Nkwichi Blog

Bank Mukhonde

Three years ago a government scheme called Bank mu Nkhonde (which translated means Veranda Bank) was launched in Mozambique. In July 2015, it hit the shores of Lake Niassa (also known as the Lake of Stars), and its sensational popularity has wowed many villages along this glorious coast. Essentially a micro-loan scheme with a Mozambican twist – Mozambicans love to do things differently! – it provides a catalyst for small business owners and aspiring entrepreneurs.

The closest bank facilities to the Manda Wilderness region are in Metangula, which is a three hour distance from the main village Cobué. In previous years, people in the villages didn’t have any financial security, i.e. a way to put their savings, or any support for the ones who are more business orientated. This new bank scheme in the region will allow the communities to plan their future better and it will give them hope for new ventures.

How does it work?!

Local communities can approach their local government officials to request banking boxes to be used by the different Collectives. A Collective is a group of a maximum of thirty people. Each member has to produce an initial deposit of, for example, 500 meticais ($10) which will be placed in the box. The keys to the box are kept by a number of people elected by the group as a security measure. Everyone is issued with a personal “bank book“, which is used to record any transactions. There is also a collective central book which records all information.

The rules to each collective are distinctly agreed according to the needs of each group -for example the rate of interest a member will have to repay when they take out a loan, and the amount of the initial deposit. All members are required to take out a loan over the course of the year and pay this back (with interest) within the agreed time-frame. Like any bank in the world, there are bank charges if a member is unable to keep up with repayments.

The “Bank” is kept for one year at a time, with various deposits, loans and interest repayments. After the year the collective will come together to count their funds, plus the interest. Each member’s funds are then returned to them and the overall interest profits are divided between them. The rules governing each member’s share of the interest depends on each collective and the rules agreed at the start. If someone wants to leave the group during the year, they must find another person to take over their account, so that the group (and the bank) as a whole does not become weaker. In fact, this enterprise should result in greater strength and cohesion for the local communities.

This kind of scheme is designed to help isolated areas where more traditional means of finance is hard to come by, but where community support, energy and trust is high. The Manda Wilderness region is excited at the prospect of new ventures being started with this scheme, from fishermen to farmers to craftspeople. Speaking to Joao Mkhwamba, a fisherman from Chigoma village, he talked of his ambition to purchase his own boat, which has been his lifelong dream, as it was his father’s before him…

We wish you good luck, João!