r
I

Mukuka, Kalikiti and Musenge IZAMBIA REPORT

Phase II: Chilimba and Market Associations

ABSTRACT
Phase II of the study was concerned with identifYing two particular
'Weselectedfor analysis the
non-formal social security schemes.
chilimba and market associations because they raised practical
policy-related issues, seemed to address priorities, covered priority
groups, (the poor and most vulnerable in urban and some parts of
rural areas) and also addressed immediate and future needs,
especially market associations. These are the non-formal social
security schemes that have the most potential for strengtheninf5 by a
policy regime that recognizes each individual's need to have some
.form of social security, identifies non-formal security schemes and
their members' needs and then offers training in basic skills of
leadership and management, business and entrepreneurship and
expanding employment opportunities so that more people can earn
enough to pay for formal social security.

Chilimba
The word chilimba means strengthening.
It derives from the Nyanja
and Bemba words "kuiimba" and "ukulimba",
respectively. In prac-
tice, chilimba is a self-help way of assisting those who are unable to
raise the money required either for business or buying household items.
Chilimba started as an informal rotating credit and savings (without
interest) scheme that provided mutual assistance among poor male
labour migrant miners on the Copperbelt of Zambia during the colonial
period as a means of coping with the perennial problem of lack of
money. The contingencies covered ranged. from buying personal items
to meeting funeral, educational, transport and medical expenses. At this
in chilimba because only they were
stage, only men participated
allowed to reside in the Copperbelt were employed. Epstein (1981)
observes that as soon as Africans assembled in towns and engaged in
industrial work they began to form social relationships appropriate to

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97

Ta.ble III: Distribution by gender of chilimba group members
Gender
Women
Total

Number
386
441

%
88
100

SOURCE:

FIELD OATA

their new situation. For example, tribal elders representing different
ethnic groups and chilimba credit scheme emerged in mine townships.
In practice, chilimba means lending another person the whole or
part of your wages for a period (for example, one month) and receiving
it back, together with the other person's equal and reciprocal contri-
bution, the following month. At the time of the study it was found that
more women than men were participate in chilimba.

This was true both among those engaged in selling at the markets in
rural and urban areas and those who were organized solely for the
purpose of raising money for domestic use. This is because there are
more women than men in the informal sector although more men are
entering it as formal sector employment opportunities are narrowing,
mainly as a result of business closures stemming from the economic
restructuring process. At the time of the study, however, men who were
out of formal employment were still hoping to rejoin it. They had not
yet decided to start creating long-lasting reciprocal relationships
like
those required by chilimba.

Although the system of chilimba initially came about as a result of
the poverty of the African mine migrant labourers on the Copperbelt,

Table IV: Reasons for joining a chlllmba group

Reasons
To raise money
No interest on contributions
No security or collateral
You can stay in the group as long as you want
Total

required to join

Number
300
56
47
38
441

SOURCE:

FIELO DATA

%
68
12
11
9
100

NOTE:

THIS NUMBER INCLUDES

THOSE WHO WERE ENGAGED

IN CHILIMBA FOR ITS OWN SAKE AND

THOSE WHO USED

IT WHILE OPERATING

IN MARKET

ASSOCIATIONS.

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Mukuka, Kalikili and Musenge IZAMBIA REPORT

the system has spread to other urban areas. During the period of eco-
nomic boom the practice of chilimba decreased but from the 1980s it
came back with renewed vigour, when it began to be used for raising
money to meet different needs such as education, medical fees and
rent. The assistance is usually seen as primarily social
terms as no
interest is charged and the scheme remains informal.

Table IV shows the reasons given for joining a chilimba group.
More than h<l;lfof the respondents (68%) joined to raise money. For
those who were working in markets the money raised is used mainly to
expand their businesses, as indicated by the following remarks from two
women:

Chilimba enables me to raise money so that I can expand my
business. I am able to buy more goods for sale and by doing so I
make more profit
than I would otherwise make without belong-
ing to the chilimba group. Without chilimba I would have been
out of business a long time ago.

