CMSL Community Trust
Mpendulo Savings promotes a communal system of savings and lending based on long-held traditions (such as the ‘stokvel’ system) that low-income households use to mobilize useful lumps sums of cash. Community members from self-selected groups (from 10 to 20 members) and attend training in the Mpendulo saving and lending methodology. Members draw up a constitution where decisions about how they will manage themselves are recorded.
Groups meet monthly, typically after they receive their social grant, to save money (in the form of shares) in a common fund from which loans are lent out to members and repaid with interest. In general, groups charge 10% interest per month. Loans are generally one to two months and the interest stays within the group’s fund. Mpendulo Savings neither takes money from nor gives money to, any group.
The cycle of savings and lending is time-bound. After 10 to 12 months, the group conducts a “share out” where each member receives their savings and the interest collected on loans is distributed in proportion to each member’s total savings for the cycle. Groups then start anew, typically after the Christmas holidays. Mpendulo Field Officers follow up mentoring with groups over an 18-month period until they are able to self-manage.
Members gain basic, but critical, skills in managing household finances and have access to a savings and lending mechanism that they control. All of this creates a platform of increased self-confidence and a renewed sense of motivation to achieve ever-higher levels of savings and financial health within the household.
From this platform then, access to small loans throughout the year and the lump sum at the end of a group’s savings cycle allows members to start-up and/or improve businesses. Typically our members start with informal economic activities and Mpendulo refers to those who are ready to take their business to the next level to our Enterprise Development partner, Isibabalo Business Development Services.