Assessing the effects of village banking programme on household income : A Case Study of Chongo Village of Monze District, Zambia

Abstract

This study was aimed at assessing the impact of village bank services on household income and the livelihoods of village banking beneficiaries in Chongo village of Monze District. Ninety-one respondents were interviewed and ten of these were employees of Microfinance Institutions. The study was carried out using both quantitative and qualitative methods. Questionnaires and interviews were used to collect the data that is presented in Charts, and graphs to examine the effect of village bank on the household income and livelihoods of village banking beneficiaries in Chongo village. The findings of the study revealed that village bank groups operating in Chongo village of Monze District provide services like training and skills development, credit facilities and savings mobilization, banking facilities, supervision and monitoring of the clients, provision of agriculture finance. The repayment of the credit facilities is usually through monthly instalments. The size of the loan depends on the MFI but ranges from as low as five hundred kwacha to ten thousand kwacha. The security usually required is group collateral in case of groups and any other as deemed necessary for the individual by the MFI. The study examined that village bank members who accessed the loans from MFIs were able to improve their socioeconomic status through starting up or expanding investments and enterprises, paying school fees for their children, purchase of household items like furniture, land and solar installation, building of houses, confidence building, participation in leadership roles etc. The research also found out that village bank members face some challenges in their access and utilization of the MFI services and these include; the culture does not allow, poverty (No money to open account, some does not understand Microfinance (village bank), policies and procedures are long, fear and mistrust of employee, lack of business skills, Politics in the Microfinance (village bank), distance to the Microfinance Institution, fear of collapse of Microfinance Institution and many more. The respondents recommended that the government should intervene, especially where interest rate is concerned and centralize it or make it uniform and also monitor the operations of the MFIs so that they offer adequate services to the members. Microfinance Institutions should carry out gender sensitization, promote and encourage financial transparency among couple, increase in women awareness and understanding on Microfinance Institutions, adjustment in product, policies and procedures, training members in business skills and encourage them to start income generating activities, making Microfinance an operating environmentally friendly to village bank members and other efforts.