To make matters worse, those pushing for formalisation have not done their home-work.\u00a0 The foundation of all savings clubs has strong social and economic dimensions.\u00a0 The clubs were (and still are) a self-driven initiative as revealed through self-group formation among community members with the same social status. In addition to having specific objectives, traditionally, members had the same and consistent source of income. That would enable them to contribute to the club. The savings clubs \u00a0revolved mainly around income-generating projects like beer brewing.<\/p>\n
The rush to formalize savings clubs does not seem to be taking this indigenous framework into full account.\u00a0 The main question is: should formalizing savings clubs start with requesting club members to save or start by supporting income generating projects which will enable member to save?<\/em><\/strong>\u00a0 All savings clubs need a support base and sustainability framework.\u00a0 Institutions like banks that come into these clubs should come as partners bringing value added services beyond just mobile platforms.\u00a0 They should realize that they are coming into existing socio-economic networks.<\/p>\n The main selling proposition for a mobile platform like eco-cash has remained the distance factor.\u00a0 However, for most savings clubs, proximity is key. Members live in the same village and beyond just existing as a club, they conduct regular physical meetings to discuss various issues.\u00a0 Institutions coming into the community should try to fully understand what drives group formation \u2013 Is it a project or self-driven initiatives like local burial societies?<\/p>\n Addressing the real needs<\/strong><\/p>\n Bringing together savings club members onto a mobile money platform does not translate into addressing softer social issues.\u00a0 A major gap may be financial literacy in terms of identifying and making sense of investment opportunities.\u00a0 How can members re-invest their savings?\u00a0 If a member borrows from the club and repays with interest, there should be a viable business from which s\/he will earn enough to be able to repay a loan with interest. Otherwise borrowing for consumption makes members worse off when they fail to pay back with interest.\u00a0 What is the trade-off between saving in eco-save or investing in an income generating project?\u00a0 If club members use $500 to buy 100 chickens \u00a0and earn $100 profit at the end of eight weeks, to what extent are they able to earn the same profit by saving the same $500 in eco-save during the same period?\u00a0 This is an opportunity cost factor that most savings clubs consider.<\/p>\n The mobile money platform model across African countries is designed in such a way that users are charged for moving money not for creating business.\u00a0 If a club member decides to send money to the club through eco-cash s\/he is charged while the club is also charged for withdrawing that money. In dynamic businesses like agriculture markets where members can make daily contributions, it means they will lose a lot of money through charges.\u00a0 Cumulative charges associated with depositing, transferring and withdrawing minimize any interest that could have accrued to the club or individual members.<\/p>\n Time factor and opportunity cost<\/strong><\/p>\n Saving for three month as a condition for one to get a loan from formal financial institutions attracts prohibitive opportunity costs, especially in the fast-paced agricultural trading business.\u00a0 An alternative would be riding on the numbers where a substantial amount stays in the club fund.\u00a0 Members can get loans and repay quickly.\u00a0 Someone may just need a loan to facilitate a transaction, for example, order financing.\u00a0 A reserve of, for example, 10% per given amount can act as a reserve fund.\u00a0 As the number of people increase, so does the reserve fund.\u00a0 For every $100, a reserve can be $10.\u00a0 Another option is to inject a loan fund within the savings club at a much lower cost to boost it.\u00a0 This is more like a backing account for the club\u2019s investment opportunities.<\/p>\n Technological limitations<\/strong><\/p>\n At the moment mobile technology has no way of tracking and providing comprehensive reports compared to what happens in banks.\u00a0 Users of eco-save or eco-cash can only see their balance and deposits on their mobile phones.\u00a0 The whole record -keeping process is not embedded in the system so that savings\u2019 club members can monitor their trends. Another challenge is access to technology.\u00a0 Some members may not have up to date phones for tracking transactions.\u00a0 Another critical issue is security.\u00a0 The conventional banking model requires two or three signatories. On the other hand, when using technology, each person gets an individual pin number. How can two or three club members use their individual pin numbers to electronically sign for the whole club in order to do business?<\/p>\n Building on existing economic drivers<\/strong><\/p>\n The mobile money model should be built around other value chain actors. If a club is interested in inputs, it makes sense for the institutional funder to bring in a seed company or an input provider. Members can get inputs to produce agricultural commodities and payment for inputs in deducted from the club fund.\u00a0 This is smart financial inclusion riding on production as a motivation for saving. The rural banking model has collapsed in many African countries because of failure to ride on existing economic drivers and other value chain actors. Most Africans based in rural areas do not have potential to save cash due to fewer cash-based economic activities.\u00a0 Instead, they save in the form of assets such as chickens, goats and cattle which constitute meaningful wealth.\u00a0 When their cash gets to a certain level, they buy livestock and other valuable assets such as utensils.\u00a0 They are fully aware that saving should be linked to valuable commodities.\u00a0 This is a much broader and meaningful notion of multiplying value and creating wealth.<\/p>\n Options in agriculture markets<\/strong><\/p>\n The rate at which money changes hands in informal agriculture markets presents a unique scenario for crafting appropriate financial saving models. The facility can be designed to attract very low charges on transactions and very small reserve requirements that ride on the velocity of transactions.\u00a0 In a market with 5000 traders, each trader can easily save $1 a day, translating to $5000 available for loaning out to other traders. Transactions can also show which commodities perform better than others. Traders in the market tend to have speculative tendencies such that sometimes they may not buy commodities every day as they watch market performance.\u00a0 This balancing act in line with market activities and performance is an opportunity for smart saving.<\/p>\n However, to be functional, this initiative requires a broker who also monitors agricultural commodities in the market.\u00a0 An additional key role for the broker is verifying and authenticating transactions in line with commodities on transit.\u00a0 This is one way in which the savings clubs model can be linked to commodities in agriculture markets without impoverishing savings clubs.\u00a0 Ordinary consumers and club members who want to have agricultural commodities delivered to their door-steps can also use such a trusted facility with an institution taking care of the needs of various actors.<\/p>\n charles@knowledgetransafrica.com<\/a> \u00a0\/ charles@emkambo.co.zw<\/a> \/ info@knowledgetransafrica.com<\/a><\/p>\n Website: www.emkambo.co.zw<\/a> \/ www.knowledgetransafrica.com<\/a><\/p>\n eMkambo Call Centre: <\/strong>0771 859000-5\/ 0716 331140-5 \/ 0739 866 343-6<\/p>\n","protected":false},"excerpt":{"rendered":" Financial inclusion has become one of the buzzwords in many African countries including Zimbabwe.\u00a0 It is as if financial institutions, development agents and policy makers have suddenly discovered the need to bring marginal communities into formal financial systems.\u00a0 However, financial inclusion that does not fully take into account socio-economic circumstances of those to be financially Read more about How do we stop financial inclusion from becoming financial slavery<\/span>[…]<\/a><\/p>\n","protected":false},"author":1,"featured_media":741,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[25,19,3,29],"tags":[],"_links":{"self":[{"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=\/wp\/v2\/posts\/740"}],"collection":[{"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=740"}],"version-history":[{"count":1,"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=\/wp\/v2\/posts\/740\/revisions"}],"predecessor-version":[{"id":742,"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=\/wp\/v2\/posts\/740\/revisions\/742"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=\/wp\/v2\/media\/741"}],"wp:attachment":[{"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=740"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=740"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.emkambo.co.zw\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=740"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"emkambo\"](\"https:\/\/emkambo.files.wordpress.com\/2016\/05\/emkambo3.jpg\")
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