group Promoters to link informal CBFIs or Savings Groups to formal Financial Service Providers (FSPs) to avert the security risky of keeping money in the Box.
From 2016 to 2022, RUFEP has supported about 12 Implementing Partners (IPs) under the CBFIs linkages Window One (I) of the IOF to build capacity of Savings Groups or Village Banks and link them to formal financial institutions. This is to ensure security of group savings and to expand rural financial inclusion.
The Implementing Partners included Non-Governmental Organizations (NGOs), Private Sector Organizations, Faith Based Organizations (FBOs) and Micro Finance Institutions (MFIs).
Among the NGOs supported by RUFEP since 2016 includes Keepers Zambia Foundation (KZF), Africare, Rising Fountains Development Programme (RFDP), Zambia Rainbow Development Foundation (ZRDF), SOS Children’s Village of Zambia Trust (SOS),- and Nutri-Aid Trust.
The Churches Health Association of Zambia (CHAZ), Kasama Christian Community Care (KCCC), Catholic Diocese of Mansa and Jesus Cares Ministries are some of the Faith Based Organizations supported by RUFEP to promote Savings Group linkages.
Among the Financial Services Providers that developed products for Savings Group linkages includes the Zambia National Commercial Bank (ZANACO), NATSAVE, Madison Finance, Vision Fund and FINCA.
ZANACO Head Preferred Banking, Mrs. Mbololwa Zimba disclosed that the Village Banking Product which attracts no bank charges was developed in 2019 as a result of RUFEP’s engagement with the Bank (ZANACO).
“RUFEP invited us to a discussion forum where they explained on the challenges the groups were facing in terms of keeping their money safe. From that meeting RUFEP encouraged ZANACO to reflect on what solutions the Bank can provide for savings groups or village banks”, Mrs. Zimba said.
By 2022, over 60,000 Savings Group members were linked to financial services by the Savings Group Promoters using different methodologies such as Savings and Internal Lending Communities (SILC), Village Savings and Loan Associations (VSLAs), Self-Help Groups (SHGs) and Own Savings for Assets and Wealth creation (OSAWE) etc.
CHAZ Microfinance Programme Officer, Mr. Joyous Sikalima disclosed that the initial challenge RUFEP partners faced on the CBFI linkages was that FSPs particularly banks did not understand the operations of Savings Groups or Village Banks.
Mr. Sikalima added that existing products offered by the banks were not suitable for Savings Groups or Village Banks as they attracted bank charges which proved to be a barrier for linkages.
“Following the development of the ZANACO Village Bank Product, CHAZ engaged ZANACO towards the end of 2019. We managed to link 165 VSLAs to ZANACO by March 2022. This happened after the RUFEP supported Project on CBFIs Linkages had already closed”, he said.
Through Preferred Bankers ZANACO engaged with the groups directly at Minga Mission Hospital and in Petauke rural to facilitate opening of Village Banking Accounts.
Speaking during field visits in Petauke rural, ZANACO Petauke Branch Preferred Banker, Mr. Jolly Bima said he had been assisting Savings Groups and communities in Petauke and Nyimba Districts to open Village Bank accounts with ZANACO.
“ZANACO’s Village Bank Product has no bank charges. Savings Groups just require a registration certificate, Group Constitution, Tax Payer Identification Number (TPIN) from the Zambia Revenue Authority (ZRA), a minimum of ZMW100.00 and 2 to 10 signatories to open an account”, he said.
Following a partnership agreement between SOS and ZANACO, RUFEP signed a grant agreement with SOS Children’s Village Trust in October, 2020 to implement a Project entitled ‘Promoting Village Own Savings Associations’.
SOS Children’s Village Zambia Trust is one of RUFEP’s partners under the CBFIs Linkages Window promoting Savings Group Linkages with ZANACO in Eastern and Southern Provinces of Zambia.
While the Project managed to link 1,759 VSLA group members to ZANACO against the target of 1,500 by March 2022, implementation of the project was delayed in 2021, due to the COVID-19 Pandemic.
In Eastern Province, SOS had linked 644 VSLA Group members to ZANACO in Chipata and Chadiza Districts by the end of March 2022.
Speaking during field visits by the RUFEP Team in March 2022, SOS Family Strengthening Coordinator, Mr. Howard Mulenga disclosed that 19 Groups were linked to ZANACO in the two districts.
Mr. Mulenga said in Chadiza, 10 VSLA Groups were linked with 4 remaining while in Chipata, 9 Groups were linked out of 25 adding that the remaining groups needed further strengthening and had challenges to get their TPINs before they are linked.
“Among the challenges we faced in 2021 was the COVID-19 Pandemic and the August 2021 General Elections which were disruptive for us to mobilize and build capacity for Savings Groups before linking them to ZANACO”, he said
ZANACO Chipata Branch and Regional Manager Mr. Mabvuto Ndhlovu was happy that SOS Children’s Village Trust partnered with ZANACO to promote linkages of savings groups in Eastern Province.
Mr. Ndhlovu said the response was overwhelming from rural communities who have embraced the Village Bank Product for ZANACO.
In Central Province’s Mkushi rural in Luano District, Zambia Rainbow Development Foundation (ZRDF) with support from RUFEP has been building capacity of Savings Groups and linking the groups to ZANACO.
Using the Savings and Internal Lending Communities (SILC) model, ZRDF had built capacity of 296 SILC Groups and linked 52 SILC Groups to ZANACO by the end of March 2022.
ZRDF Executive Director Mr. Brandy Mungaila said the interventions on the SILC Group linkages supported by RUFEP was successful with huge impact on the ground.
Savings Groups members linked to formal financial institutions such as ZANACO are happy that their money is now safe with the bank.
While the box is still in use, it is now a storage for group records. It has remained a reminder of the past when Treasurers never used to have a peace of mind in their homes as custodians of Group Savings.