It has been six years now since Zimbabwe adopted the multi-currency system which formalised the use of foreign currencies as legal tender in the nation; and yet, the banking industry still struggles to entice the bulk of its former clients, as well as encourage a younger generation to make use of its services.
With the spectre of the early 2000s’ hyperinflationary environment – and measures such as ‘mattress banking’ – still foremost in many Zimbabweans’ minds, it seems safe to say that people still struggle to trust formal banking systems. Additionally, the debate on whether ordinary Zimbabweans are going to be compensated for their banking losses has not yielded any results.
But while formal banking services may have declined, this has not taken away the need for such services for ordinary people. Instead, it has led to a thriving, informal saving system; savings clubs. Although less secure than your fixed savings account, these clubs have allowed different people who earn different income ranges to maintain financial discipline and plan for their future.
Popularly known as ‘maround’, savings clubs are not a new phenomenon but have grown exponentially in an economy where almost every financial transaction is informal.
‘Maround’ work by rotating funds among members of a savings club. When people form a savings club and decide how much they are contributing and sharing, they use a system that ensures that everyone contributes and benefits from the system equally. It is an all-encompassing and rotational system, hence the name.
Vanessa Mbele has been part of a four-member savings club since January 2015 where each member contributes US$200 at the end of each month. This means that at the end of each month, one of the members pockets $800.
“We decided to start this in order to help each other gather capital to boost our business, although one of our members is doing it mainly to enable herself to save up,” explained Mbele.
Mbele and the three other members of the club are cross-border traders and they constantly need a capital boost each time they go to other countries to purchase more wares to sell.
Although cash savings clubs or ‘maround’ are the most popular, savings clubs for different purposes are also thriving. For example, there are grocery savings clubs where each member of these clubs contributes a certain amount of money to purchase groceries monthly, bi-annually or annually. The frequency in purchases depends on the amount of money being contributed by each member.
Mai Dzawo, a fruit and vegetable vendor, says she hardly runs out of food supplies in her house because she is able to get all her needs for the month through the savings club.
“Because of my trade I do not earn much, but by contributing US$1 a day, in a group of ten, we are able to do bulk purchases from wholesalers at discounted rates, states Dzawo.
As a group, they have decided to save towards basic needs, something which has made it possible for them to survive the harsh economic climate.
An interesting observation is that women mainly comprise the membership of these thriving savings clubs. Men-only savings clubs are a rare phenomenon.
According to another member of a savings club, Mavis Mataraure, women are mainly involved in savings clubs because they are responsible for the general planning of the home. Mataraure’s husband is formally employed as an agronomist so he gives her $250 every month to contribute to the club she is part of.
“We are saving towards a stand and my husband thought that it was safer if I joined a savings club with some women from my church as they seem trustworthy,” she revealed.
The savings clubs are mainly formed in confined social settings where women who are either in the same trade, or go to the same church, decide to pool their resources for different purposes. Women who usually maintain these savings club relationships start off by having strong personal relationships based on trust.
From an economic point of view, it may be correct to assume that more men are registered with formal banks where they save their money as, traditionally, women have been based in the home where they hardly have any means or need to open a bank account.
Maround and mobile money
Economic decline has created room for everyone to get involved in some form of economic activity. This has resulted in these informal saving systems standing the test of time. As a result, ‘maround’ are competing very well with mobile money and internet banking. And in some cases, companies have seen an opportunity for integration of services.
Econet has seen business potential in partnering with these traditional informal savings clubs and has introduced Ecocash Savings Clubs, which allow users of the telecommunications’ Ecocash service to save money.
A member of the group opens a group wallet and facilitates all members to join, allowing everyone to be up-to-date with all club transactions, thus increasing accountability and transparency. The service also allows transfers from the group wallet to an individual wallet.
In as much as the service augments Econet’s interests to increase its’ customer base, it also eliminates the headache of having to select one or two members of a savings club to keep the club’s savings. This has proven a challenge over the years with some members misusing or losing the money due to unforeseen circumstances.
The fact that a company leading in mobile money services has recognised the savings clubs as a good business venture is also a sign that slowly, corporates are beginning to see the need to merge formal and informal ways of doing business in Zimbabwe.
With the fact that Zimbabwe’s economy is currently more informal than formal, ‘business as usual’ is simply not a model that can work to serve the needs and interests of the majority of Zimbabweans still living in great financial uncertainty.