The Right & Wrong of “Chilimba Investment Schemes”

All of us need Money from time to time. After all, Money is much a part our life. We need to raise Money to Finance our education, finance our business plans and meet daily needs.

But when it comes to investing money, there is the right and wrong way to invest. Am not here to tell you where to invest your money, but show you the right and wrong way of investing your money.

Several reports in Zambia indicate that an increasing number of people have little or no access to finance. The informal financial sector is more popular than the formal sector for several reasons including flexibility and speed with which services are provided. It is quick and easy to get financing sources on the streets of Lusaka than at any commercial Bank. To me, this is a potential risk and to some extent a manifestation of how banks are loosing out on business. Unfortunately it comes with a cost.

There are a variety of arrangements rooted in the social fabric of the society, through which Zambians gain access to capital. The most popular grassroots-based savings and credit scheme is Chilimba.

Chilimba is a self-help way of assisting those who are unable to raise the money required to finance a business or buying house hold items.

In practice, Chilimba means “lending another person the whole or part of your money for a period (for example, one month) and receive it back, together with the other person’s equal and reciprocal contribution, the following month.”

Initially, Chilimba did not involve any written down rules but recently the town has seen the most organised forms of schemes, commonly known as Chilimba with some allegedly fronting names of named personalities as sponsors. The perception I hold about this boom in informal lending arrangements is that it shows how Banks in Zambia have lamentably failed to provide financial products to meet the saving culture of Zambians.

The idea of making quick money with very little effort sounds interesting. Unfortunately such ideas costed many people world wide their hard earned cash. Wait! Don’t get me wrong am not saying the credit saving schemes currently on the market will cost you your money. I just don’t accent to any “get rich quick ideas.”

Let me now substantiate my views beginning with why I see formally organised Chilimba investment schemes as a risk. The concept behind most of the investment schemes is very simple, but it is often presented to potential investors in a slightly altered form. For this reason, it is not only important to understand how these schemes work, but also be familiar with the concept these schemes use. Find out for your self what a pyramid scheme is before we get to the next point.

While trying to find answers to some patent questions a colleague of mine rose on this matter, I stumbled upon a report on a study into non formal social schemes in Zambia published in the journal of social development in Africa Vol 17 No 2. I must be quick to admit that this report made very good reading.


The report suggests that “although the Chilimba is useful, however it does not constitute a real social security scheme. Nevertheless it has the potential for being strengthened as long as it remains informal or semi-informal.” The report further warns that, “the formalisation of the Chilimba scheme into, for example a non governmental organisation presents a possible danger of creating cleavages, ultimately leading to its collapse.”

Further, experts argue that the major problem is that a pyramid type of  scheme cannot go on forever because there is a finite number of people who can join the scheme (even if the whole country was to join). “The problem lies in the fact that it is impossible for the cycle to sustain itself, so some people may loose their money somewhere down the line” Those who may be most venerable are those towards the bottom of the cycle where it may become practically impossible to recruit the number or people required to pay off the previous layers of recruiters.

I know by now different thoughts may be going through your mind but before you make a wrong conclusion, consider doing the following things.

1.       Find out about the company behind any Chilimba investment scheme before you finally decide to invest into it.

2.       Learn about the product, carry out your own research, and find out from friends and relatives. I have always said it and I will say it again. The best way to improve any skill is to consult an expert on the subject and then apply the advice he gives. Seek advice.

3.       Most importantly, ask questions. Don’t jump to conclusions based on what people say , you might miss out on a better investment opportunity. Ask the managers how sustainable the chilimba scheme is before jumping on board.

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The Future of Smart Cards in Zambia

For many of us, smart cards are now part of our daily lives. We rely on their technology to gain access to our office buildings and access and pay for utility services. But as smart card technology continues to evolve, there are still some more interesting new applications in the pipeline.

A case in point: The Zambia Electricity supply corporation ZESCO was experiencing repeated problem of accumulative electricity bills by most customers. The company introduced prepaid meters using smart card technology and the rest is history.

Another new and interesting use of smart card technology will soon be found within the Ndola City. The local authority was also struggling to effectively manage parking in the central business area in order to maximize revenue collection. The existing system of parking attendants alone was vulnerable to pilferage.

Under the partnership with city parking solutions, which would be launched in the city, if successful, motorists will see the first ever digital parking meters in Zambia. Motorists will simply purchase a city parking card pre-loaded with credit. After parking, the driver will insert the parking card in the smart card reader. The card reader verifies that there is sufficient money on that card, and when the driver selects the desired parking time, the money is deducted from the card.

Undoubtedly, this initiative is the first of its kind in Zambia. It will not only make vehicle parking more convenient and efficient but it will significantly improve the revenue collection and accounting at the local authority.

The scope for technology to improve asset management, asset trucking and access control to deter theft, drive operational efficiencies is virtually unbounded. It seems likely that the potential for technology to help us just do that in Zambia is limited only by our own imagination.

Prosperity Agencies is already working with some major utility companies in Zambia that are keen to leverage the benefits of Bar Code asset tags to increase efficiency and asset traceability with Barcode Labeling and Asset Management Software.