Ijoined chilimba as a means of saving money and increasing my
business capital"

Those who join other chilimba groups outside the markets do so to
raise money to pay for household items, medical and school
fees.
is payable on loans and no
Another
security or collateral is required to join the chilimba group (23%). The
following remarks convey the general feeling:

reason is because no interest

I did not want to end up with the problems I would encounter if
I failed to pay interest on loans from other organizations.
We do not go to lending institutions for fear of losing our pro-
perty if we fail
Chilimba is better than borrowing money from banks orfrom the
non-governmental organizations that lend money to women in
markets because in chilimba groups you are not expected to
enrich the lender; only yourself.

to pay back the interest.

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99

I am very comfortable with chilimba because,iJ I fail
to contri-
bute, when my time comes to collect, I simply do not collect and
only miss one turn. There is no penalty for that.
I am not educated and I do not know how to get a loan from
established institutions.
Wefear losing our household property to organiza.tions
would lend us the money due to the interest required
I would rather gofor chilimba than a loanfrom a bank orfrom a
non-governmental organization because instead of progressing
you spend most ofyour time servicing the loan.

that

Nine per cent of respondents said they had joining because they could
stay in a group as long as they wanted. Chilimba was effective as long
~s all members of the group were honest, hardworking and had the
ability to pay their contributions. Other remarks were

Although no specific number of people is required to form a
chilimba group it is, however, better to have not more than ten
people in order to reduce the waiting time for a member
to
collect the group's contribution" and

"The recommended number of chilimba group members is 4 to
10. There are usually problems when there are more than 10
members"

The study found that the chilimba scheme had been transformed into
a popular grassroots-based savings and credit scheme and that some

Table V: Key factors for the success of chilimba scheme
Factors

Reciprocity, honesty and trustworthiness
Ability to pay for the contribution
Respect for other group members
Hardworking
A good network of members
Total

Number
161
122
71
53
34
441

%
37
28
16
12
7
100

SOURCE:

FIELD DATA

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Mukuka, Kalikiti and Musenge IZAMBIA REPORT

of the problems members associated with a large group were dis-
honesty and defaulting. Its success, as shown in Table V, appeared to
lie the limits attached to membership which allowed for a high degree of
intimacy and, therefore, a fair amount of trust. By pooling their limited
individual
in
various ways.

resources members were able to support one another

The degree of participation in a chilimba group was determined by
the nature of the individual's financial need and also her level of in-
come. How wages were paid was also critical.
If employed people
received their wages weekly the chilimba practice was widespread as
everyone needed to pool resources to purchase items that could not
be bought on an individual's weekly wage, especially under conditions
which did not allow savings. Thus such items as bicycles, sewing
machines, a radio, relatively expensive clothing and raising money for
social functions like weddings was generally made possible.
Although initially chilimba did not involve written-down rules and
executive leaders the study found some chilimba women's groups with
both.

In one group that was interviewed, 12 women came together under a
chairperson, secretary and treasurer. They agreed to contribute K35,000
each per month. The group's financial resources were mobilized by the
treasurer and passed on to a group of three each month. To harness
more than just the group members' resources, friends were invited to a
monthly party and encouraged to bring presents. A group of twelve
could, therefore, benefit from as many as 100 to 150 friends and relat-
ives. The emergence of such groupswas also the result of a liberalized
economic environment which had made market goods available.

As men lose their jobs women take up informal trading in order to
survive and raise their children. Such trading groups obtain capital
through chilimba. A common practice is for women traders to contri-
bute KI,OOOevery day for a week. At the end of the week the amount
collected is given to one ofthem to replenish her stock or cater to some
other need. The women involved in chilimba groups tend to be more
'serious over meeting their obligations to others than would generally
have been the case with money borrowed from non-members.

