"The daily cash contributions have enabled me to extend my business premises to accommodate more customers. I did all this with monies realised from Chilimba savings," says Margarete Moyo 33, a restaurant owner at Soweto Market in Lusaka.
It is not known exactly how and when the informal savings and credit scheme (Chilimba) started but a 2002 Journal of Social Development in Africa report suggests the idea was conceived by mine workers on the Copperbelt Province during the pre-independence era. The aim was to alleviate suffering during times of distress.
Chilimba groups are now common among small-scale traders. Homemakers and some people in formal employment also have their own kind of arrangements.
Group membership ranges from four to 25 members. Some groups have as many as 30 members. Members agree on a fixed, regular cash contribution that is given in turn to each member in a specified order.
Market groups tend to be larger with members making daily but minimal contributions, while smaller groups tend to make larger, but less frequent contributions.
Defaulting is rare as the system itself gives rise to an atmosphere of social pressure within the group where the cost of social embarrassment is enough reason for one to meet their obligation. New members are usually added at the end of the rotation.
Savings realised from Chilimba are largely used to expand businesses, buying household items such as fridges and cookers as well as for paying school fees among others.
"If not for the Chilimba, I would be struggling to save monies for school fees for my three children. I have also managed to purchase new equipment for my hair salon," says Mary Mutale, 29, of Matero Township in Lusaka.
A snap survey conducted in Soweto, Matero and Chawama markets revealed that about 90 per cent of traders are involved in some form of Chilimba with women accounting for more than 80 per cent of individuals involved in the scheme.
Contributions vary from daily to weekly payments; with the former being the most common among groups. Members of Chilimba groups are very commitment to their groups as well as their businesses.
"Our group requires that a member makes a contribution of K25 everyday, except on Sundays. Each member gets a K750 in a month," explains Moyo.
She claims that it is practically impossible for a small-scale trader to save money without being part of a Chilimba group.
"Not belonging to any group makes one vulnerable to financial mismanagement as they tend to lack discipline. Joining a Chilimba group makes one stay focused on what they want to achieve," asserts Moyo.
But why is this informal savings and credit scheme preferred to conventional banking systems?
"It has none of the bureaucratic procedures that characterise the formal banking system. There is little or no paper work involved, which is good for a number of market traders with little formal education.
A treasurer or secretary of a Chilimba group does all the paper work, which is not so tasking. Trust is an essential element in these groups," explains Mary Mutale, a vegetable trader at Chawama Market.
She was, however, quick to point out that despite having a humble educational background, most small-scale traders were good at numeracy. They also know how to write basic personal details.
She maintains that it would be tasking for her to go to the bank everyday just to deposit a small amount of money, hence her preference for the Chilimba over formal banking systems.
She also notes that unlike formal financial institutions, Chilimba groups offer both moral and financial support to members in times of distress.
"These groups are also very helpful. A member can even get an advance payment when they have a pressing need. It is for this reason that most members strive to meet their obligations to the group," explains Mutale.
Lately, there have been calls to formalise this savings and credit scheme. It has, however, been noted that the formalisation of the ChiIimba scheme may lead to its collapse.
The success of the scheme has continued to depend on it being run by direct beneficiaries without outside interference.
Although the Chilimba is useful, it does not constitute a real social security scheme. It is also not a remedy for reducing overall poverty and is appropriate only for people with some regular source of income.
Furthermore, it and does not serve as a safety net in emergencies and long-term loans are not possible.
However, it has been observed that it could achieve more if the resource base was improved and women's financial management skills enhanced through formal training.
Entrepreneurs Finance Centre (EFC) notes that financial literacy is key to registering significant financial growth as well as reducing poverty.
"An informal savings and credit scheme such as the Chilimba is a clear demonstration of individuals' desire to have some savings.
However, it should be noted that formal financial institutions offer opportunities and knowledge necessary for people to competently manage their financial resources and expand their businesses to levels that significantly impact on communities.
That is why it is important for people to familiarise themselves with financial institutions so that they can benefit from the various services offered. At EFC, we make a point to educate our clients about financial literacy, which is key to business growth and development," explains EFC chief operations officer Chembe Chipungu.
He notes that while informal savings and credit schemes might seem convenient, they do not offer long-term financial education for most women wishing to expand their businesses and make long-term investments.
He further outlined some of the benefits of having an account with EFC particularly for entrepreneurs.
"With as little as K20, one is able to open a savings account with EFC where they could gain some interest from their savings, which is not the case with the Chilimba system.
Along with providing long banking hours to carter for our busy clients, we offer financial literacy to enable them manage their finances and businesses better," he adds.
He explained that women entrepreneurs, who are clients of EFC, demonstrated unmatched financial discipline prompting the institution to come up with loan packages that do not require collateral in the form of a house, land or vehicle. This is in a bid to encourage more women entrepreneurs to realise their dreams.
He also revealed that the EFC had earlier this year conducted a three-day financial management boot camp for women aimed at empowering participants with knowledge and skills to advance their businesses.
"The response was impressive. We plan to have such initiatives regularly so as to reach out to more entrepreneurs particularly women because they play a huge role in developing communities. Women also make great financial managers," asserts Mr Chipungu.
He further revealed that EFC has also registered an increase in the number of women clients over the past three years. Currently, about 40 per cent of EFC clients are women.