By Chrispin Inambao
Villagers, often deemed not creditworthy and high-risk, thus cut off from formal lines of credit, have started to save money towards a new empowerment scheme in Caprivi in return for soft loans that come in handy in times of crisis.
The European Union (EU) funded savings initiative known as the Community Empowerment and Enrichment Scheme has taken root in Zambia, Malawi and Tanzania, said Cynthia Mukendwa, the scheme’s credit manager for cooperatives and community savings.
She explained that EU funds to this particular Savings and Credit Cooperative (SACCO) are channeled through the Namibia Nature Foundation (NNF), a non-governmental organisation.
Other components of this innovative empowerment scheme are poultry, fish farming and conservation agriculture. The other managers are Jessica Smith and Priscah Lilungwe and Maxon Simfukwe (agriculture), while Ron Phillips is the technical advisor for the project.
Area coordinators and facilitators support Phillips and a cluster of managers.
Because banks operating from the provincial capital of Katima Mulilo namely, Nedbank, Bank Windhoek and First National Bank (FNB) and Post Office Savings Bank do not have branches in remote areas, members of the scheme do not have to travel to banks at the town.
On top of having the convenience of having access to liquid cash commensurate to savings, beneficiary villagers at Kongola some 120 km outside town save on transport fare.
Though people in rural areas do not have access to formal lines of credit, Mukendwa says, “People in the villages have money, some from businesses. Others are pensioners. The question was where do they take their money if they want to save it?”
Some have business acumen but do not have access to bank loans because of collateral.
But this is not the end of the road when it comes to the issue regarding easy access to small loans that would enable villagers to pay for school fees or pay for other expenses.
The scheme is operational in three conservancies namely Kwandu, Mayuni and Mashi all situated in Kongola Constituency about 120 km from Katima Mulilo.
The three conservancies combined make up the Kwamashi SACCO where about 410 registered members each have an account through which they save money.
The members are usually in groups of three to five people who save money for loans.
“The second benefit is that just like a bank they earn interest, furthermore unlike banks, they have no charges to their accounts and no charges when they withdraw,” she said.
When asked about the defaulters she said, “we haven’t had any defaults as yet and the risk is thought to be very low because as you know that this is their own money they give out and as a community they know one another. So the chances of defaulting are very slim.
We also have a process that an applicant goes through before they get a loan.”
Loan applicants appear before a review meeting where they are expected to make a presentation on the application where after they are asked a number of questions.
There is also a loan committee that communicates to applicants whether their application has been approved or reasons why the loan could not be granted.
Before the loan is disbursed to the borrower, the scheme insists it is important the applicant fully understands the terms and the conditions of the loan repayment, which are normally repaid at a rate of 40 percent per annum or equivalent to a rate of 3.3 percent each month.
Borrowers also receive a schedule of loan repayments that shows how much must be paid each month and the borrower must also sign two copies of the loan disbursement form and documented evidence of the approval of their respective Loan Committee and Club.
And if the borrower knows in advance that he will not be able to make a repayment as scheduled he/she should inform the manager before the next club meeting.
“We also give the community lessons on how to use their money by giving them ideas on income-generating activities and drawing up business plans,” Mukendwa narrated.
Information on this scheme can be obtained from Mukendwa at the offices of the savings scheme at Nambweza Location at Erf 1872 at Katima Mulilo.