INTERNAL SAVINGS AND LENDING (ISALs)

Author: Brenda Ncube Editor: Marciline Fusire

Internal Savings and Lending (ISALs) 1

Table of contents

INTRODUCTION……………………………………………………………………………........……2CHAPTER 1: INTERNAL SAVINGS AND LENDING....................................................................31.1 What does internal savings and lending do........................................................41.2 Principles..................................................................................................................41.3 Common characteristics........................................................................................41.4 Internal Savings and LendingTraining...................................................................51.5 ISALs Group Development Cycle..........................................................................6CHAPTER 2: MODULE 1-INDIVIDUAL SELF SCREENING..........................................................62.1 Self analysis………………………………........…………………………………........…6CHAPTER 3 MODULE 2: GROUPS AND LEADERSHIP………………………………........….......83.1 Group formation………………………………........…………………………………..103.1.1 Difference between a group and a gathering………………………………......103.2 Appreciating qualities of other members………………………………........…...103.3 Group Leadership………………………………........…………………………………113.3.1 Leadership Attributes………………………………........….....................................123.4 Group Committee………………………………........………………………………..133.5 qualities and functions of Committee Members………………………………....133.6 Holding Elections………………………………........…………………………………..15CHAPTER 4 MODULE 3: CONSTITUTION................................................................................194.1 Group constitution………………………………........………………………………..174.2 Building a constitution………………………………........…...................................184.3 Group Constitution Framework………………………………........…....................19CHAPTER 5 MODULE 4: GROUP FUND DEVELOPMENT………………………………........…225.1 Different types of savings......................................................................................225.2 Cycles of access to internal loans………………………………........…...............245.3 How savings can grow………………………………........………………………..…265.4 Charging Interest………………………………........………………………………….265.5 Loans and Income generating Activities (IGAs)……………………………….....275.6 Types of Group Funds………………………………........…....................................30CHAPTER 6 MODULE 5: RECORD KEEPING………………………………........…...................326.1 What are records………………………………........………………………………….326.2 Savings and lending records………………………………........……………..……32ANNEX 1: FACILITATOR’S NOTES………………………………………………………...........…37

2 Internal Savings and Lending (ISALs)

ABBREVIATIONS AND ACRONYMS

CTDO Community Technology Development OrganisationGBV Gender Based ViolenceIGA Income Generating ActivitiesISAL Internal Savings and LendingKI Kupfuma IshunguSMART Specific,Measurable,Achievable,Resultbased,TimeboundSPM Selection,PlanningandManagementUSD United States DollarVSAL Village Savings and Lending

Internal Savings and Lending (ISALs) 3

INTRODUCTION

Many Zimbabwean rural and urban communities desire engagement in income generatingactivitiesbutmeetthemajorhurdleofbusinessfinancing.Mainlinebanksrequirecollateralsupportforbusinessfinancingwhichthesmallscaleinformaltradersand farmers are unable to provide. Household livelihood financial provisions thenbecome a vicious cycle of poverty where livelihood options are limited. The Internal Savings and Lending (ISAL) methodology was introduced to salvage the challenges facedbythesmallscaletradersandfarmerswhofinditdifficulttoraisebusinessstart-upfinances.The ISAL methodology opens opportunities for savings and investment for the future where communities assist each other in raising income for business start-up. Originally this concept was introduced as the Village Savings and Lending (VSAL) where it evolved in communal villages but it has evolved over time to ISAL where it is not limited to villages only but to any members of like minds sharing a common vision. The Internal Savings and Lending methodology was started as one of the solutions to some of the challenges listed below which were being faced by the majority of micro entrepreneurs in Zimbabwe:Formalfinancialservices,savings,creditandinsurancelimitedformost

Zimbabweans especially the poor.High transaction costs and suspicions of limited volume of business in rural areas.Limited initiation or growth of income generation activities. Limited capacity to access/own productive assets.Limitedaccesstosocialservicesorsupport(education,food,andhealth)duetoreducedagriculturalproduction,etc.Problems of access to capitalLimited access to family and other social platform for interaction Theemergenceofruralfinancialinclusionprogrammes

The opportunities presented by the methodology have prompted CTDO to produce this training manual to assist communities understand the methodology and engage in the concept for the betterment of their households and communities. It may be important to highlight the objective and purpose of this training manual here

For full copy, request from jackie@ctdt.co.zw

Community Technology Development Organisation286 NorthwayProspectWaterfallsHarareZimbabwe

Tel.:+263242-576091/589242/576108