How savings groups and marketing clubs are the basis of resilience in agricultural and rural businesses

In almost all African countries, first – hand knowledge on sustainable rural and agricultural financing is in the hands of rural savings groups and marketing clubs at informal agriculture markets. Since agriculture is the mainstay of these economies, saving and lending practices tend to revolve around agriculture-related economic drivers. To a large extent, the performance of savings groups is tied to the seasonality of agricultural commodities.


Agriculture commodity-based savings groups in Sakubva market, Mutare – Zimbabwe

Given the reluctance of formal financial institutions to invest in rural areas and informal agriculture markets, it is highly likely that 80% of the food consumed in rural and urban areas is financed by rural savings groups and marketing clubs in agriculture markets. As an extension of informal agriculture markets and rural economies, these informal financial institutions are also referred to as community-based financial institutions (CBFIs). Given the broadening definition of ‘community’ in line with communication technology and social media, CBFIs are increasingly assuming a new identity.

The oldest forms of CBFIs are rotating savings and credit associations (ROSCA) and accumulating savings and credit associations (ASCAs). Most CBFI models are user-owned and user-managed. They are common among rural households and informal agriculture markets in the absence of institutional finance. While some models remain informal, some have legal structures and are registered with different authorities such as the savings and credit cooperative societies (SACCOs).

In eastern and southern Africa these informal financial institutions exist alongside formal financial sector structures. Similar to West Africa, these structures go by many names: Chilimba (Zambia), Chilemba (Uganda), Chiperegani (Malawi), Chama (Kenya & Tanzania), Ungalebo/Stokvel (South Africa), Xitiques (Mozambique) and mukando (Zimbabwe). They have become foundations of savings group models being promoted by various NGOs. The way many microfinance institutions (MFIs) are structured borrows a lot from these savings schemes in terms of social capital and group practices.

Recognizing the importance of savings group models in reaching unbanked remote rural households, the International Fund for Agricultural Development (IFAD) has in the past 10 years supported financial inclusion using these models in six countries: Lesotho, Malawi, Mozambique, Uganda, Tanzania and Zambia. In Lesotho, IFAD’s Rural Financial Intermediation Programme (RUFIP) supported Catholic Relief Services’s (CRS) savings and internal lending communities (SILC) methodology as a community-based approach to address financial inclusion of marginalized populations. The RUFIP worked with CARE and CRS in Lesotho to address cases of overlapping and duplication of effort. Due to outreach mapping, CRS had to redeploy its field staff in areas where CARE had no presence.

The Village Development Committees (VDCs) model has been introduced in Malawi and eventually linked to Opportunity International Bank of Malawi. In Tanzania, IFAD-funded programmes include the Agricultural Marketing Systems Development Programme; and Market Infrastructure, Value Addition and Rural Finance Programme. In Uganda the intervention is known as Programmes and Project for Financial Inclusion in Rural Areas (PROFIRA). Catholic Relief Services and CARE have also taken a leading role. For Zambia, savings group’s networks like Save-NET have gone a long way in addressing the challenge of financial inclusion in remote rural areas.

Savings groups and agriculture markets

In Zimbabwe, savings group’s models have naturally evolved and increased in both rural and urban areas following economic decline and slow growth. Farmers and traders have not stopped innovating because banks have collapsed. Most of these groups are organized around individual contributions ranging from labour, foodstuff to money. These resources are accumulated and given to one person at a time until the whole cycle is finished. The same routine normally occurs in subsequent cycles. With time the groups increasingly focus on monetary contributions and some eventually become informal finance schemes that are efficient in financial intermediation. A significant proportion of food in the market travels on the rails of informal savings groups which oil the exchange of money between farmers, traders and consumers. The following analysis focuses on Mbare Agriculture market where informal savings played a fundamental role in moving food from farmers to the market and to consumers during the month of April 2015 as in other months.

