“I went to the bank and proposed that they lend money to the poor people. The bankers almost fell over.” Those are famous words from Muhammad Yunus, a professor of economics from Bangladesh who ignited the global microfinance movement when he started a bank for the poor in his home country. More than 30 years later, microfinance — small loans to poor entrepreneurs (most often women) — has spread to every continent and changed the face of development work. And changed countless lives.
WRC, in partnership with the Canadian International Development Agency (CIDA), is on the brink of helping to change many, many more with a five-year Microfinance Program Agreement that will bring the transformative potential of microfinance to the lives of 56,000 new entrepreneurs.
In the next five years, you will be hearing more about this agreement and how World Relief Canada is helping to offer small loans and encourage sound business practices and savings through: Koinonia Microfinance [KMF] in Bangladesh (the birthplace of microfinance);Turame Community Finance [TCF] in Burundi; Local Enterprise Assistance Program [LEAP] in Liberia; Dutabarane Shigikirana Savings for Life [SSFL] also in Burundi and World Relief Kenya Savings for Life [KSFL] in Kenya.
World Relief Canada will adopt a two-pronged approach to the development of this expanded microfinance endeavour. We will focus on the development of local and sustainable microfinance institutions [MFIs], which offer micro-lending services to poor people, enabling them to develop their businesses and thereby improve their incomes and livelihoods. MFIs depend on external capital and are the form of microfinance that Canadian donors are most familiar with.
We will also build Savings Group(SG) programs of local partner organizations. These SG programs will provide organization and training to community-based groups of poor entrepreneurs to pool their own savings and provide loans for income-generating activities within their own communities, improving their incomes and livelihoods. Savings Groups are built on local, internally-generated capital. Both approaches build capacity, sustainability and have gender equality and protection of the environment as essential business practices. Both approaches change lives.
So, whose lives will be changed? The program’s direct beneficiaries will be 106,000 of the poorest entrepreneurs, 90% of them being women. Don't forget the more than 530,000 family members who will — according to studies on the success of microfinance — see an improvement in their income, their health, their ability to attend school and work and their access to a steady and dependable source of nutritional food.
The ripple impact of microfinance to strengthen entire families, communities — and even the agencies that offer the loans — is one of the reasons microfinance is so often the chosen tool of transformation and a focus for World Relief Canada and CIDA in the next five years.
Making sure Microfinance Works
World Relief Canada applies the Maximizing Microfinance Aid Effectiveness principles of CGAP, an independent policy and research center dedicated to advancing financial access for the world's poor, to ensure the microfinance programs we initiate work best for the poor.
The principles are:
• facilitate strategic clarity
• provide quality technical support
• build in accountability for results
• knowledge management
• use appropriate finance and capacity building instruments
• the coordination and use of comparative advantage
Going Deeper with Microfinance
Burundi is one of the focus countries for World Relief Canada’s Microfinance Program Agreement. Tucked between Tanzania and the Democratic Republic of the Congo, Burundi's people are struggling to rebuild and restore their lives after a civil war ravaged their country from 1993 to 2005. As people began to move back to the communities they had been displaced from, and pick up the pieces of their lives, it was clear that traditional banking services — severely limited even to those with resources — were not available at all to the poorest of the poor.
Microfinance is a key strategy for improving the lives of the poor in Burundi. Turame Community Finance is the lending institution built to serve the poor of Burundi with financial services. From 2010-2015, World Relief Canada will work closely with Turame to expand the amount of loans and training it can provide throughout the entire country. WRC will also focus on making Turame Community Finance an even more viable and sustainable institution, run by local experts who are completely committed to poverty reduction. The number of clients Turame serves will grow from 17,000 to 27,000. WRC is expecting that, after five years of concentrated work with Turame, all of the client's children will be able to attend primary school, with at least half progressing to secondary education. There will be a significant improvement in the health of children and entire households as mothers, the primary recipients of Turame's loans, will be able to afford to feed their children at least twice a day as their household income rises.
In Burundi, World Relief Canada is not just working with partner institutions. We are working with churches that are committed to transforming the lives of the poor. Dutabarane, a local organization of churches, will be able to expand Shigikirana Savings for Life [SSFL] program, a church-run savings group program. In the next five years, Dutabarane, partnering with World Relief Canada, will organize and train 1,000 community-based village groups of the very poor (18,000 members in total) to accumulate very small amounts of savings, pool those resources and provide micro-loans to each other for income-generating activities to improve their livelihoods. As women form groups to support each other's endeavours, they grow in both power and potential within their communities and within their own homes.
On the other side of the world in Bangladesh, microfinance is a transformative agent in the lives of women, who bear a disproportionate load of poverty, discrimination, poor health and oppression as they struggle to improve life for themselves and their children. In the next five years, World Relief Canada will partner with Koinonia to increase its client base from 20,000 to 26,000 entrepreneurs who are trained in business practices, credit, health and techniques to protect and expand their enterprises. World Relief Canada and Koinonia expect
a 20% increase in average household income because of this expanded project.
Over on the west coast of Africa, WRC is working in Liberia with LEAP, a microfinance provider that has survived, like its country, through several rounds of civil war. LEAP is one of the most experienced lenders to the poor in Liberia, and it is poised to extend its impact far beyond the borders of Monrovia, the capital city. In the next five years World Relief Canada, through the CIDA microfinance agreement, will assist LEAP to increase its clients from 15,000 to 22,000, while ensuring that each of those clients grows in business management skills. We expect the average household income of LEAP's clients to increase by 20%, improving life for families and communities.