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101

it has the potential

Potential for strengthening
. Although the chiIimba is useful, however, it does not constitute a real
social security scheme. Nevertheless
for being
strengthened as long as it remains informal or semi-informal. The
formalization of the chiIimba scheme into, for example, an non-govern-
mental organization, presents a possible danger of creating cleavages,
ultimately leading to its collapse. What appears to be the way forward
is to encourage many women as well as men to form such groups under
their own informal control.
It could achieve more if the resource base were improved and women's
management skills were enhanced by formal training. The success of
the scheme depends on its being run by direct beneficiaries without
outside interference but government could help by providing a policy
environment
non-
formal social security schemes to widen their scope and coverage.

that encourages and supports community-based

Market associations
Between 1964 and 199I all markets were run and controlled by the
United National Independence Party and their main function was to
mobilize mass political support for the Party. Since 1991 a few market
associations have produced constitutions and rules with the aim of
promoting their member's interests. They have created a common fund
which they use to help members with such contingencies as sickness,
birth, death, education and the payment of rent.

The market associations that existed before Independence were
revived because of the numerous hardships that were being faced by
poor peri~urban and rural people, large numbers of whom had experi-
enced a sharp decline in their livelihood and food security during the
I980s as a result of economic liberalization and the reduced role of gov-
ernment in the Third Republic (I991-200 I). In particular, the contraction
of the formal sector workforce from 23.9% to 9.8%, devaluation of the
currency and rapid inflation, the removal of subsidies for basic food
and the decline of health and education services had, in peri-urban
areas, precipitated a crisis which resulted in a low quality oflife.

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Mukuka, Kalikiti and Musenge IZAMBIA REPORT

This was characterized by the growth of illegal compounds and poor
quality homes; poor access to a clean and safe water supply; limited
access to social services; low levels of community-based organization
and participation and the use of pit latrines. Poverty \',Iasshown by the
use of expensive charcoal as cooking fuel and paraffin being retained
as the main source of lighting; spending most of the household income
on food and housing; eating one or at mo.sttwo meals a day and a high
prevalence of stunting and underweight, especially among children;
together with a high dependency ratio. Work was mainly to be found in
the informal sector;
there was increased reliance on neighbours or
relatives for credit and a correspondingly limited access to individual
assets and consumer durables. Finally, there was a significant number
of children with no access to education.

Most people in these peri-urban areas, therefore, resorted to informal
sector trade. As a result urban markets became full and the need to
maintain order in the markets and address the needs ofmarketeers
led
to the formation of market associations with registered membership.

Some of these associations have produced operating modalities with
elected leaders, constitutions, sets of rules and forms of training. They
are also registered with the government. Most, however, are still semi-
formally organized. There is no differential coverage by gender but
geographically, market associations are more prevalent in urban than in
rural areas. In rural areas they are restricted to provincial and district
towns. The poorer the market, especially the rural market, the more
loosely organized the association is..

The main goal of these associations is to look after the needs and
welfare of their members. They are intended to meet contingencies such
as sickness, education, accommodation, business and death. At the
Lusaka City Market, for example there are two semi-formal social secur-
ity schemes, Proud Africa and Take Care. Both were established in 2000
with government assistance. Interested marketeers were trained for six
weeks, after which they are given loans of K270,000 each. Those who
are trained are put in groups of five, with each member contributing
K40,000 per week. After six weeks a member qualifies for a loan from
the Association. Ifthe member who is given the loan is successful then

VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA

103

the amount given out in the initial loan is increased to K500,000. It was
.not possible, however,
to establish exactly how these two schemes
operated.