April 2015 Mbare Agriculture Market Analysis

A total of 4292 farmers supplied 41 types of agricultural commodities to Mbare Agricultural Market during the month of April 2015 generating a collective Estimated Revenue (ER) of $ 1,790,611.00, an increase from March’s E R by 14%. All these being equal, each farmer took home an average Estimated Revenue of $ 417.20 which is about the same amount if not more than what is earned by formally employed people in Zimbabwe.

Table 1: produce supplied to the market


Table 2: Produce Classes supplied to the market


The above table shows all commodities supplied to the market, quantity (in respective units of measurement and tonnage) and the ER for each product type.

Table 3: E R by produce class


At almost US$59 000, wild fruits are a significant player in the market and most of these fruits come from rural districts like Buhera, Muzarabani and Gokwe, among others.

Chart 1: E R Share per produce class


Table 4: E R by Province


Table 5: E R by District

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Table 6: Top Ten E R earning produce


In Zimbabwe, April is the peak month for most field crops like groundnuts which is why they scored more than onions and apples. Potatoes are often low in the farmers market because they usually go directly into the wholesale market which is a different market.

Table 7: Gender disparities


As in all other months, in April the farmers market was dominated by men more than women. Efforts are underway to address this gender disparity.

Some of the recommendations and lessons

Savings Groups (SGs) have played and continue to play a major role in addressing rural and agricultural finance. Some of the lessons and recommendations include:

  • Linking community-based financial institutions to the formal financial sector requires fulfilment of some preconditions for success. Formal financial institutions have to understand the context in which potential lenders and savers operate (rural areas and dynamic markets).
  • Aggregating community-based financial institutions is critical in order to better access formal sector services while creating effective market engagement through economies of scale.
  • Enhancing digital financial services infrastructure may play a key role in expanding the scope for financial inclusion among the unbanked.       However, lessons from some countries indicate digital financial inclusion is not as inclusive as claimed because even among professionals usage is limited.
  • Linking the informal financial sector with other government and NGO programmes that provide additional financial and non-financial services such as adult literacy programmes creates empowered groups good for business with formal sector service providers.

One word of caution

Resilience is often compromised where development partners and NGOs try to be in the forefront of financial inclusion programmes ahead of local financial institutions or the private sector. In some communities of Zimbabwe, group members have refused to pay back loans due to the fact that a donor had injected some capital into a community-based financial institution. Those who refused to pay felt that since it was donor money there was no need to repay.


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E T hamadziripi

E T hamadziripi

Would it not also help inform the value chain if eMkambo could include other merchandise such as huni, prepared fodya ye bute, mudhombo, migwaku et al. Perhaps consideration could be given to further break down the types of wild fruits (as you did for Nyii) to give an idea of the scale at which trade is taking place, if this is not asking for too much.

Charles Dhewa

Charles Dhewa

Dear Hama,

I totally agree with you! We have bits and pieces of data regarding a lot of the items you refer to. Perhaps its a question of seating down and analyzing trends over the past three years we have been gathering data.

charles Dhewa

charles Dhewa

thank you for the update. The information is very important to me as Agritex officer.

Caroline Mubaira

Caroline Mubaira

Do you have data on Mukando and Community Health schemes. I hear some would form their health insurance schemes

Charles Dhewa

Charles Dhewa

Dear Caro,

Thanks for your inqury. Yes we have some information. Perhaps you can also sent your mobile number so that someone from my office can get in touch with you.



Caroline Mubaira

Caroline Mubaira

Dear Charles,

I am currently travelling. Emails best. My number is +263772428036. Am available on that number mid April however I would appreciate if I get the information now as I am working on something involving Community Health Insurance schemes and would benefit from your experience



On Thu, Mar 24, 2016 at 8:38 AM, From the Peoples Market wrote:

> Charles Dhewa commented: “Dear Caro, Thanks for your inqury. Yes we have > some information. Perhaps you can also sent your mobile number so that > someone from my office can get in touch with you. Best, Charles” >

Charles Dhewa

Charles Dhewa


I will ask one of my team members to compile the information for you. But it would be better if you can get in touch when you are back mid-April.