Mrs. Chimphamba’s Story

Mrs. Chimphamba runs a very small, informal business out of her homestead in a rural part of Malawi, just outside of Blantyre. Her husband grows some maize and tomatoes, mostly for their own use, and keeps a pig for emergencies. They, together with their neighbours, maintain 10 honey bee hives as a cooperative. Twice a year, the honey is harvested, and one harvest is invested back into the cooperative while the proceeds from the second harvest are equally shared among the 10 members. For daily needs such as salt, tea, cooking oil etc that the farm cannot provide, Mrs C distills wine for sale. It takes about 1 to 3 days for it to be ready to sell. Some of the cash money from this she keeps aside on her person towards the children’s school fees. Neither Mrs C or her husband has a bank account (2008) but they have a feature phone.

Mrs C’s household expense planning is geared towards making sure that incoming cash flows map against outgoing expenses. Her goal is to minimize the volatility between these two flows, and to ensure that they are not caught short for too long. This is why she refers to the pig as “emergency money” or “security” — in the event of an urgent need for a lumpsum of cash money, it can be sold. Her long term savings are in tangible form. She is saving up to build a house, and points proudly to the bricks, and the door and window frames.

In order to achieve her objective of minimizing the volatility between the income and expenses, Mrs C has to juggle two elements:

  1. Time: periodicity and frequency
  2. Money: amount; cash or kind

This is because they must manage their household expenses on an irregular cash flow from a variety of sources, that may be unpredictable as to actual amount and arrival date. A salaried person, on the other hand, knows exactly how much will be in their paycheck and its due date.

Predictability, periodicity, and frequency allow for a different kind of planning than when one must manage without consumer credit, on cash (or otherwise), on a variable income stream over the course of the natural year.

Knowing that there will be two large lumpsums due when the honey harvest matures means that she has been able to plan the larger expenses of building a house. Distilling wine for cash sale occurs 3 or 4 times a week, bringing in the small amounts for daily necessities and known payments such as school expenses.

If we step back from the details of the pigs, and the maize, and honey harvest, what we see is a rather sophisticated financial portfolio of investments that mature over different times, providing income and cash flow over the course of the calender year. The daily and weekly cash comes from the wine, the pig acts as a cushion against emergencies (in addition to food), the foundation is the farm with its grain and vegetables, while the annual harvests of honey in a cooperative are the bonus for larger purchases.

Without formal financial tools, Mrs C manages a complex value processing and juggling act in order to maintain the smooth running of her household. In the next chapter, we will look at what difference the arrival of a mobile phone has made to her economy.