CHAPTER 5: CONCLUSION AND RECOMMENDATIONS
5.4. Recommendations to Organisations implementing VLSA
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challenges related to reckless lending taught them to think of ways for including an acknowledgement of debt when the group issue loans to borrowers. Again, the research data confirms the growth aspirations such as better use of their savings, enterprise development and management of debt. Few income generating activities such as garment making, buying and selling women’s and children’s clothing and blankets, grow and sell chickens, growing and selling vegetables, beans and maize were reflected in the study. These participants confirmed that entrepreneurs needed larger loan amounts that are payable at least between six and twelve months. This reflects a very strong allegiance to the neo-liberal economic system which is based on monetary exchange.
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• Self-selection, group establishment and participation
• Life skills with specific focus to managing debt and prioritising savings
• Instruments and tools that a saving group can use to strengthen its operation and capacity
5.4.1. Strengthen self-selection processes to enhance participation
The study found that the deciding factor regarding the success of the savings group is the ability of the prospective members to conduct honest and transparent self-selection exercise.
The main objective of self-selection is to allow members to decide exactly as to whom they want to be with. Further to this, the ability to screen new members that join the group from the second saving cycle is equally important as a self-selection exercise. Based on the experiences of the participants, the following recommendations are made with regards to participation in the savings group:
• The group should not be allowed to accept members that are not trained in the savings methodology. In the case resignation of few members and where the remaining members want to replace them, the new members should at least attend an induction training workshop facilitated by a support organisation such as SaveAct. This will afford the new members an opportunity to unlearn traditional stokvels practices and to appreciate the group methodology.
• It will be important to review the constitution at least one month before the dissolution of the group fund. This should be done in preparation for the new savings cycle and most importantly in preparation for screening the applicants that want to join the group. Review of a group constitution will also allow members to apply their minds (based on their experiences) in amending the constitutions, rules and procedures. New clauses that deal with servicing of debts should be strengthened. For instance, participants wanted a way to use the constitution as an acknowledgement of debt instrument that can stand in the court of law.
• There should be a formal application process for accepting new members and such should happen in good time before the start of the new savings cycle. It is recommended that a checklist for screening the applicants should be developed.
• A special meeting should be called to present the constitution, the rules of the group and the screening process to the participants. This will allow the applicants to self-
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screen themselves and to decide at this stage whether they want to proceed or not.
Further to this, the applicants should accept the terms and conditions of participation in the group. For instance, old timers may propose loan restrictions to the newcomers for a certain period in order to enjoy full access to the services and products of the savings group.
5.4.2. Embrace life skills
The study also found that through the savings group, participants members benefited beyond financial products and services that were offered by the group. There should be a concerted effort to commend positive experiences that promote discipline in the group. For instance, the blending of conflict management with the experiences of the participants during the training and supervision phase of the group would go a long way in helping the group in preventing and/or resolving dilemmas and conflict situations. However, transferable skills should go beyond savings and managing debt. A concerted effort to provide extensive personal financial planning, mainly funeral insurance, life insurance and medium to long term investment should be introduced as part of the financial education package. It is believed that such interventions would optimize the choices members to reach their socio-economic goals.
5.4.3. Dedicate record keeping and supervision skills programme to record keepers
A dedicated record keeping and supervision skills development programme should be designed mainly for the record keepers of the group. This programme should focus on providing supervisory skills to the record keepers so that they are empowered to supervise other groups in the village regarding keeping accurate and clean records of the savings groups. Skilled record keepers may graduate to become Community-based Promoters.
5.4.4. Broaden financial offerings
It was clear that the participants were confident that their group was able to provide them with a savings vehicle, short-term loans and lump sums at the end of each saving cycle.
However, it was also clear that the group had to re-orientate itself in order to overcome some discomforting experiences that were caused by bad practices. The survival of the group
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despite of challenges suggests that the participants believed that the group was able to deliver the three financial products. It can therefore be concluded that additional financial services and products would enhance the social bonds of participants and help to strengthen the institutional capacity of the group. This service can be done by linking the group to the formal financial institutions that provide friendly banking services (and infrastructure), funeral insurance and affordable medium to long-term investment products. Further to broadened financial offerings, the group can also tap into public and private institutions that provide personal financial education or the responsible personal finance training that will propel the group to the next level and conclude mutually-benefiting relationships with institutions in the financial services value chain. However, the notion of creating apex structures and provision of foreign capital for loans should be avoided at all costs for such programme. Foreign capital and apex structures risk taking away the founding principles and control from community-based financial institutions like Sizanani Savings Group.