Village Banking part 2

……Continued from last week

This is a continuation of the discussion we started last week about advantages and disadvantages of village banking (VB). Through a women’s forum on Facebook, members of different village banking groups shared their views whether village banking is benefiting those aiming for financial freedom. This week, people who have registered losses through village banks share their sad story.

Village banking becomes bad when members get loans with bad intentions. There are some members with no conscience with other people’s money. They keep getting loans without giving back. It happened to our VB and I have no kind words for such ladies.

Jenipher Mkandawire

Village bank loans have no security and surety that’s the biggest challenge. Most VBs don’t have clear rules as to what will happen should a person fail to repay loans which unfortunately are a must for every member to get. In an event where a member fails to repay, others agree to impound household items which is a violation of laws since there was no prior arrangement plus a loss to the VB because some members have no property that can match with the loans they took.

Khataza Chawanda

It is either there is nothing good about VB or I joined the wrong group. My money is still with people to date even though we were supposed to share profits by now.

Madalitso Botomani Mauwa

Village banking has just helped to nurture the saving culture in me but unfortunately it hasn’t brought me the so-called profits people associate it with. So many crooked minds in our VB has resulted in over a million kwacha loss instead of profits in our group. Those debtors are making it clear they have no money to repay the loans. We have even visited their homes and found property of less value compared to the loans they took. The experience has been an eye-opener though because next time I want to join a VB group I will thoroughly scrutinise the members.

Lerato Wa Neliswe

Those that are entrusted with the responsibility of keeping money are the biggest problem in VB. Things seem to be up and running until it is time to share profits that’s when they either go missing or attempt suicide because they misappropriated the money.

Nankhoma Chidzukulu

From the comments that have been given one thing is clear, village banking is the way to go but precautionary measures have to be taken. Anathu Mauire summarises the discussion on the Importance, shortcomings and recommendations for a successful Village Bank.

Advantages of VB

It promotes a saving culture. VB members have access to loans without tough conditions such as those of commercial banks. You have access to soft loans and still benefit from the same cash during share outs unlike the banks where you get a loan and repay without benefiting at the end of the year. If one puts money into a fixed deposit account amounting to K1 million, the benefits usually are 10 percent or less of the invested amount, while if you invest the same K1 million in VSL for the same 12 moths on monthly basis, you can make profits of up to 20 percent on monthly basis. From January to December if you deposit a K100 000 every month to village bank, you gain more than 50 percent worth of interest while having the privilege of borrowing and using the money for other investments.

With VB, when you are sick or a family member is sick or has an important event or even death of a relative, village bank members will be there to comfort, support and give you a little something unlike banks who have nothing to do with their customers welfare.

Disadvantages

VB creates financial slavery and becomes a monetary game for many women, especially those who join with a primary agenda of borrowing and spending other than savings and investing.

If you critically look at VB, it has a higher interest rate than other financial institutions such as Sacco because most of VSLs interest rates now go as high as 20 per month per month which translates to 240 percent per annum. n