Microfinance

On Friday I went to a meeting for women’s groups in the Northern province organized by SLANGO (Sierra Leone Association of NGOs). SLANGO is the national coordinating body for NGOs in Sierra Leone. The purpose of the meeting was to share information with women’s groups in the region and to try to connect them with NGOs that want to work with them.

The NGOs at this meeting were two local NGOs that offer microcredit. In several of the development blogs I follow (see list on the right), there has been quite a bit of debate recently about the merits of microcredit (does it actually lift people out of poverty?) and how it should best be done (non-profit vs. for profit), so it was interesting to me to hear about some of the programs offered and hear what the women here thought afterwards.

Both organizations focused on working with women and offered a variety of different types of loans, starting from about Le 300,000 (a little less than $100 CDN) all the way up to Le 20 million for bigger groups (e.g. agricultural associations). The loans had to be taken out to support or expand an agricultural operation, or to expand or start a business. Loans could be made to borrowers without collateral in groups, so that the people in the group serve as each other’s guarantee of repayment. Interest rates were low, 2-3% depending on the purpose of the loan. Each loan also included an element of forced savings – part of what the borrower repaid was put into a savings account, which they were able to access once the loan was fully repaid. Each organization also required borrowers to attend training/information sessions before borrowing so that they fully understood the process.

After the meeting, Sally and Mabinty told me that the conditions offered by these organizations were not feasible for women in Mapaki. There were a few reasons for this. The first is that the amount of the loans in general was too large – the women here are either engaged in small-scale agriculture and sometimes in petty trading as well and wouldn’t be able to either use such a large amount of money all at once, or earn back enough income to make the required payments in time. Another problem is that because Mapaki is located in a rural area, women here who do petty trading may only have the opportunity to sell their goods once a week at the nearest market in Mayalaw (at the junction of the road to Mapaki with the highway, 7 miles from here). This means it takes much longer for women here to generate income from an investment compared to someone in a town that is able to go to market every day.

The women from Mapaki who attended the SLANGO meeting in turn met with the rest of the women here in Mapaki to share the information. All the women here generally felt the same – that these programs would not work for them. However, there is still an interest here in microcredit. The CIDA project currently ongoing here (a project of cdpeace and Peaceful Schools International) includes a small amount of funding to support women’s groups, Le 320,000 ($100 CDN). The women in Mapaki decided that they will use this money to start their own smaller-scale microcredit project here in the village. This way it will be organized by them locally and can work with very small amounts, making the payments easier to achieve. The women will retain control over the money and can make decisions together about how it should be used. I think that this is a great idea and am looking forward to seeing how it works. This is a good example of how given a big of support, a community can find its own solution to development challenges.

Oh, and the meeting was also an excellent test of my Krio as I took the minutes. My comprehension is really pretty good. Now if I only I could learn to speak it a little better . . .