The effect of informal ichilimba finance societies on the growth of microbusinesses in Lusaka, Zambia

Abstract

Women are often excluded from the formal financial sector such that they turn to informal finance such as Rotating and Savings Associations (ROSCA) and Accumulated Savings and Credit Associations (ASCA). This study adopts the qualitative research approach informed by the constructivist paradigm to investigate factors influencing the use of the iChilimba informal finance society by women microbusiness owners in Lusaka, Zambia. Primary data was collected using in-depth interviews with women entrepreneurs in Lusaka, and secondary data was collected from association documents. Data analysis used ATLAS.ti 9 to conduct thematic and cross-case analyses. The main study examines factors that influence women microbusinesses into using the iChilimba informal finance society. The main findings indicate that the less stringent iChilimba finance system conditions and its dependence on social networking referrals and Ubuntu cultural values reduced the default risk as participants knew each other. Furthermore, the informal social networks provided platforms for exchanging basic financial knowledge and financial literacy, thereby generating social capital based on shared values and information on business operations. Lastly, the flexible and less stringent iChilimba informal finance society requirements enhanced financial inclusion through sustainable microbusiness ventures.