Courtesy of Women's Microfinance Initiative
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The Women's Microfinance Initiative (WMI) started as a casual discussion between two women in Bethesda, Maryland. Robyn Nietert and Betsy Gordon wanted to help people in an impoverished community, and microfinance seemed a more sustainable and empowering approach than conventional aid.
They chose Buyobo, Uganda, an area 150 miles east of Kampala in which AIDS has left many women widowed and children orphaned. To build a network of support for each other, women in the area banned together and formed the Bulambuli Widow's Association. This association has served as the point of contact for WMI to work in the community, first of all by choosing the initial pool of prospective candidates for the first round of loans almost two years ago.
I had the wonderful opportunity to talk with Robyn and learn more about the work that WMI has done in Uganda, the differences those efforts have made for the lives of the women there, and what's next on their microfinance agenda.
Planet Green: WMI has come a long way since you first began. (Congratulations!) Can you tell me how it all got started? How many women were included in the first round of loans, and how many are receiving loans now?
Robyn Nietert: Our first trip to Uganda was in January 2008. We started with 20 loans, and we waited two months. After 60 days, they were making their payments, so in March, we made 20 more loans. Those went well, so then we made 40 loans in July and 40 in October, and now we're on a schedule of making 40 loans every 3 months.
Overall we've made 680 loans to 329 discrete borrowers and right now, there's $60,000 in the revolving loan fund—so there's $60,000 in outstanding loans. And we promised the women that after they've paid off their loans—the loans have terms of six months—as long as they've made their payments on time, they're all eligible for a follow-up loan. They're all operating businesses and businesses always need operating capital—that's rule #1 when you're operating a business. We did not want to abandon them in the middle of their businesses. Whether they need money for seeds, or it's growing season and they need money to carry them over until harvest—you just don't want to cut someone off from their banking. So far I would say 99 percent of the women have taken follow-up loans. They gradually increase the size of their loans because their businesses are growing.
It's quite successful. We have not had a single default. I'm amazed.
Obviously somewhere, somehow, some way, someone's going to default on a loan. But it hasn't happened so far in 21 months.
How do the loans work, and what kinds of changes have you seen in the lives of the women who participate?
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| Courtesy of Tobin Jones |
We do not tell them what to do with the loan money. Our only requirement is that they use it to start a business. It can't be used to buy consumer goods, or pay bills, or debt. Our theory is, these women know much better what business they should be in than we do.
We find that when they become owners of a small business, they're now vested in that business doing well, they become much more vested in their community. They get a certain amount of self-confidence, they take a greater interest in their own welfare and the welfare of the household, they can now buy medicine, pay school fees. So it lets them stabilize their household—and once your household gets stabilized, you want to it to stay stabilized. So you continue to work at your business, to expand it, and you take an interest in your community.
WMI did not pay for chairs in the building, and the women have collected small amounts of money—from each other, from their businesses—and bought chairs because they're invested in this building now.
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| Courtesy of Erick Mafabi |
Do you see WMI as an alternative to more conventional forms of aid?
Once we help someone get into a business, we feel obligated to stick by them. And it's not just the loan—it's the financial literacy training, the weekly support group meetings, and the camaraderie amongst the women that has contributed to the success of the program. I think that's actually a problem with aid programs as they're traditionally conceived is that they go in, they're a one-shot deal, and you never know what happens to the women afterward. There's not the support that anybody starting a business needs.
I understand WMI is about to enter a whole new phase—a partnership with a bank?
We're developing a program with a bank in Uganda where the women will transition into getting a loan directly from the bank. We will guarantee that loan for one year. After that year, if they make all the payments, the bank will transition them to independent banking.
So we'll have a complete 36-month cycle that takes someone from being unemployed and destitute and not having enough money to really support their family, gives them their first loan, their first job, the support and training they need, and graduates them after 36 months into the formal economy.
How did this partnership come about?
