MBABALA, Zambia — If Beatrice Hamilandu lived in North American and couldn’t afford parts for an oxcart she was building to sell, she might go to a bank and take out a loan. But in her rural community of Mbabala, Zambia transportation to a bank would be a challenge without a vehicle. And if she made it to the bank they may not actually give her the money. She would be forced to stop working until she could save enough money to buy the required parts.
But since 2012 when the community organized three Village Savings and Loans Associations (VSLAs) Hamilandu had easier access to loans to grow her business. When she first heard about the new association, Hamilandu remembered an unfinished oxcart in her yard and decided to join in hopes of getting a loan to complete the project.
The Compassionate Ministry program of the Brethren in Christ Church in Zambia, a Mennonite Central Committee (MCC) partner, trains communities to run the VSLAs. Each group has a maximum of 30 members who meet monthly to buy shares, distribute loans, check on outstanding loans and sometimes use the profits to fund community projects. MCC funded the salary of the field officer who provided the initial training as well as a SALTer to assist with training and follow up. MCC will continue to support monitoring and follow-up of the VSLAs in coming years.
Here’s how the association worked for Hamilandu:
- Once her local VSLA opened she took out a loan for 300 Kwacha (about $60) in October of 2012
- She used the loan to buy parts and complete the oxcart
- She sold the oxcart for 2,500 Kwacha ($500)
- She used some of the profits to help pay her children’s school fee. In the past she would have been forced to borrow money from family or friends to keep her kids in school.
- She repaid the loan and invested some of the profits back into the association
When any member needs a loan they approach the group, explain the amount they want and what they plan to do with it, then the collective makes a decision. Members have two months to repay their loans without penalty. If someone is unable to pay it back they are fined unless it’s due to illness or death in the family.
Whenever Hamilandu can’t afford parts for oxcarts, or needs a different kind of loan she is easily able to borrow from the VSLA. “I like this program so much,” she said in 2013, “It’s an easy way to access loans. Many times I get stuck with my business so I run to the group to seek assistance.”