On the Copperbelt

in Kitwe, the study found a market association
that had formed a funeral committee with rules for members in 1998. This
was based on the realization that funemls are often unanticipated and
always costly. At the time of the study, membership of the market
association was open to anyone working in the market but plans had
been made to restrict membership to only those people who had a
stand and were wiliing. to pay a membership fee. The study found the
funeral committee was concerned with funerals that took place at the
member's home. The committee coIlects donations from members in the
form of money and food and takes this to the funeral house. The plans
which the market association
discussed with the. research team
include:
• Extending funeral support to family members and dependants of the
registered members of the market association;
Giving money the collectors allowances for lunch, transport and rent
for their market stands and
• Making every member contribute K1000.00 per week.
Both men and women were members of market associations. In one as-
sociation in Lusaka, for example, there was a chairman and chairwoman
. as weIl as a vice-chairman and a vice-chairwoman.

In general, the study found fewer market associations with a funeral
committee than those which did not, but most had a market fund to
which all the members contributed and incorporated chilimba practices
in their work.
Viability
As a result of extreme levels of poverty and the frequency of funerals
people do not attending funerals as much as before. With the support
of market associations, however, it is easier for the bereaved to feed the
mourners and also maintain a good number of people to help them with
the funeral till the day ofthe burial. The fact that these market associ-
ations existed before and that people were entering markets to make a
living gave them the potential to succeed in addressing social security

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JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002

Mukuka, Kalikiti and Musenge IZAMBIA REPORT

contingencies. The study, however, found no linkages between market
associations
and the formal social security system in the country.
like chilimba, were also found to be oriented
Market associations,
towards meeting both immediate and the future needs of their members.
In two rural areas of Chipata and Mansa in Eastern and Luapula
provinces respectively, it was found that the people working in markets
had a market fund to address the needs of their members. A market
fund operates like insurance and the members'
contribution is the
premium for,the benefits that members receive or expect to receive from
their associations. These markets also had been using chilimba. It was
also found that in the two rural provinces there was a higher mix of
schemes tha~ in urban provinces for the mobilization of support when
need arose. This usually consisted of a combination of the market fund,
chilimba and the extended family, depending on the nature and sever-
ity of the contingency.

It was because members have to pay a premium and social pro-
tection is guaranteed that market associations can be considered social
security-providing schemes. They were selected for in-depth review
because they were readily available and found in both urban and rural
areas, at least in provincial and district capitals of all provinces in the
country.
Weaknesses
It was reported from both urban and rural market associations that,
because of high levels of poverty, members' contributions were insuffi-
cient
increasing security expenses or to sustain the
remaining family. It was also reported that there had been cases when
members of the market associations had lied about having a funeral in
order to get funeral donations. When such cases are discovered they
tend to demoralize members and discourage them from further contri-
butions, even for a genuine funeral. The associations explained that
they were still learning and that, in future, cases of cheating would not
take place, as the associations would have the capacity to conduct
physical checks at the funerals reported.
Potential for strengthening

to meet

their

VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA

105

The market associations hav~ the potential to be strengthened, espe-
cially since they have worked successfully before in similar conditions.
They also have the potential to work in the rural areas, where the only
viable social security provider that exists is the extended family.
There is, therefore, a need to improve the market infrastructure itself
first. Members and the leaders of market associations need to be trained
in basic skills of cooperative organization, business development and
management, record-keeping, pricing, marketing and stock-taking. This
would enable them to make more money. Some oftheir members might
even graduate into small and medium-scale business enterprises, which
would not only give them additional
income but also enable them to
employ other people and, in turn, contribute to the reduction of un-
employment, poverty and insecurity.

Conclusions and recommendations
Formal social security
Formal social security is guaranteed social protection against social
distress, based on cash premiums.
It covers the limited number of
contingencies set out in the ILO's definition. In Zambia it targets only
the 5% ofthe population in waged employment. As a result non-formal
social security system on which most people depend should be the
focus of expansion and strengthening. No deliberate gender bias was
found in any of these schemes, although formal social security schemes
had fewer women members than men because of other biases stem-
ming from culture, socialization, education and employment. It was not
possible, however, to get a gender breakdown of recipients of formal
social security schemes because the data were not disaggregated.
These schemes should be encouraged to disaggregate data by gender
and improve their data collection, storage and retrieval systems. Their
members should be allowed to transfer their pension rights in search of
better performance and quality. Political interference should be reduced.
Employers and pension scheme members should be able to influence
investment decisions. Tough and enforceable penalties need to be
legislated for evaders. Annuities should be indexed to inflation and
pension scheme members should be able to ascertain the value of their

