Under the pressure of hard times, strict bank-lending policies and lack of alternative funding mechanisms, community members in various parts of the country have resorted to forming savings' associations and cooperatives to finance their frail business ventures.

Enterprising locals have not only managed to strike at something similar to the banking system, albeit without stringent collateral requirement; they have also managed to reach out to the unbanked majority, along with increasing money circulation in community economies, says Rejoice Phiri, Communications Officer for Plan Malawi.

Plan-Malawi, one of the organisations helping rural dwellers organize themselves and establish revolving fund initiatives, is running microfinance programmes in Mulanje, Kasungu, Mzimba and Lilongwe.

"These programmes empower resource-poor community members with the financial resources necessary to transform their livelihoods. People have no problems contributing interest, and this keeps these initiatives going," Phiri said.

Another organisation working in microfinance is Cisp- Malawi. Cisp's Village Saving and Loan Associations (VSLA) coordinator for Blantyre, Agness Mkwanda, said the initiative has helped people develop a savings culture.

"At least people are saving the little they have and, after 12 months, receiving more money than they would have generated on their own. This is good for the economy because 70 out of every 100 people taking part in these initiatives are women," Mkwanda said.

Mkwanda said VSLA has helped women graduate from baking pan-cakes and flitters to becoming traders of repute, some of whom engage in cross-border trade.

"Women are building houses and paying school fees for their children using proceeds generated from small business ventures. It is clear that, with proper funding mechanisms, people can transform their lives economically," Mkwanda said.

Malawi Union for the Informal Sector (Mufis) General Secretary, Mwanda Chiwambala, said establishment of village savings and loan associations plays a significant role in boosting the business capital of vendors.

Chiwambala said 50 vendors from Tayamika and Mwaiwathu Village Savings and Loan Associations based at Yasini Trading Centre, Chiradzulu, recently showed that such initiatives can transform lives when they shared money saved in 2011 last month.

Under the associations, the vendors contribute some money as share capital and each one is free to borrow from the group's bank and pay back with some interest. At the end of the year, each member collects the share-capital contributed together with profits realised, which are distributed according to one's contribution.

He said the system has been a success mainly because it forgoes collateral, a thorny issue between local communities and commercial banks.

"At the same time, you are able to make a lot of money in interest which you would not have realised had you used the commercial banks,"

said Chiwambala, observing that some members had pocketed interest of up to 32 percent of their initial contribution.

Chiwambala noted, however, that there was need to integrate HIV and AIDS, gender, and business management capacity-building programmes in order to cover the economic and social needs of beneficiaries.

Success stories in alternative financing mechanisms make Charles Nyekanyeka, manager for Bvumbwe Savings and Credit Cooperative (Sacco), believe that rural communities can do without commercial banks, "after all".

"I think Cooperatives are the way to go because, in sharp contrast to banks, they provide the right finance at the right time, and this can mean greater efficiency, improved product quality and increased incomes.

"In fact, cooperatives increase access to affordable and convenient financial services for rural populations, particularly small-scale farmers," Nyekanyeka said.

Bvumbwe Sacco, which has branches in over three Southern region districts, has managed to generate over K23 million annually since 2010, a development he described as an indication that people are realizing the benefits of cooperatives as opposed to commercial banks.

One of the women to have benefitted from self-sponsored revolving funds is Chrissy Kavina, from Tayamika village in Chiradzulu.

"I spent over 10 years languishing in poverty as I waited for banks.

When I realised that they would not help me, since they favour the rich, I joined my friends in a village saving group. Now, I do many things for my family," Kavina said.