Informal savings clubs, known as mukando, have gained popularity in Zimbabwe, particularly among women and those in the informal economy who may not trust banks. These clubs consist of about a dozen members who contribute money that is then distributed either amongst the group or to individual members at intervals. Members can borrow money from the pool and pay it back with interest, which is then added to the pot and shared out at the end of the savings cycle. While these clubs provide essential support for many, they are unregistered, unregulated, and rely on trust among members, leaving them vulnerable to being swindled.
In one instance, a group of women from a savings club in Mabvuku faced difficulties when their treasurer disappeared with the money they had saved for Christmas groceries. Despite attempts to confront him, the club members were left with little recourse as the treasurer had used the funds for his own purposes. Another woman, Tanaka Mutyori, shared a similar experience where the leader of her savings club failed to distribute the money as promised, leading to financial setbacks and the eventual collapse of her business.
Economist Prosper Chitambara highlighted the motivations behind joining savings clubs, including access to investment capital and the ability to mobilize savings within a group. These clubs offer protection for members’ funds from external pressures like family and friends asking for money. However, without legally binding documents, these clubs can be susceptible to fraud and conflicts in the event of disputes. Moses Mavhaire, a lawyer, emphasized the importance of having written contracts to avoid such issues and ensure clarity on rights and obligations.
The lack of trust in Zimbabwe’s formal banking sector has contributed to the rise of informal savings clubs, where loans are given without the need for collateral. This informal system appeals to many who may not qualify for bank loans and prefer the flexibility and accessibility of savings clubs. However, Mavhaire cautioned against giving out loans for interest without legal mandates, as this could lead to complications in terms of enforcement and accountability.
While informal savings clubs provide a lifeline for many in Zimbabwe, the lack of regulation and legal documentation poses risks for members in case of disputes or fraud. Women and individuals in the informal sector, like LynnenMary Katiyo, participate the most in these clubs, seeking financial support and investment opportunities. However, the reliance on verbal agreements and platforms like WhatsApp leaves members vulnerable to potential scams and mismanagement of funds.
Overall, the story of savings clubs in Zimbabwe reflects a complex landscape of financial insecurity, trust issues, and the need for stronger legal frameworks to protect members’ interests. Despite the benefits these clubs offer in terms of savings and investment, there is a crucial need for transparency, accountability, and proper documentation to ensure the sustainability and integrity of these informal financial networks.