106

JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002

Mukuka. Kalikiti and Musllngll

IZAMBIA REPORT

pension. Employment opportunities should be increased so that more
people have access to formal social security.
Non-formal social secUrityis a collective provision of guaranteed social
protection through risk-sharing and pooling resources. It differs from
formal social security in that it provides for an unlimited l1umber of
contingencies and the premium is generally received in kind, not cash.
Among the five schemes of non-formal social security examined (the
extended family, urban reciprocal social networks, church, the chilimba
and market associations) only the first and last meet the criteria for
being regarded as social security-providing schemes.
It is necessary to encourage and support community-based
social
security schemes. This includes making policies that are deliberately
aimed at developing,
recognizing and supporting community-based
social se,?urity schemes and integrating social security issues into the
mainstream discourse on national development. This would involve
adopting a two-pronged approach to enable government
to expand
formal sector employment while encouraging the development of
community-based, non-formal schemes.
Recognition,
• Studies should be mounted to explore the modalities offormalizing
non-formal schemes with potential, like burial and market societies.
• Links between formal and non-formal systems should be set up and
policies put in place to improve the latter. Formal schemes should be
encouraged to guide and train promising non-formal groups such as
market associations and burial societies .

links and support

• General

training and support programmes should be developed for
non-formal social security schemes, to help to widen coverage. Their
structures and operating systems need to be improved.

Non-formal systems
the
There are two types of non-formal
traditional
represented by extended family and based on
customary and kinship ties; and semi-formal schemes, represented by
urban reciprocal social networks, church, chilimba and market associ-
systems should be supported by expanding
ations. All non-formal

social security systems;

scheme,

VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA

107

opportunities for training in basic skills, food security; employment and
income generation, literacy and health services, infrastructure, develop-
ment and agriculture. Finally, the extended family has always been the'
main provider of social security in Zambia. The institution of the family
therefore needs to be strengthened .

.Semi-formal systems
These are weak and loosely organized. It is necessary to strengthen all
such schemes, including reciprocal urban social networks, churches,
chilimba and market associations which serve most urban people. A
priority lies in identifying the real causes of poverty and implementing
anti-poverty. programmes. Policies promoting the economic expansion,
employment and income-generating opportunities will generally reduce
poverty levels and allow more people to join formal social security
schemes. More specifically, policy regimes should creat~ a framework
t.o provide a context and structure for non-form~l
social security
schemes and to link them to formal structures and programmes in order
for them to access other resources and support.

Rural social security
More than 60% of the population live in rural areas with higher levels
of poverty than urban areas and without any formal social security. As
agriculture is the basis of any independent development, concentrating
on :agriculture and rural development will slow down poverty, rurat-
urban migration and chronic social insecurity. The non-formal social
security schemes that have the most potential for strengthening are the
extended family, chilimba and market associations. Social security,
whether formal or non-formal, can be strengthened by a policy regime
tl;1atrecognizes each individual's need to have some form of social
security, identifies non-formal security schemes and their members'
needs and then offers training in basic skills ofleadership and manage-
ment, business and entrepreneurship
and expanding employment
opportunities so that more people can earn enough to pay for formal
social security.

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JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002

Mukuka, Kalikiti and Musenge IZAMBIA REPORT

Finally, the baseline of information on both formal and non-formal
systems of social security, which this study has attempted to provide,
is to be built upon by future studies.
In spite of the limitations of
analysis and documentation,
this study has provided useful answers to
the questions asked at the beginning. It is, therefore, hoped that it has
helped to place the question of forma! and non-formal social security
systems at centre stage of national development.

r

Nationalization

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