Savings clubs a potential powerhouse

As the policymakers and other stakeholders endlessly discuss moves towards the billion-dollar economy, women are already doing it.
From kitchen parties famous for drinking and bawdy talk, many women have adapted the South African stokvel concept to generate business capital and livelihood income.

“Stokvels are invitation only clubs of 12 or more people serving as rotating credit unions or saving schemes in South Africa.
“Members contribute fixed sums of money to a central fund on a weekly, fortnightly or monthly basis. It is estimated that one in every two black adult South Africans are a member of at least one of 89 000 stokvels. Black adult South Africans invest approximately R12 billion in stokvels a year.” — Wikipedia.

Locally known as “Round Tables” most of the savings clubs comprise between 10 and 12 women who take turns to give each other a set sum of money. Each member employs her discretion on the choice of investments that she makes but must ensure that she pays her contributions on time.

The chronicle of one such club that was started in 2010 by a group of small entrepreneurs clearly illustrates that this is an avenue of unexplored potential for sustained growth.
The club chairwoman says members have recorded significant development in their business and personal status with most now worth more than five times their 2010 value.

In 2010 the members were contributing US$400 a month which was split into payouts for two members. Thus each person was guaranteed at least US$2 000 cash.
There was room to make more at the parties as non-members had to buy food at an inflated price and there would be other fund-raising avenues like fines for inappropriate dressing.

The chairwoman says it was not easy especially in the beginning and members had to be really innovative in ideas to ensure that the money received generated into more. Scrimping and saving were the order of the day and many members were involved in various small ventures to ensure that they could meet the targets.

They soon realised that they were spending a lot of money and time in hosting the parties and decided to start giving each other the money with no fanfare. After each round was completed they raised the contributions slightly to encourage the development of bigger visions.
As of now their contributions have gone up to US$1 000 a month per member meaning that each one has a capital of US$10 000 in turn. The chairwoman says now most members can easily fork out the money without scrapping and still remain solvent enough to continue business as usual and maintain their accustomed lifestyles.

For people who two years ago thought that holding a capital of US$5 000 at any given moment was a huge goal to achieve, great progress has been realised. This is all in addition to other responsibilities that they have been taking care of. They have been sending their children to school, putting food on the table with some buying real estate or constructing houses in the interim.
That is a growth rate of over 500 percent and it is almost impossible to imagine where we would be today if the whole country’s economy could have matched that.

The chairwoman said the club was more than just a cheap banking initiative. The psycho-social support that the women give each other helps them gain confidence to reach for greater economic heights. The drive not to be left behind by peers also spurs everyone to work hard and be prudent in their financial management.

She says personal financial independence has come to all the members. Before they joined the club, most were mainly dependent on their spouses and did not consider themselves serious business people.

Four of the members have moved from the informal sector to register bona fide SMEs like their counterparts. And this is all in an economy where according to cvpeopleacfrica.com — average incomes are pegged at about US$700 for shop floor technical jobs and average around US$1 300 for managers.

What is clearly demonstrated is that these clubs have become areas of immense growth. It now only needs for women to realise that the next step is to amalgamate the hundreds of clubs into one powerful unit which can take on any sector of the economy in a big way.

These women have a commodity that everyone is clamouring for — cash. But in small fragmented amounts it does not really mean anything and that very few of the women realise the potential power that they wield.
What is needed is the organisation of the various savings club into one powerful entity with the power to buy equity on the stock exchange, invest in various sectors of the economy and go directly into financing.

That direction would lead women to real executive positions in the economy and not just as gender-balance placeholders on boards of companies where they do not even own a single share. With such power there no longer need be any sector of the economy that is deemed “closed” to women.

It is time for Zimbabwean women to look beyond the failures of previous such ventures while taking lessons from them to avoid heading into the same pitfalls. But there is no call to reinvent the wheel.
Strong corporate governance, tried and proven administrative systems as well as members with a shared vision are needed to bring about the amalgamation of all the clubs into one entity that creates a powerful voice and pocket for all.

In coming up with this consortium, it is important to note that there are many classes of women and not to exclude the most marginalised and vulnerable through steep entry requirements.

Even though the middle and high level professional women may be the main drivers, there should be room for the vendors and rural women eking out a meagre existence on very little. A tier system will ensure that everyone can come on board.
For who better to help women than women themselves?

Women in East African countries like Kenya and Uganda are successfully doing it and have changed their status from “marginalised” to “empowered” through such initiatives. So why not us?