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Silk scheme: the only solution for marketeers and the informal sector

[By David Chishimba]

It’s not always that solutions will lie in other countries who were in a similar situation and have changed it or are changing it. Sometimes better solutions lie in our communities right here at home. That is why before the government can look elsewhere, they need to take surveys within local communities to try and find out if there are working solutions being implemented on a small scale.

It’s human nature to always strive to find solutions to our problems. We live in a country where interest rates from banks are high for most SMEs to cope with. This creates a barrier for people having SMEs to access the much-needed capital to enable them graduate from one level to another. With so many requirements, restrictions and paper work, banks are perceived to be nightmares for most informal businesses and service providers, more especially people with little or no education.

This however hasn’t stopped people affected by this situation from looking for solutions to their problems. In my normal routines of trying to find practical solutions to problems which communities are facing, I found out that one of the most successful programmes offering loan schemes and savings is the Silk Programme. This programme is well known in communities and more prevalent among women doing business. It has improved a lot of businesses of participants, and testimonies are everywhere. If this programme was to be adopted and implemented at a national scale, it would change a lot of people’s lives and would stand to be the best tool to fight poverty in our communities for the informal sector.

How the programme works

Training: unlike banks, whenever a group of women want to start the silk programme, they hire a specialist to teach them how the whole programme works. The teacher gives them all the information they need, from saving to loaning and annual cash outs. They monitor the programme throughout the year and assist participants in terms of sharing the money at the end of the yeah. The programme is very simple because unlike banks, you don’t need passport size photos, a recommendation from anywhere, affidavit and all the unnecessary requirements which banks ask for.

Ledger book: there is a ledger book which is very well documented where all the activities are recorded. All the savings, loans, loan payments and balances are recorded in the ledger book.

Savings: the silk programme starts with savings, everyone pledges the amount they will be saving every after seven days according to their capacity. Every after seven days the beneficiaries gather and cash in their savings. This money never goes to the bank, it remains with a designated individual from the group.

Loans: the way the loan scheme is, is that you cannot get more than you have saved. So, if you want to get a bigger loan, then you need to save more. After assembling and cashing in, anyone who wants to get a loan is given an opportunity to do so.

Interest: when someone gets a loan, the money is returned with an interest. The interest is a percentage which is agreed upon by the members according to their capacity. It’s usually not big. The interest paid by the people getting loans adds to the money which is shared at the end of the year.

Cash outs: after savings have been made and loans have been paid every year, the beneficiaries do what is called the cash out. This is simply withdrawing all the money and then starting the programme afresh. This gives a chance to the members to remove those participants who had been problematic either by not submitting savings or not returning loaned money.

Conclusion: this programme is not a theory but is providing practical solutions in our communities. I recommend that the government, local leaders and private institutions take keen interest in the programme.

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