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Internal Savings and Lending

This document provides an overview of Internal Savings and Lending (ISAL) groups. It discusses that ISAL groups were created as an alternative for small scale farmers and traders in Zimbabwe who lacked access to capital from mainstream banks. The document outlines the principles and common characteristics of ISAL groups, which are community-run savings collectives that allow members to take small loans. It then covers the training modules to form and develop successful ISAL groups, including self-screening, group formation, writing a constitution, developing group funds through savings and interest-bearing loans, and maintaining financial records. The overall purpose is to provide a manual to communities on how to establish and utilize ISAL groups to generate income and alleviate poverty.

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Promise Merry Lakes Maseko
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473 views7 pages

Internal Savings and Lending

This document provides an overview of Internal Savings and Lending (ISAL) groups. It discusses that ISAL groups were created as an alternative for small scale farmers and traders in Zimbabwe who lacked access to capital from mainstream banks. The document outlines the principles and common characteristics of ISAL groups, which are community-run savings collectives that allow members to take small loans. It then covers the training modules to form and develop successful ISAL groups, including self-screening, group formation, writing a constitution, developing group funds through savings and interest-bearing loans, and maintaining financial records. The overall purpose is to provide a manual to communities on how to establish and utilize ISAL groups to generate income and alleviate poverty.

Uploaded by

Promise Merry Lakes Maseko
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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INTERNAL SAVINGS

AND LENDING (ISALs)

Author: Brenda Ncube Editor: Marciline Fusire


Table of contents

INTRODUCTION……………………………………………………………………………........……2
CHAPTER 1: INTERNAL SAVINGS AND LENDING....................................................................3
1.1 What does internal savings and lending do........................................................4
1.2 Principles..................................................................................................................4
1.3 Common characteristics........................................................................................4
1.4 Internal Savings and LendingTraining...................................................................5
1.5 ISALs Group Development Cycle..........................................................................6
CHAPTER 2: MODULE 1-INDIVIDUAL SELF SCREENING..........................................................6
2.1 Self analysis………………………………........…………………………………........…6
CHAPTER 3 MODULE 2: GROUPS AND LEADERSHIP………………………………........….......8
3.1 Group formation………………………………........…………………………………..10
3.1.1 Difference between a group and a gathering………………………………......10
3.2 Appreciating qualities of other members………………………………........…...10
3.3 Group Leadership………………………………........…………………………………11
3.3.1 Leadership Attributes………………………………........….....................................12
3.4 Group Committee………………………………........………………………………..13
3.5 qualities and functions of Committee Members………………………………....13
3.6 Holding Elections………………………………........…………………………………..15
CHAPTER 4 MODULE 3: CONSTITUTION................................................................................19
4.1 Group constitution………………………………........………………………………..17
4.2 Building a constitution………………………………........…...................................18
4.3 Group Constitution Framework………………………………........…....................19
CHAPTER 5 MODULE 4: GROUP FUND DEVELOPMENT………………………………........…22
5.1 Different types of savings......................................................................................22
5.2 Cycles of access to internal loans………………………………........…...............24
5.3 How savings can grow………………………………........………………………..…26
5.4 Charging Interest………………………………........………………………………….26
5.5 Loans and Income generating Activities (IGAs)……………………………….....27
5.6 Types of Group Funds………………………………........…....................................30
CHAPTER 6 MODULE 5: RECORD KEEPING………………………………........…...................32
6.1 What are records………………………………........………………………………….32
6.2 Savings and lending records………………………………........……………..……32
ANNEX 1: FACILITATOR’S NOTES………………………………………………………...........…37

Internal Savings and Lending (ISALs) 1


ABBREVIATIONS AND ACRONYMS

CTDO Community Technology Development Organisation


GBV Gender Based Violence
IGA Income Generating Activities
ISAL Internal Savings and Lending
KI Kupfuma Ishungu
SMART Specific, Measurable, Achievable, Result based, Time bound
SPM Selection, Planning and Management
USD United States Dollar
VSAL Village Savings and Lending

2 Internal Savings and Lending (ISALs)


INTRODUCTION

Many Zimbabwean rural and urban communities desire engagement in income


generating activities but meet the major hurdle of business financing. Mainline banks
require collateral support for business financing which the small scale informal traders
and farmers are unable to provide. Household livelihood financial provisions then
become a vicious cycle of poverty where livelihood options are limited. The Internal
Savings and Lending (ISAL) methodology was introduced to salvage the challenges
faced by the small scale traders and farmers who find it difficult to raise business start-
up finances.
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:
 Formal financial services , savings, credit and insurance limited for most
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.
 Limited access to social services or support (education, food, and health) due to
reduced agricultural production, etc.
 Problems of access to capital
 Limited access to family and other social platform for interaction
 The emergence of rural financial inclusion programmes

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

Internal Savings and Lending (ISALs) 3


For full copy, request from [email protected]
Community Technology Development Organisation
286 Northway
Prospect
Waterfalls
Harare
Zimbabwe

Tel.:+263242-576091/589242/576108

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