There are many banks in Africa, but they're all trying just to serve the wealthiest customers. They're not trying to penetrate the rural areas, they don't want to deal with women in particular—rural women, ignorant women, women who may not be literate.
When I went to the banks and said: we have 100 percent repayment rate, these women are starting their businesses, they want bigger loans, we need to partner with a bank, I thought their reasons for not participating would be that it was going to be too expensive, or that women are going to default. But the most common reason was that these women don't have financial literacy training: they don't know how to keep books, they don't know how to report on the businesses, they don't know how to even figure out if they're making a profit.
Our board started thinking, that is what we do—we go to the rural areas, we teach the women financial literacy, we get them to the point where they're valuable bank customers. They've got track records, they have businesses that are turning profits, they're looking for money to expand. So these two parties need to get together!
What advantages are there to working with the widow's association and with women exclusively?
In the group of 20, all the women guarantee each other's loans. That creates a real sense of responsibility, because you don't want to let someone else down. It's like a concentric circle, and the radii keep getting longer and longer.
This is their home, this is their future, these are their families. We have to put all the administration in the hands of the local people, in the hands of the widow's association so they have better skills and can govern better.
We leave the selection of the candidate pool up to the widow's association. We don't want to bring in a foreign layer of administration saying this is how it's going to be done—because I'm not Ugandan, I'm not a member of the culture, so i don't know the subtleties of living there.
Everybody needs this loan, and we can only serve as many people as we have funds—that's why our goal is to expand the program.
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| Courtesy of Robyn Nietert |
Since you've started, have you seen any changes in the kinds of businesses the women are starting? Have people started to expand beyond a lot of the redundancy that tends to occur in markets in parts of rural Africa?
One of the reasons for this redundancy in so many places, I think, is because people don't have access to credit. Because this second layer—financial services—never comes in.
Everyone initially was in agriculture. Now we're seeing beauty shops, tailoring, second-hand shops, there's one woman who calls herself world famous: Camina, she has a catering business. She started with a hotel (which is really a shack by the side of the road), and she moved into catering. Now she's catering to 200 people, that's a lot different than selling the same meat and beans and potatoes by the side of the road. It's the level of client that she's serving, and as she starts to cater for more and different people, they ask for different things, and she gets different ideas. That's how businesses evolve, that's how they grow. People coming in from different areas with different ideas.
What is WMI looking to do next?
Now, we're raising the ceiling on the loans. At first, our loan amounts were $50, 100, or 150. Now, for the first group that got their loan in January, 2008, we've raised the ceiling to $250 because they're expanding their business. They'll be the first to go in the transition program with the banks in January 2010—that will raise the limit to $500.
Are you incorporating any environmental initiatives into the program?
The widow's association became a dealer in fuel efficient stoves over the summer. Now that villages are starting to have money, we are able to help them improve all aspects of life: health and sanitation, clean and efficient fuels, electricity, education. So we're starting with distributing fuel-efficient stoves—they use 1/3 less fuel, and are virtually smokeless. They flew off the trucks when we had the first shipment.
It's a better alternative to women using firewood, but the second thing is, to get electricity to the house, you have to buy your own poles, your own wires, you have to pay to bring a government representative to the house—in all, that costs $2,000, and nobody has that. And the grid is already overloaded anyway—the daily newspaper runs the blackout schedule, for when electricity will be shut off in which areas. So we could have tried to hook the village up to the grid, but that'd be insane because the grid's already overpacked.
The bank also has a solar loan program, and as soon as we get the transition program with the bank up and running, I think that'll be the next step in our partnership with the bank.
Electricity is so important. You almost feel like having access to electricity after dark is almost like a human right. Solar panels is one the biggest demands of the women in the village.
We're in too nascent a stage to get the women involved in other specifically green initiatives—they're just trying to survive. That's why we're doing the solar panels—to show this is what we believe in and we think this is important.
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| Courtesy of Tobin Jones |
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MicroPlace: Getting Something Back from MicroFinance Loans
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