Source: Times of Zambia
DESPITE the positive macro-economic performance Zambia has achieved in the recent years, financial inclusion continues to be a challenge as a number of Zambians remain without access to financial services.

Further, the entry of new commercial banks and the expansion of products and services by market players have not helped in changing the situation as some parts of Zambia have no banking and financial services.

A recent study by Finmark Trust indicates that 62.7 per cent of the Zambian adult population remains without access to formal and informal financial services and products.

Indo Zambia Bank (IZB) responded to the challenge and rolled out the Micro-Credit Lending scheme which allows women groups to borrow under the Self Help Group (SHG) concept.

The formation of SHG by women has assisted many households to get out of poverty by forming small income generating enterprises.

The synergies emanating from the group will help expand the scope and scale of outreach to as many community members as possible taking advantage of the aggregations.

Most importantly, SHG are seen as an essential and integral part not only to the financial service delivery, but also as a channel for the delivery of non-financial services within larger objectives of livelihood promotion, community development and women's empowerment.

Barring a few exceptions, savings and credit have been used as a practical entry-point activity around which to organise poor women into SHGs.

For example, in India these SHGs are potential "micro-banks", either on their own, or through higher levels of association, capable of using their own resources, grants and borrowed funds for financial intermediation.

Apart from accessing funds from the formal financial sector, SHGs can become a forum for dissemination of development ideas and information, an association for community mobilisation or an organisational unit for linking up with other economic, social and political interventions.

Within this role for SHGs, a range of models and approaches have emerged, with IZB supporting women entrepreneurs.

IZB believes linking SHGs directly to the bank is the basic model in which an SHG, promoted by a non government organisation (NGO) or other institution, can access a multiple of its savings in the form of loan funds.

The SHG after accessing the resources from the bank can then lends the funds to its members.

So far IZB has disbursed KR2.2 million to 85 women groups comprising of more than 1,000 women beneficiaries.

Last year, the bank financed 47 groups which translated to 940 families amounting to KR1.400 million.

IZB managing director Shankardas Gupta said the total amount approved was KR2.2 million to be disbursed to 85 women group of which 38 groups are borrowing for the first time to whom a total of KR874,000 had been extended.

The first group to receive the loan include Everest, Chikondi Chazimai and Muliphamvu of Chipata Township, Tiyanjane and Unity of George Township, Tulichite Choolwe,Carrot of Chingwere, Moto Moto and Nkusu of 10 Miles and Favour of Mandevu Township.

Others are Zambezi of Nine Miles, Tiyeseko of Matero and Milimo of Chazanga Township, Pasogolo of George Township and among others.

"We have received application from 87 groups out of which only two have been unsuccessful.

The total amount of loans approved is KR2.2 million and repayment period for the loan is between 12 and 24 months.

The groups have been assessed individually and have group savings of between KR1, 000 to KR3, 000," he said.

The first batch of the loans under the SHG Scheme was disbursed in January, 2011 amounting to KR840, 000 to 20 women group and since then the funds have grown to KR2.2 million this year.

During the period under review, the bank was able to reach out to 400 families and to-date the number had increased to 1,000 families.

Mr Gupta said it was important for the women beneficiaries who had received the credit facilities to ensure that the loans given to them were utilised for the productive purposes and repayments are made to the bank as per the schedule given to them.

"Please bear in mind that the loans being extended are not being extended as a donation or charity and all of you must emulate the example set up the earlier group.I am confident that you will not let us down which will help our bank to extend additional loans to new groups," Mr Gupta said.

Commenting on the facility Central Bank governor, Michael Gondwe said the Micro-Credit scheme provides a real opportunity to improve the welfare of the poor people in the country.

Bank of Zambia (BoZ) was delighted to note that Indo Zambia Bank had waived the collateral and guarantee requirements, which have in the past proved to be a major barrier for the marginalised to access finance.

He said financial inclusion in Zambia continues to be a challenge regardless of the positive economic performance that the country had achieved in the recent past.

Despite the entry of new banks and the expansion of products and services by market players, Dr Gondwe said some parts of Zambia had no banking and formal financial services.

He said it was important for the women and communities to form organised groups to make full use of the Self Group Micro Lending Schemes for them to realise their visions and grow their small businesses saying that successful businesses begin from small project.

He said the scheme represents a major shift from the traditional loan schemes that have for a long time characterised traditional banking models in Zambia which target the higher end of the market.

"The group also assist in ensuring that defaults by members are minimal due to peer pressure to pay back the loans both from within the group and from other groups," Dr Gondwe said.

Further, the growth of Micro, Small and Medium Enterprises (MSME) as a driver for job and wealth creation and ultimately development in all spheres of life cannot be overemphasised.

Dr Gondwe said the Government was cognisant of the need to provide various policy options for financing enterprises affordably, efficiently and effectively and providing opportunities to enhance personal welfare and quality of living.

He requested the financial service providers to pay more attention understanding the opportunities in the Zambian market and to have loan staff who understand the challenges of the MSMEs in the country.

Everest chairperson Margret Mwankomesha said her group had managed to receive KR20,000 under the Micro-Credit scheme and would distribute it to the group members to beef up their businesses.

Ms Mwankomesha said the support groups are empowering in that they provide members with the opportunity to take on new meaningful roles.

She said the funds would be used to increase their poultry business adding that early this year the group had an opportunity to access a grant worth KR10, 000 which had helped them to grow their businesses.

"We are based in Chipata Township and we have 16 members and we will share the KR20,000 loan from Indo Zambia Bank to increase our poultry business and we are very delighted that the bank has given us an opportunity to borrow money from them," Ms Mwankomesha said.

Ideally, the groups support their members in rediscovering new roles and responsibilities, which have been lost, which in turn helps them to gain back control of their lives.

Another group based in George Township said, access to finance had been a major challenge and it was gratifying to note that Indo Zambia Bank was thinking about the plight of the poor marketers.

Tiyanjane chairperson Frasier Mvula said they had accessed KR10,000 from the bank which would be shared among group members.

"The funds would help us grow our business and we need to manage the funds so that we can be able to pay back the money. We want to encourage other women in the market to form groups and access loans as a group to grow their business further," Ms Mvula said.

Therefore, banks and financial institutions need to disaggregate their portfolio and targets and put in place strategies that will help them to better understand and serve the diverse markets.

• Zambia