LUSAKA, July 8 (Xinhua) -- As the world continues to face economic turmoil resulting from the COVID-19, communities in Zambia are turning to informal savings groups to cushion the impact of the pandemic.
Interviews conducted with beneficiaries and members of savings groups revealed that savings groups are providing the much-needed resources and helping a lot of households, particularly in underprivileged communities to overcome adverse effects of the COVID-19 pandemic and to venture into sustainable economic activities.
Members of these groups have access to savings, credit and a social fund that they need to build resilience and enable them to respond to some crises.
Juliet Chibesa, Coordinator for Women Organizing Resources Together (WORTH), a program initiated by Development Aid from People to People (DAPP) in Central Province of Zambia to encourage women from poor communities to invest in savings explained that many poor communities in central Zambia have continued to be sustained by savings groups.
Chibesa notes that these groups, which usually consist of a minimum of five and a maximum of 30 persons who put their funds together have helped to develop communities and to serve as economic shock absorbers.
"Savings groups are not only an engine for economic opportunity but also an important tool for financial inclusion and a resilience mechanism for many families in vulnerable situations," Chibesa said.
Chibesa's sentiments were echoed by other members of a savings groups in both Lusaka and Central Province of Zambia who added that the savings groups are helping to build resilient communities and individuals amid the COVID-19 pandemic.
Amon Mulanshi, a tailor and a member of one of the savings groups at Chawama Market in Lusaka observed that the groups are helping to inculcate a habit of saving noting that once individuals join savings groups, they become goal-oriented and begin to spend less on non-essentials.
"Aside from being a source of flexible loans and some form of social security, savings groups are encouraging people to be more disciplined in terms of managing their incomes and focused," Mulanshi said.
Financial literacy specialist Sanyambe Mweemba who has worked extensively with savings groups noted that the flexibility of savings groups in terms of giving out loans and repayment arrangements make them appealing to the poor.
"Savings groups have thrived and continue to do so even now because, unlike other financial entities, they respond as well as adapt to the needs of communities," Mweemba asserted.
Savings groups, also known as Village Savings and Loan Associations have proved to be the most consistent and sustainable platforms for economic development and growth in developing countries.
They are also considered to be a reliable and sustainable way of empowering poorer communities and also are increasingly becoming the cornerstone for expansion of financial inclusion, especially among the rural, unserved and underserved population groups the world over.
Currently, there are more than 15 million members in savings groups in more than 73 countries around the world, according to a report by Agrilinks published in March this year.
A report by Zambian Financial Sector Deepening published in April this year indicates that there are over 800,000 savings group members in Zambia, with cumulative savings of over ZMW82,904,562 (about 4.6 million U.S. dollars).