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Know Your Customer (KYC) – Why Village Banking?

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By Maria Karima

Dear Reader,

We trust that you are well and that you are practising behaviours that can help you to accelerate your wealth creation agenda. In the last two stories, we shared tips from wealthy people about how they think and behave towards money as well as what makes them create and sustain wealth successfully. We thank you for the feedback you continue to give us regarding the stories we share on this platform. During the past weeks, a number of you have requested that we talk about ways in which we can create money. Remember that there are only five things that you can do with money; earn, save, spend, invest and give it away. It goes without saying therefore that we even begin to speak of growing wealth, we must earn it first and then work out ways of growing it. In today’s story Dear Reader, we talk about Village Banking (VB)and the role it can play in helping us to grow, save and invest money effectively. We explore what it is, its origin and objectives as well as best practices that can enrich our experience of it. This is particularly to address some of the bad practices that we can attribute to a number of unpleasant and worrying incidences being reported in some cases of VB.

Inspiring Origin Of Village Banking

The origin of VB can be traced to Muhammad Yunus, the Bangladeshi economist, also widely known as the Father of Microfinance who started a microfinance movement with a vision to eradicate poverty from the world. He founded the Grameen Bank to make small loans easily accessible by the poor. He got this motivation from his mother who was known for never turning away anyone in need. The 1974 Bangladesh famine was motivation enough for Yunus to do something about poverty. While visiting the poorest households in the village of Jobra, it dawned on him that a small loan can make a big difference to a poor person. He started by helping 42 women with the equivalent of only 27 USD. The women then made baskets which they sold to pay back the loan. This was proof enough that small loans would not only help the women to survive but that it would also create in them the desire to be enterprising which ultimately would empower them and pull them out of poverty. It was not possible for the poor to access loans from traditional banks at the time and so Yunus launched activities of the Bank in 1976 and officially formed it in 1983. The success of the Grameen microfinance model inspired hundreds of countries throughout the world, including the USA to create similar banks.  Grameen Bank and Dr Yunus jointly won the Nobel Peace Prize in 2006. The Grameen Bank reversed conventional banking practice by eliminating the need for collateral before one could access a loan and created a banking system based on mutual trust. The word Grameen is made of the word ‘’gram’’ or ‘’village’’ and means ‘’of the village’’.

Village Banking And Its Objectives

Village banking is a microcredit methodology whereby financial services are administered locally rather than centralized in a formal bank. This entails a group of people coming together with essentially three objectives in mind. These are to save money, grow it by way of borrowing the money at an agreed interest rate and creating access to capital on relatively simple and heavily negotiated terms. The benefits of it therefore include but are not limited to the following:

  • Enhanced culture of Saving in people; one benefits from the positive influence by members of the group to Save. In the long run and when well implemented, Saving becomes a habit for members.
  • Enhanced commitment by members to grow their money; members do everything within their power in ensuring that they grow the money because it is their sole responsibility to do this by way of borrowing it at agreed interest rates.
  • Access to capital; members of VB groups enjoy the benefit of accessing money which they would otherwise not be able to on fairly easy terms as agreed by the group. When properly utilised and put to good use, the capital has the potential to change the quality of life for members and their loved ones because it can help to improve whatever business undertaking they choose to participate in.

Village Banking In Zambia

VB is becoming more popular by the day. The appetite by individuals to join VB groups is great. It’s very rare to find salaried or small business entrepreneurs who do not belong to such a group. The general increase in the number of these groups is affirmation enough that members find the activities valuable and objectives worth pursuing. The fact that Banks have risen to the occasion to help support such groups also affirms that as key stakeholders in the National Financial Inclusion agenda, they find this cause worthy and they recognise the need to support it. Whereas success stories of VB outweigh the downside of it by far, the unpleasant stories of VB gone wrong cannot be ignored. These call for correctional measures to be put in place so that such ill vices can be mitigated or completely done away with. It is critical that the risk associated with VB is well noted and ways in which to mitigate it well documented and understood by members in these groups. There are so many best practices that can help people to manage their VB groups more efficiently in order to avoid such unfortunate occurrences. We will limit today’s discussion to the Know Your Customer (KYC) concept as a starting point in ensuring that you are in a group where you can grow and nurture enough trust in/for others necessary for you to comfortably conduct business with them.

KYC – Why Village Banking?

The informal nature of VB groups translates into the fact that trust becomes a key foundation of all activities. This trust can only be cultivated and nurtured from knowing members in one’s VB group well enough for you to trust them enough for you to partner with them. KYC goes beyond knowing one’s name, it’s about knowing all the important particulars about someone. This therefore calls for a solid KYC framework.  A number of activities go into knowing people at acceptable and appropriate levels for this kind of venture. You need to know for instance what people in your group do to earn the income they are bringing to the table because those are the means they will use to pay back what they will borrow. You need to know who the people really are, ask for proof of residential addresses and arrange that you visit them (most groups achieve this by taking turns in hosting group members at their homes) and ensure that you know some of their relatives so that you are able to easily trace their whereabouts should anything go wrong.

Dear Reader, we trust that this story has helped to enhance your understanding and appreciation of VB so that you make informed decisions and choices in the event that you choose to join a group.  In next week’s story, we will share more best practices that can help VB groups thrive and achieve their objectives so that indeed, we live one of the Grameen philosophy which states that charity is no long-term answer to peoples’ needs but rather that we can all make decisions to improve the quality of our lives and that of our loved ones by adopting behaviours that promote our own wellbeing through initiatives such as VB. It is our responsibility to ensure that we do it right because it is only then that we can say that we helped to increase and enhance FI in Zambia and contributed to enabling ourselves and other people to be active players in the growth of our economy.