Merchant Accounts-Why You Need One

For years it’s seemed that while everyone acknowledges the importance of merchant account services, nobody except possibly merchant service providers- actually boldly talk about it. Part of this is because most bloggers hate to read on something they don’t really understand and are reluctant to comment.

If you are just trying to figure out the importance of merchant accounts, just read on you will find out the real reason why you really need it for your business.

Credit cards have become a preferred method of payment in today’s market, making a merchant account essential for any serious online entrepreneur. Sadly, however, too many websufers end up frustrated by the fact that they can not buy their favorite goodies online just because they don’t have a credit card. This is a feeling I personally had to deal with for a long time.

Undoubtedly, the banking and financial system world over has undergone a process of modernization and streamlining. The regulatory frameworks have been strengthened and dealings in the financial market are now facilitated by automated merchant services. Customers now enjoy ATM/Point of sale facilities from any ATM and merchant banks.

The evolution towards large financial conglomerates with integrated merchant banking service development is slowly blurring the hassle of queues in banks and delay in clearing of electronic payments. On the other hand more still needs to be done. The hassle of opening an account in the bank, with the demand of documentation involved and also the bureaucracy in financial institutions is also another challenge.

In this day and age, receiving payments online is of great importance to any online business. These benefits have made it easier for small businesses to grow and compete competitively with large organizations. Yet, the most common use of merchant services to date is customers using their credit card or debit cards in person to pay for goods and services.

I must mention that, accepting credit cards online is a risky proposition. Fraud rates are substantially higher when compared to traditional retail establishments. Nevertheless, a merchant account is an extremely flexible tool for those who are informed but like I said, you need to be more careful to determine which credit card processing solution is best for your business among the many merchant account choices available.

That is why sometimes choosing a third party merchant account provider like Google checkout is the obvious choice. A third party merchant account provider can give your business the ability to accept debit and credit cards in payment of goods and services in a matter of seconds eliminating the monthly fees. Interestingly, some merchant account providers do not charges any set up fee as well. The only time a merchant will incur a fee is when they accept payment via credit card.

With a credit card processing service on your website, you can increase your sales, flexibility and give your customers many payment options. Surely you have nothing to lose, and only time and money to gain.

What Your Bank Thinks You Don’t Know

Are you happy with your Bank Customer Service? If not why not? Are you concerned about the Service Charges, Card charges, Interest charges and other Account fees? Or are you frustrated by the bureaucracy or lending restrictions? Most importantly, do you think that moving your Bank account to a different Bank would resolve these issues?

Evidence suggests that most business men and even personal account holders have a story to tell about the quality of their customer relationship with their Bank. This ranges from minor to serious complaints.
Research has in the recent past shown that there is increasing competition in the Banking industry and banks should be more keen to hear your complaints and think carefully about ways to handle them. Yet, “your Bank thinks you don’t know this.”

Now let me tell you what you ought to know. A review of the UK and European loan markets by Lloyds TSB for example showed that “Banks were focusing more on middle market borrowers because competition at the top end of the market is getting stiffer.” You therefore deserve the best service.

The research further raises concerns that banks ought to consider seriously. For example “competitive charges” appeared to be the second highest priority on SME’s wish list. Interest rates are also another potential bone of contention, but the most complaints emerge over issues such as Clearance times.

Honestly, “there must be no reason why electronic payments shouldn’t clear on the same day” It happens in developed countries so it must if Automated systems exist in the other countries as well.

But it’s not much use complaining about your Bank knowing that completion in the sector is increasing if you are not prepared to move. Funny enough, Research has found that the number of people considering changing Banks had increased yet the actual amount that did so was almost unchanged.

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The Most Deadly Online Banking Mistake!

Online Banking, despite having been around for years is still fairly a very new concept in African Banking and in Zambia particularly. A number of banks have in the recent past introduced internet banking services all over the world.

It is indeed a value added service. With an online bank account one is able to transfer money from their accounts to another account either within the same bank or to another bank from their PC and even manage to check account statements and account balances online.

As an Accountant, this gives you total control over your accounts and saves you a lot of trips and phone calls to the bank.

Naturally, all online banking systems come with a lot of security measures but some people including some Accountants are however still reluctant to use online banking services citing security as a major concern. They are still more comfortable putting a signature on "pieces of paper".

In this article, I want to communicate to you the most deadly mistake you must never make online on web banking account.

There is one very important rule that needs to be strictly followed when using any online accounting application especially online banking. Just like you do with your ATM cards, NEVER give your log on credentials to anyone.

By log on credentials I mean your PIN number or password. even when you receive any unsolicited email purporting to be from your bank asking you to log onto some website for whatsoever reason, call your bank first to verify the authenticity of the email.

This is because some hackers create sites known as phishing sites that look almost the same as your online banking site and would send you an email with a link to their site asking you to log on with your online banking account log on details.

Once you do that, they will take your PIN number or password and use it to log on your accounts. The next time you will find your account empty.

So once again, NEVER give your Online Banking PIN number or password to anyone. You will be making a deadly mistake.

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