Lilian Masiye, an informal female cross border trader, was in dire straits. After sales at her duvets stall plummeted, she applied for a loan from a bank to keep her business going. She was unable to access funding because she did not have a fixed salary or own any property that the bank requires as collateral.
“It was emotionally disturbing,” she sighs, with her smile temporarily giving way to a frown.
Lilian had a somewhat flourishing business – importing and selling duvets and kitchenware in Zambia’s tourist capital, Livingstone, a hub for visitors to the Victoria Falls, bordering with Zimbabwe - before the COVID-19 pandemic struck.
Her business took a massive hit when the tourism sector was hard-hit by restrictions imposed by the government in response to the pandemic. It prevented her from crossing the borders into neighbouring countries – Zimbabwe, South Africa and Botswana – where she sourced her goods.
The COVID-19 certification fees of 1,000 Zambian Kwacha (US$55) charged at the borders also increased the cost of doing business for Lilian and many informal cross-border traders, mainly women and youths whose start-up capital, usually drawn from household resources, is very low.
More than 70 percent of informal cross border traders in Zambia are women who rely heavily on small-scale cross border trade for their livelihoods. The COVID-19 crisis has disproportionately affected these women by making it far more complex for them to make ends meet.
With a maroon colourful ‘chitenge’ (wrapper) tied around her waist, Lilian remembers redirecting her business capital to covering family needs when the pandemic put cross-border trade on hold. The 27-years-old single mother, with a child and three dependents to put through school, makes only a small profit which is barely enough to meet the basic needs for her and her dependents.
When borders were closed due to COVID-19, tourism and trading livelihoods were immediately affected resulting in loss of income for informal cross border traders. Moreover, the nature of their trade render them unable to secure loans to manage their business operations, putting their livelihoods at risk.
Stacked against all odds
In patriarchal societies like Zambia, when a woman from a marginalized community wants to start or grow her own business, the odds of securing a business loan from a traditional financial institution are heavily stacked against her. This affects women like Lilian, who was unable to take out a loan for her business because, as a woman, she could not provide administrative papers such as proof of property ownership and income demanded by mainstream banks.
Building resilience through innovation
In a surprising turn of events, Lilian has bounced back, thanks to her entrepreneurial spirit and the Africa Border Lands Centre Innovation Challenge project funded by UNDP and led by its UNDP Accelerator Labs which is helping border communities in Zambia overcome the double hit from COVID-19 and climate change while staying in business.
Lilian is among the 75 beneficiaries – mostly women and youths – who were initially trained in digital and financial literacy as well as basic entrepreneurial and group savings management practices through the far-reaching and innovative project.
The Innovation Challenge project was made possible with initial pooled funding of more than US$250,000 from the Africa Borderlands Centre (ABC), an initiative led by UNDP to conduct research, policy analysis and programming dedicated to Africa’s borderlands and from UNDP Accelerator Labs in Zambia and Zimbabwe.
The ABC aims to improve the wellbeing of communities living along the borders by working with borderlands influencers and leaders to co-create ‘innovation challenges’, aimed at transforming security, economic and environmental vulnerabilities in the borderlands into opportunities for inclusive development.
The Accelerator Labs are part of a global UNDP initiative that responds to the widespread recognition that business-as-usual will not take us to the world we want in 2030. It will take new solutions that are locally relevant and locally driven, that can be adapted, sustained, and replicated to address these complex needs. The Accelerator Labs create actionable intelligence and test solutions with national partners.
Working through the Cross Border Traders Associations in Livingstone and Victoria Falls Town in Zambia and Zimbabwe respectively, UNDP Accelerator Labs in both countries in 2021, began discussions with local innovators - the “local problem solvers” to find innovative ways to ensure business continuity for the traders.
Two start-ups stepped in with innovative solutions to address the twin challenges that small-scale cross border traders face.
VillageSavers, a Zambian start-up, created a digital app that helps traders manage their savings digitally through a Self-Help Saving Groups (SHGs) initiative, while providing digital and financial literacy training to help their businesses grow, boosting their incomes so they could pay for schooling and medical bills.
As it accelerates its activities, the ABC-funded project also intends to help informal cross border traders buy and sell their goods online without crossing the borders, using the VillageSavers App.
Thumeza, a Zimbabwean logistics start-up, facilitates the movement of goods for traders across borders, using a digital transporter tracking system. This aims to address the challenge the traders face due to travel restrictions and required COVID-19 certifications for every travel across the borderlines.