Until next week, stay blessed and be a blessing to others.

Business

Spring TV is operating illegally because it is not licensed by the authority, IBA Chair Mabel Mung’omba says

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INDEPENDENT Broadcasting Authority (IBA) Board Chairperson Mabel Mung’omba has insisted that Spring TV is operating illegally because it is not licensed by the authority.
Mung’omba in a statement said Spring TV is not a licensee of the IBA hence it operating illegally.
“Spring TV, like any other broadcasting service provider, is bound by sections 19(1) of the Independent Broadcasting Authority (Amendment) Act No.26 of 2010 which prohibits the operation or the provision of a broadcasting service in Zambia without a broadcasting licence,” Mung’omba said. She said any electronic communication intended for reception by means of radio frequency spectrum or any electronic communications network or any combination thereof is supposed to be licensed by the authority. ”
Therefore, any person wishing to operate or provide a broadcasting service in Zambia, regardless of whether the broadcasting service is conveyed through radio frequency spectrum or any electronic communications network such as the internet, is required to obtain a broadcasting licence from the IBA,” said Mung’omba.
She said operating without a broadcasting licence amounts to a punishable offence.

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US okays electronic cigarettes

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WITH rising numbers of smokers in sub-Saharan Africa, concerns regarding risk exposure to tobacco have been well documented. The impact on the entire industry, from farmers to consumers has always been a source of concern: who will support the farmers earning a living through their trade? This could change after a landmark decision in the industry.

Following 43 months of evaluation, the U.S. Food and Drug Administration (FDA) recently authorised the marketing of electrically heated tobacco system called IQOS by Philip Morris International (PMI) as a modified risk tobacco product (MRTP).

This decision by the US FDA marked the first time the agency has granted marketing orders for an electronic alternative to cigarettes. It found IQOS to be “appropriate to promote the public health and is expected to benefit the health of the population as a whole.”

Considering that cigarette smoking kills more than seven million people worldwide each year, the US FDA decision opens a public health opportunity in the fight against the global tobacco epidemic. Encouraging the rapid shift from smoking cigarettes to alternatives such as IQOS – for adult smokers who have been unable or unwilling to quit – could save many lives.

While the FDA does not endorse IQOS, its decision followed a scientific review of more than one million pages of evidence submitted by PMI and took into account independent studies. The federal agency concluded that non-combustible tobacco products such as  IQOS differ from cigarettes in reducing the body’s exposure to harmful or potentially harmful chemicals.

This is consistent with earlier conclusions of regulatory and scientific bodies, that the product emits lower levels of harmful toxicants than lit cigarettes.

The finding recognizes the harm-reduction effects of the “heat-not-burn” technology, which provides smokers with nicotine, while substantially reducing the risks associated with the combustion of conventional cigarettes.

While rates of smoking have decreased in wealthy countries, they have grown in poorer nations. In sub-Saharan Africa, cigarette consumption increased by over 50 percent between 1980 and 2016. Of deaths among African adults caused by second-hand smoke, over 60 percent are among women who live and work with smokers.

There are lessons to be learned from the decision by the US FDA and similar regulatory bodies in Europe. A dogmatic approach to tobacco control, which condemns all tobacco products as equally injurious to public health, has little chance of reducing the harm of cigarettes in today’s world.

It should lower the cost of reduced risk products and make them available to adult smokers in Africa. Countries should move to include harm reduction in their arsenal of tobacco-control measures and engage the tobacco industry to find the best ways to make the new products widely available to adult smokers unable or unwilling to quit, possibly including raising taxes on conventional cigarettes, while significantly lowering them on reduced risk products;

Across Africa, where the median age is under 25, very strict measures must be put in place to protect under-age youth from gaining access to the new products, considering that they have been shown to be only better alternatives but are not risk free.

In an ideal world, humans would avoid all unnecessary substances that have negative effects on their health. Unfortunately, that is not the case and will likely never be. It will require courage and political will, but it is a public health imperative to adopt measures to reduce risks to the more than one billion smokers worldwide.

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MoH, UNICEF and SIDA announce a new US$ 5.2 million agreement in Zambia to boost essentials health services to mitigate the impact of COVID-19

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THE Swedish International Development Agency in partnership with UNICEF and the Government of Zambia have signed a K94. 6 million worth agreement with a view to mitigate the impact of COVID-19 on the Zambian Health sector.

The partnership is also aimed at supporting existing health services in Zambia by providing essential commodities for reproductive, maternal, neonatal, child and adolescent health (RMNCAH), by procuring oxygen concentrators for hospitals in Southern, Eastern, Luapula, and Muchinga Provinces.

And Ministry of Health Permanent Secretary Dr Kennedy Malama has thanked the partners for the support in the sector.

“This support comes at a crucial time for Zambia in the COVID-19 response and will go a long way to supporting essential health services. We thank the Government of Sweden for their generous support to the people of Zambia, especially our children,” Dr Malama said.

Part of the partnership is also lined up to provide personal protective equipment to 5,000 health workers in 983 primary health care facilities and 48 hospitals.

Swedish Ambassador to Zambia, Anna Maj Hultgård, said her country is happy to be able to make this important contribution to Zambia.

“We place great importance to supporting the health system in Zambia and essential health workers not only to empower them to safely respond to the Covid-19 Pandemic but also to ensure that essential services such as maternal, new-born, child and adolescent health and nutrition can continue with minimal disruption,” Hultgård said.

She said about one million people in Zambia are expected to benefit from essential health services and commodities supplied under the programme.

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Meet the Farmes Summit 2020

ZAMBIA: COVID-19 STATS

09 Aug 2020, 3:04 AM (GMT)

Zambia Stats

7,903 Total Cases
203 Deaths
6,431 Recovered

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