Day 32: Banki M’khonde to save the Retail Shop

Banki M’khonde is a micro-finance system that has saved Cake Palace since day one, and we want to introduce it to the retail shop too.

In brief, Banki M’khonde is a temporary team (usually year long) made of small scale entrepreneurs in order to create a loan source and annual savings. Literary translating to ‘a bank at a veranda’, Banki M’khonde is a team led and made by the beneficiary entrepreneurs only (No financial institutions involved). Banki M’khonde teams function differently depending on the agreement of the team members, but all the teams have some factors in common. Firstly, the team puts money together. Every team member puts their periodic contributions on the table. The teams can be of any size, but for explanation sake, an example of a Banki M’khonde could be a team of 20 market women that is called Umodzi. Umodzi women have a fixed meeting calendar, which is the first Saturday of every month. During every monthly meeting they bring a fixed monthly contribution, let’s say MK2000 per person. When the money piles, they lend it to 3 of the women. During the next meeting, the 3 women that took a loan pay it back at an interest of 20%. After piling monthly contributions and repaid loans, other 3 women will take a loan, and pay it back during the upcoming meetings at the same interest. After a year, the money is then divided among all the 20 women.

Cake Palace has managed to make annual savings, and later be able to purchase baking machinery, because of involvement in teams like Umodzi. As a group entrepreneur, they also give each other emotional and intellectual support. When Cake Palace thrived, she joined higher levels of Banki M’khonde. Some of them involved making one contribution per year, for example, MK500,000. And then taking 3-month loans and repaying them at interest. After a year, the team divides the money. The strides that Cake Palace has made have been very obvious. That has got me thinking… can’t the ‘new baby’ of Cake Palace, the retail shop, also thrive through joining the system?

In fact, the google sheet that we use to record the retail shop sales revealed that the retail shop has more than MK600,000 in profit, which confirmed that the retail shop could afford to join a high-level Banki M’khonde. A few weeks later, my mother found a team that was just in the formation stage. She joined the team on behalf of the retail shop. The team involves one contribution, which is MK500,000. During the subsequent meetings, the retail shop shall only be getting 3-month loans and repaying them at an interest of 20%. According to the team’s contract, the retail shop shall be able to get up to MK2,000,000 ($2,755) in loan and repay them in 3 months. According to our plans, the loans shall be used to purchase wholesale groceries in bulk. Bulk purchase generally increases profit because the shop barely runs out of supply products, and cost-price per item is cheaper when purchased in bulk.

After a year, I hope the savings from Banki M’khonde shall be used to purchase a new confectionery display and a microwave.

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