Rwanda Microfinance Program Ready to Stand Own Its Own!
There is great news from Rwanda! World Relief Canada has worked for several years with the URWEGO Opportunity Bank in Rwanda, providing microfinance loans to the poor of that country and building the capacity of this bank to continue on strongly into the future.
URWEGO Opportunity Bank was able to increase the number of its mostly female clients from just over 29,000 to more than 35,000. The lives of those clients have changed as they have been able to grow their businesses, send their children to school, purchase and grow nutritious food for their families, and even save for the future. The women who took out loans managed them and grew their incomes, but also grew in status by becoming financially independent and participating more fully in society.
It is time for World Relief Canada to wrap up its involvement with the URWEGO Opportunity Bank of Rwanda, which is now a strong and sustainable force to be reckoned with in the economic development and future of Rwanda. In fact, in a recent WRC visit to Rwanda, the bank and its director were singled out in government meetings as one of the most positive developments in Rwanda’s economic development. This success story, from what has been one of the most troubled spots on Earth, confirms what we already know. Microfinance, built with sustainability and local ownership as priorities, can change the future of any country.
Farming That Makes Sense
Conservation farming makes sense in Africa. It is a style of farming that holds the needs of the farmer and what is best for the environment — and therefore the farmer in the long-term — as equal priorities. The Canadian Foodgrains Bank, of which World Relief Canada is a member, is promoting and supporting partner capacity building for conservation farming.
Conservation farming has been proven to boost the agricultural production of even the smallest farm plots, and improve the food security of the most vulnerable of households. In fact, conservation farming is custom made for the poorest of farmers and the smallest of plots because it does not depend on expensive inputs, but on the most basic needs of the land and the crops.
Conservation farming is built on the premise that natural and already available resources are the best ones to use to work with and for the land. Farmers learn the negative side of practices like ploughing and tilling, which actually leads to the degradation of soil when enriching organic matter is disturbed and destroyed. They learn the benefits of a stable, rich soil cover, and only disturbing the soil enough
to plant the seed, enabling the ground cover to retain water and nutrients to a much higher degree.
Farmers also learn about mulching and crop rotation, two other key principles of conservation farming that help ensure optimal soil health and crop production. The Canadian Foodgrains Bank has witnessed farmers doubling and sometimes tripling their yields as they converted to conservation farming.
Kenya Savings For Life Program
Imagine yourself, if you can, in a room with 20 women and men in a small village in Kenya. They are listening eagerly to a presentation by a community worker who is helping them come up with strategies for saving very small amounts of money. The amounts sound like nothing to you, but it is clearly a financial stretch for these people. You can see the eagerness and desire of the participants to accomplish this goal. One woman, though, seems particularly discouraged and uncertain if she can manage, but the others offer to come alongside and help, to keep her accountable. They tell her to keep the goal in mind.
The goal for the 800 community groups that World Relief Canada will be helping to form, train and succeed in Kenya, is for members to accumulate very small amounts of savings, pool these precious resources, and then provide micro-loans to each other out of this community fund. The loans will be for income-generating activities that will improve their livelihoods, their families and their communities.
Severe poverty is an ever-present reality in Kenya, a country where AIDS-related diseases kill 700 Kenyans a day. Fifty-eight percent of the population live below $2 US a day.
Microfinance, especially this savings group approach, provides a way out and a way forward for the poor who would be otherwise neglected by the traditional banking system. The 800 community-based village groups represent 15,000 members, 60% of whom are women, and they are part of World Relief Canada's Kenya Savings for Life [KSFL] program. KSFL expects to “graduate” 8,000 members into fully self-managed savings groups over the next five years. Each of the 800 groups will be trained how to develop group policies, how to conduct savings and lending operations, and how to conduct an end of cycle (typical 10-12 months) “share out” when the savings and accumulated loan interest will be shared out to group members, in proportion to their savings activities. The program will be carefully monitored and evaluated every step of the way, to ensure that the needs of the savers and entrepreneurs are anticipated and met as they continue on their journey to being more empowered, economically stable households and communities.
When HIV and Microfinance Meet
Any microfinance program working in sub-Saharan Africa will come face-to-face, quickly, with the HIV/AIDS crisis. How could it not when two-thirds of the world's HIV/AIDS victims — many of them in the working prime of their lives — live there? Microfinance, as a tool for reaching the world's bank-less, can also be a tool for improving the lives of its clients already impacted by the devastation of HIV/AIDS.
It is hard to think of someone less likely to qualify for a traditional bank loan than an African woman who has HIV/AIDS, for example. But microfinance does not only have a plan, it has a heart. By welcoming borrowers who have been impacted by HIV/AIDS, microfinance helps these women and men regain and grow their livelihoods. Their dignity and ability to care for their own families is gradually restored. But there is much more to this story.
Microfinance can also help stop HIV/AIDS in its tracks, by incorporating AIDS awareness and prevention strategies in its mandatory business training seminars. Debrework Zewdie, Director of the Global HIV/AIDS Program for the World Bank, has called microfinance “the missing link in the fight against AIDS.” That is because, increasingly, microfinance providers, like World Relief Canada, incorporate HIV/AIDS support and education into the savings and lending process. Clients and entire communities learn how to prevent the disease from spreading, and how to treat and support community members who are already living with the reality of HIV/AIDS, along with learning the sound business practices that help turn their entrepreneurial plans into life-changing reality. In fact, in the Kenya Savings for Life program alone, 20% of the clients will be caregivers of orphans or people living with HIV/AIDS.
To help make a difference in the Kenya Savings For Life Program, please donate here.
