Village Savings and Loan Association meeting in Kafue Flats in Mazabuka
Financial access in livestock communities
The smallholder sector is one of the most underserved sectors when it comes to access to financial services, even though farmers remain the most commercially active on the continent. This creates a barrier for farmers acquiring skills around financial literacy, which is pertinent for anyone running a business and trying to map their journey to becoming profitable. It is for this reason that Solidaridad, through the Nambola Livestock Programme, supports Village Savings and Loans Associations (VSLAs), which provide affordable credit for farmers and a return on their savings that typically exceeds those offered by any formal finance institution.
Nambola Livestock programme has 390 registered farmers under the programme. The VSLAs create a safe space for farmers to save their money, access loans, receive financial support during personal emergencies and build their social support network. A foundation of the VSLA is that it is driven entirely by the members through their Village Saving Groups. The members generate each and every coin that the group saves or earns.
Building a savings culture
Savings facilities are scarce for rural smallholder farmers and this has presented itself as a challenge for farmers in the The Nambola Livestock Programme. The programme is implemented in the Mazabuka district which is mainly a Livestock rearing community. Often, the decision by farmers to sell their livestock is triggered by household needs, and in such instances farmers would find themselves with excess money from the sale upon meeting the household need. The Village Saving Groups model lends itself as an opportunity for farmers in this position to invest in a platform that allows their money to earn interest while enabling other community members to access it as a loan.
An interesting finding with this particular aspect of the programme is that it generally appeals to women-farmers than to men, with 60 women and 32 men being part of the savings groups from the programme’s initial sign ups. Solidaridad is a partner in the advancement of financial literacy amongst farmers, and our training to smallholders have demonstrated how they can make better utilization of their social fund as well as strengthen their constitution to ascertain their Saving Groups long term sustainability. We initially found 7 savings groups and later initiated 9, so altogether we are servicing 16 savings groups with a total membership of 200.
Through the saving group, members were able to earn at least 10% interest on their savings. Most of the men have chosen to use the revenue to enhance the daily running of their cattle business, by buying more cattle or procuring medicine. On the other hand, some of the women have found ways of creating small businesses based on identified gaps in the market as a means to create supplementary income. These businesses range from:
Breeding of small stock for selling purposes
Reselling of airtime
Second hand clothes sales
Belinda Sichone has started a shop with her savings
One of the enterprising members of the Saving Group, Ms Belinda Sichone (43 years old) opened a local grocer within the community. This particular business fills the gap within the community as most people have to go into town to buy their daily consumables. “I started this shop after getting money from the savings group. I got 2000 ZMW (97 Euros) and bought different products as can be seen in the shop. I have redeposited some of my earnings to allow me to get some more money to better my shop. It has improved my livelihood” said Belinda.
Through this program the farmers have managed to accumulate 83 000ZMW (4150 Euros) in savings, which is accessible for borrowing to individuals as well as interest groups within the program such as the youth to construct a leather workshop that will be paid back from the earnings in leather tanning and leather products production. The farmers have seen this as a life saver as it is giving them access to monies to allow them invest and sort out their needs with minimum interest. While the program started with more women being interested, the men have noticed that they too can facilitate their growth in both personal and group businesses.