When I was a little child, my mother took my sisters and me to one of the local banks in my town and made us open a junior account. It was a remarkable event for us, but I don’t think we ever thought of it like that, as we were handed small elephant shaped piggy banks that we could add the pocket money we might get, or loose coins we could find. This money was not supposed to be taken out, but as a deposit to save once in awhile.
See, for us, we grew up with the notion that a financial institution was a place to save, not borrow.
Years later, I have now joined working forces with a microlending organization, and I have to admit I am not fully bought into the idea of indebtedness. You would think that after all these years of studying and having the word microfinance being tossed around I would be sold. But no!
Microlending is supposed offer people a kick start to their financial liberation, but are we in essence putting people into more debt or still keeping them in the same spot that they were still at?
Zawadisha provides small loans to women in rural Kenya and our model is meant to eliminate the upfront costs. They have the chance of making the products we offer them work for them at no cost – grace period and then do the repayments of the loan over a span of six to twelve months. When we deliver to them products such as water tanks and solar lamps, they can use them in ways which will assist them making financing their lives. Money spent on buying kerosene is now channeled to school fees and other income-generating activities which in turn allows them to adopt a saving culture.
However, at some point, you actually start questioning the work that you do. What if the product loans offered don’t break this barrier? Are we making them more dependent on the loans that they can not break away from the credit cycle?
The challenge for us, for instance, is to make the product loan work for the women to a level where they can become financially fluid and be able to save. This involves training models that are to be shaped within their environment. For example, they use their solar lamps to make money by having people pay cash to charge their phones.
Instilling such ways of thinking to people might seem simple, but the little they get and hopefully save goes a long way in improving their lives. What I would not want is to be someone putting people into more debt. I believe if we care about social justice and equal opportunity, well-managed microcredit is one of the most powerful tools that has demonstrated great benefits at scale.
Zawadisha believes that if people are given the right tools to they have a chance to fight poverty. By providing product loans to the women we work with in rural Kenya we have a chance to move beyond the limitations of microfinance.We identify the challenges at hand and tailor the product loans to deliver to the women. If we offer water tank, then the women can do rainwater harvesting saving on time they used to walk on miles to fetch water. Additionally we there are group training offered to the communities on how they can best better their finances and how to use the products.
I can never promise that people can be free from credit or bad loans but through my microfinance journey and working with the communities in Kenya, we can work towards creating social enterprises that can perpetuate employment. Where women are financially dependent and are not recycling loans.The are able provide for themselves and their families. The goal will be also be reaching out to more women and have increased sustainable entrepreneurial models. It is crucial that communities are just not getting income or loans for basic consumption but also are able to save and create businesses along the way.
Most of communities we serve have immense wealth, so the objective when working with them should be directed towards bringing about a fundamental change of attitude toward the poor.Not looking at thema as hopeless victims but as human beings that can should also tap into the great natural wealth within their environment.
By Thelma John (Development Director, Zawadisha)