social enterprise

Microfinance in Zambia

Microfinance has not yet taken off in Zambia, but it has transformed impoverished communities all over the developing world. Grameen bank is perhaps the most famous microfinance bank for its work in extending credit to the rural poor in Bangladesh. Kiva is also well-known for its international reach, servicing low-income people in countries all over the world.

Microfinance is the extension of financial services, often to the extremely poor who would normally not have access to such services. Microcredit is a subset of microfinance and refers to very small loans given to those people who have little or no collateral with which to finance a loan. As the microfinance movement spreads across the globe and practices improve, different forms of microfinance, such as group lending through cooperatives, have gained popularity.

One obstacle to social enterprise for rural farmers in Zambia is a lack of adequate money to fund initiatives. Through microcredit, farmers will be able to take out small loans to purchase new seeds, tools, and technology. When accompanied with proper training and awareness, such a change could break the vicious cycle of poverty and allow farmers to take their livelihood into their own hands.

Economic empowerment of the rural poor, and especially of women, is increasingly seen as the way to create a real lasting change in developing countries. Gender roles in rural Zambia are still split, with women tending to be limited to child care, household work, and subsistence farming. Increasing the access women have to other income-generating activities will lead to greater gender equity as well as the betterment of children and the entire community.

One type of microfinance is collective borrowing through the use of cooperatives; an example of this is a group of 30 women creating a cooperative in which they will pool their funds which they can use to take out larger loans. This method has been used in rural communities to purchase water tanks for all of the women in a village. Others have used cooperatives to purchase livestock or supplies.

In rural Zambia, microcredit loans can be used to create fish farms, improve current agricultural practices, purchase seeds for a diversified crop portfolio, reinforce and build wells, and start fish and poultry farms. Microfinance is for rural Zambia unforeseen and untapped potential and access to opportunities that were at one time not available.

Sustainable Development: The Key to Zambian Food Security

Zambia’s stable political environment and high GDP growth in the past decade has belied the poverty and hunger affecting its rural population.

While many farmers and rural citizens in Zambia seem to eat enough and make their livelihoods off of agriculture, a maize monoculture has led to malnutrition and a worrying lack of diversification. Any environmental or economic shocks have a severe effect on rural farmers who are completely dependent on the single crop. It also means that children, who make up a large proportion of the Zambian population, are not receiving proper nutrition, which affects physical growth and health and also negatively affects performance in school.

Our long-term solution for rural farmers in Zambia lies in the creation of social enterprises. This will allow us to develop and in the process, train farmers to develop their own enterprises—starting from agriculture and spreading into livestock and fisheries.

The cultivation of maize is currently the main source of income for most of the rural population. Since it is the most profitable crop to grow in the short term, other more nutritious crops have been traded for short-term profit. Commercialization of a more diverse nutritional basket will mean more nutrition is available to the farmers and their families, as well as protecting farmers from being severely effected by exogenous shocks to the maize market. Up until this point, Zambian farmers have not diversified their crops because of a lack of awareness, lack of opportunities, and economic circumstances that have pushed their crop portfolio to its current state.

In order create a lasting and sustainable change requires both diversifying sources of income and improving performance on the current activity of growing maize. This requires increasing awareness of more effective and efficient farming techniques, educating farmers about the importance of a diversified nutritional basket, and expanding farmers’ capacity to take on these changes.

One obstacle to social enterprise is lack of access to adequate funds. Farmers can jumpstart their enterprises by taking out microcredit loans to invest in new seeds and technology. Economic empowerment will produce a lasting and sustainable change where aid creates dependency. Farmers will have full ownership of their enterprises.

The aquaculture industry is still in early stages of development in Zambia, but Zambia produces among the most fish in Sub-Saharan Africa and there is great potential for future growth at the commercial and rural level. Pond culture is used in rural fisheries, which are often family-owned and for subsistence. One of the barriers to the growth of fisheries in rural areas has been a lack of technical training, but families and communities that have taken on aquaculture have found it to be a way to make a livelihood and provide a stable source of protein where the land cannot support other livestock.

As Humanity Africa’s own social enterprises take off, our staff will have greater capacity and more resources to train farmers and provide support on the ground. Once operations have stabilised there will be increased opportunities in areas such as poultry and fish farming, or aquaculture.