Micro-Credit

It's late now so I hope I'll keep this post short;-) It's funny from my position here in western Pennsylvania. Spring has come so we have warm days, although I bet you'd think them cold. But I just stepped out to see a frost has fallen. The tulips here were so beautiful yesterday, but a hard frost made them nod their big heads and the tender leaves of some garden flowers were burnt by the frost. That's gardening here in the springtime.

I know that the BSLA is busy with many activities right now. I also know that some of those probably shouldn't be discussed publicly at this time. It's a little hard to always know the what's okay and what's not. I hope you'll feel free to edit out information that's best not public now.

One of the efforts we are working on is developing a micro-credit and savings scheme--revolving credit--for women in villages. The work on the proposal is very good, but it raises questions and problems to be solved too.

It seems quite possible that the BSLA may be able to find donors to fund some loans, so lets proceed with the assumption that we can find an infusion of money. Ah, but then it's a separate problem of how village women will earn money within the community using their loans. The fact that many in the communities have little money to spend makes earning money a real challenge.

Looking over the business that are being funded by Kiva in various communities around the world one can see that there are a wide range of businesses. It also seems clear that many of the loans are made to established businesses so that these businesses can grow. That makes sense because the people getting the loans have already proven that they can make money with their businesses.

The target population of our proposal is different. These women do not already have businesses, the loans are meant for them to use to create businesses. One thing true is that many businesses fail. It's very important for the future of BSLA micro-credit programs that most of the businesses succeed! So we have to pay close attention and be very sure that these loans if we can get funding for them actually are used to make businesses providing goods and services that people in the communities will spend money on.

I was very impressed to see the Web site of The Uganda Community Tourism Association. There the development of handicraft businesses is hand in hand with the development of tourism. Tourist come and purchase goods and services to make their visit an adventure. So in this plan the money comes from outside the community.

Also at Kiva I saw several loans for a village in Mali. Unfortunately I wasn't able to find them again when I looked for them a day or so ago. Those interested me quite alot because the micro-loans were shared by groups. Each group had a leader who was responsible for the loan, but the risk of not being able to pay it back was shared. That is the loan was divided between the member of the group so that each member was responsible for a small amount of money.

This seems a particularly good plan for dealing with loans for agriculture. One of the plans provided seeds and other inputs for a group of farmers. By joining together it perhaps makes the marketing of their crops better. Most importantly ill-health or some other misfortune will not jeopardize the whole loan. If one of the farmers gets ill others might help with his crops so that the crops could be brought to market anyway. That's a good measure of security.

In that same village several women--I think it was about a dozen-- divided a loan so that each woman would get an equal amount of money to buy materials for making handicrafts. Again pooling the resources has many advantages: they can make lots of product and the marketing and business planning can be shared.

There are special challenges for developing micro-credit programs for the poorest people. Business requires planning. One of the most important things is to have a solid plan that the goods or services will be purchased. The point is to make enough money to repay the loan and to make some profit. For people making their first business, the idea of groups or teams seems like it would often be a good idea to reduce the risk that the loans will be paid back. The BSLA cannot afford too many failures in the beginning.

So I ask that we keep in mind the question: Where's the money coming from? By that I mean the money for the products and services produced by the businesses, not the question: Where are the loans coming from.

The picture is from a BSLA small garden project in Nawasinge. Small raised garden beds which were intensely planted were made in that village.