By Ti Chitsinde
Our readers have asked what law regulates the operation of ‘maround’ in Zimbabwe.
Maround (savings clubs have their roots in Zimbabwe in early Christian women’s groups. They began as a form of self-empowerment, whereby women came together and pooled money dedicated towards a common cause. They also broadened to include men in townships and mines in the bachelor quarters. Wherever they sprouted, savings clubs grew because they were informal in nature and gave people access to finance which they were excluded from accessing by the formal banking system because of their race or gender. Today savings clubs play a huge part of the societal and financial system, accounting for more than 10% of all savings, and involving approximately 40% of the population.*
Savings clubs are a wholly informal method of saving and therefore are not directly governed by statute in Zimbabwe. In other words, there is no specific law that regulates the operation of “maround”. It is that factor that has allowed them to be so resilient. This does not mean though that they are a lawless entity.
‘Maround’ are transactions between individuals who enter into an agreement for each member to contribute a certain amount at regular intervals (weeks or months) to a common pool. The common pool is then given to each individual in the club/’round’ on a rotational basis. The savings club may exist for one rotation, where each member receives the proceeds of the common pool once and then it disbands, or it may be continual where rotations continue over time with changes to the amount contributed or the membership.
As such, the saving clubs are affected by laws -civil and criminal- that affect monetary transactions between individuals. The following scenarios may help shed light on how exactly this works:
- Where the savings club has a dedicated treasurer to whom payments are made and the treasurer steals the money or uses it for a purpose other than that for which it was meant for – the rest of the ‘round’ may institute criminal proceedings against the treasurer for theft or fraud as the case may be, and/or a civil claim for return of the amount in question.
- Where there is dispute as to the rotational cycle of the club – a dispute going to the root of the agreement, the matter is best resolved by dissolving the club. Dissolving a savings club is not complicated as there no formalities involved. However, if the dissolution occurs in the middle of the cycle and some members have not yet benefitted from the “round”, the prejudiced members can file a claim of unjust enrichment against those who benefitted to compel the other members to contribute until the whole rotation has benefitted from the ‘round. ’ This however may be futile if the amount contributed towards the “round” was not substantial. Litigation costs are rather high and may even exceed the amount that one seeks to recover. Further, even when one has been successful in the case, the judgment debtor (the one who owes the money) might not have any substantial property to attach.
- Where the club is involved in purchasing, the rules of transacting apply. The transactions must not involve the purchase of illegal things.
What has allowed the saving clubs to grow is that they meet the needs of the people in a manner wholly controlled by the members of each group. To avoid getting into disputes, it is best for a saving club to be comprised of people who respect and trust each other. While there is no law directly guiding the operations of ‘maround’, there are still quite some legal implications involved in being a part of one, and recourse should something go wrong. Perhaps to avoid some of these challenges, the agreements must be reduced to writing and members must pledge their property for cases of default of payment.
* This is in terms of the Finsope Consumer Survey Zimbabwe 2011.