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Microcredit – major power Microcredit has so much power to tackle poverty that the year 2005 has been named the ‘International Year of Micro-Credit’ (www.yearofmicrocredit.org). Access to microcredit gives the world’s poor, especially women, opportunities to build their own small businesses. Using their entrepreneurial skills they can then work their own way out of poverty. No one has to tell the staff of Blantyre Urban Area Development Programme (ADP) this information – microcredit is well established there. Since 1998, the Blantyre Urban ADP has been offering microcredit to the people of Blantyre City’s Ndirande and Nkolokoti townships in southern Malawi. It is the largest of the ADP’s activities, and it’s still growing! In 2004, the project grew by seven per cent. There are now 31 village banks. Most of the 933 clients are women (92 per cent). This year it made NZ$106,000 available, an average of NZ$114 per client. The Blantyre Urban ADP’s project is renowned for the 100 per cent repayment rate it has maintained for the last three years. Loans are given to a group of 15-30 entrepreneurial people, known as a village bank. There is an element of community in this system as group members support and encourage each other. If one member of a group defaults on payment, other members help to make up the shortfall. Each group is expected to pay back their loan within six months, at an interest rate of 4.5 percent a month – considerably less than regular moneylenders offer. To encourage independence, members are required to keep five per cent of the loan as savings in the group bank account. Groups are eligible for six loans of increasing amounts, but can only move on to the next one after the previous loan is paid back in full. After the last loan cycle clients usually have enough in savings to sustain their own business. People who apply to the credit committee must demonstrate trustworthiness, entrepreneurship and a sound idea for a business. The project requires clients to undergo training before becoming eligible for a loan. There is such high demand that six credit groups, a total of 180 people, are currently on the waiting list for training. The training includes business management, credit management and savings, health and sanitation, and HIV/AIDS awareness and prevention. “HIV/AIDS education is an important part of the microcredit project,” says World Vision New Zealand Programme Officer Rene Onte. “Many of the members are HIV-positive or have someone in the family who has died as a result of HIV/AIDS.” In order to improve the service and make it more sustainable, the ADP has begun deliberations with ‘Finance Trust for the Self-Employed’ (FITSE), the parallel microfinance institution for World Vision Malawi. They are discussing collaborating to manage the logistics of the project, with FITSE to take over much of the management. The ADP is very protective of its clients and has imposed the condition that FITSE does not change the project from its current format. |
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BLANTYRE URBAN STORY ARCHIVE 2008 Charity and Aisha Snippets Counting down 2007 Good news from Blantyre Community chairperson commends World Vision Sleep easy Snippets 2006 Good news from Malawi Snippets Personal pain 2005 Snippets Microcredit – major power 2004 Volunteer spirit Snippets Another dimension Now’s your chance 2003 Snippets Close-knit relationship Fact finding visit Anti-AIDS clubs 2002 AIDS, drugs and...cycling Cholera
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