This serously affects any efforts to alleviate poverty as savings, access to bank accounts, and credit are all critical in relieving poverty in the country.
To address this, Plan International Zambia is working in partnership with Barclays Bank, and Care, to deliver a micro finance initiative called Banking on Change. The project was implemented in 2009 in central and southern provinces and then extended to Luapula and Eastern provinces in 2011.
The initiative has allowed for the creation of small savings groups in more than 33 local communities. These co-operatives typically consist of 10 members, and are referred to locally as OSAWA, which stands for Own Savings for Asset and Wealth Creation. There are a total of 1,809 savings groups with membership of 22,771.
Meetings are held once a month and each member is expected to make regular contributions. The total amount of money in circulation from all the groups is more than K 4.5million as at April 2015. Loans are then awarded from these funds - typically used to finance small enterprises. The interest paid on these loans are then split out among the group members at the end of each saving cycle.
The interest rate is decided collectively, and all the flows of money are carefully documented and signed off. The tight knit communities has meant that the default rate on these loans is very low - at less than 1%.
The benefits are plain to see. Kelvin Mbuzi, a 24 year old orphan is now paying his way through university with the proceeds of a very basic computer cafe he was able to start after joining his local OSAWE group. He is also now able to sponosr his sister's education.
It is group cooperation and the profit realising at the end of six months that has really helped me to grow