“The aim is to increase access to financial products through digital loan management and real time tracking of savings and income, the co-creation of a virtual marketplace and the safe delivery of goods across borders,” says Salome Nakazwe, Head of Solutions Mapping at UNDP Accelerator Lab Zambia.
The project is just one example of many innovative approaches taken by UNDP through its Accelerated Labs to help identify local solutions developed at grassroot levels to solve local development challenges in rural Zambia, where poverty stubbornly stands at 78 percent, directly affecting women and adolescent girls who are particularly vulnerable due to lower human capital accumulation, according to World Bank data.
Boosting financial and digital literacy
Single mothers and breadwinners like Lilian Masiye are among the most vulnerable in Zambia’s patriarchal traditional communities, where age-old customs dictate a woman’s life. This vulnerability is compounded by the ravages of climate change and COVID-19.
“I have been able to pay school fees for my children, unlike before when the income from my business was uncertain,” Lilian happily said while smiling and thumbing through a wad of banknotes as she stands by her makeshift stall with duvets, touting for business in central Livingstone.
As the project scale-up its intervention, each beneficiary will receive a smartphone to help them keep track of all financial transactions including savings, which constitutes a vital record of a person’s ability to save and repay a more formal loan in the eyes of a financing institution.
Records from a baseline survey show that at the start of the project, 99.9 percent of the women and youths had no savings with limited digital knowledge. As a result of the initiative, all the beneficiaries were able to save as a group and individually access low-interest loans, which they are now successfully repaying.
The group savings are paying off. With physical record-keeping, the group saved US$110 collectively. After deploying the App and using it to monitor their savings, the users changed their savings behavior, began trusting the tool more, and more members were encouraged to save through the group. As a result, funds started growing. By the end of February 2022, the traders had saved over US$3,500 collectively.
“We have seen an amazing improvement in success rates after a few months of working with the women and youths on ways to develop their business and digital skills, collectively save money and in turn facilitating their access to affordable loans,” says Moses Mwansa, CEO and Co-founder of VillageSavers.
“These are small-scale traders whose working capital is just about US$300, therefore, having access to a larger amount of money is a game-changer for these women and youths,” Constance Nalishebo Muleabai, the Mayoress of the City of Livingstone said.
This life changing moment did not just stop with Lilian’s family. Michelo Moono, 33, a single mother of four selling at the Zimbabwe Market in Livingstone said: “The practical digital and business tips and low-interest loan I received from the project are a real lifesaver.”
At the Zambia-Botswana border in Kazungula, 68 kilometres from Livingstone, Getrude Mateu who trades in perishable goods is also struggling. She ended up dumping sacks of rotten fruits in the landfill after the pandemic stopped foreign tourists who had been predominantly her clients.
She couldn’t hide her delight hearing about the project: “We will now have solutions to make sure we have some financial security to handle whatever surprises come our way.”
“The Africa Borderlands Innovation Challenge is an important and necessary development disruptor to aid African countries in the attainment of the SDGs. We know that cross-border trade is the socio-economic back-bone of many borderland communities. The unique premise of the Innovation Challenge is its rooting in co-creating solutions with border communities and stakeholders who are engaged in cross-border trade. Therefore, any sustainable solutions should consider existing innovations and incubate new ones,” said Zeynu Ummer, Team Leader and Senior Technical Advisor, The Africa Borderlands Centre.
Ummer said the role of the Africa Borderlands Centre is to create a launch pad for this innovation, spark new innovations and support the scaling of solutions that benefit all borderland communities.”
A self-sustaining future
“Widening access to finance for informal cross border traders into vibrant micro-entrepreneurial activities has a significant potential not only to help reduce poverty but contribute to food security and drive a stronger recovery from COVID-19,” says Lionel Laurens, the UNDP Resident Representative in Zambia.
Laurens said UNDP’s goal is to work with local actors to find sustainable solutions to the barriers against informal cross border trading, mainly through the expansion of livelihoods opportunities to women and youths for a self-sustaining future, ensuring that “nobody gets left behind.”
Lilian, Michelo and 73 other beneficiaries were without a doubt among the most vulnerable members of their communities. Having benefited from digital and financial literacy training and the group savings and tools to keep their businesses growing, they are now in a stronger position to navigate the COVID-19 crisis and stay in business.
For more information on the Africa Borderlands Centre Innovation Challenge, please click here
Story and photos by Moses Zangar, Jr., Communications Specialist/UNDP Zambia.