The Long Road to Microfinance

>> Authored by Tess Murphy (Kiva Fellow)

Seven of us are tightly packed into a truck as it carefully accelerates over the muddy potholed road of rural Zimbabwe. The dark heavy clouds and the low sun cast dark shadows over the country side. As the road starts to disappear, turning into a one lane dirt passageway, the truck slows to a crawl, navigating over the bumps. The road becomes a sandbank, and the gear of the truck stalls, then changes. The previous rains make the tires stick and, for a minute, I think we will have to turn back. But the truck accelerates and with a jolt, we move forward.  The sandbank becomes a dried river bed, and still we are calling this a road. It is the road. The only road that will lead us to where we need to go. Up and down, the truck flows with the dips and bumps of the road, rocking up and down, back and forth. The road stretches far ahead of us and remains the same for 30 minutes. Or has it been 10? The road has no signs, no markers, no clues, no lanes and no pavement. By all definition, it is not a road at all. But its the road we need. 5 hours from Harare and 88 kilometers outside of the rural town of KweKwe, we are heading to visit two borrowers with Camfed.
This is just one of the many journeys that the staff and honorary members of the Camfed Committee take to visit their borrowers. By the time we arrive, its pitch black, the kind of darkness that gives you the middle of no where feeling. As if the road didnt accomplish that already.The first borrower we are visiting, Saziso, owns a shop on the outskirts of her school. The rural communities are sprawling and often children need to walk 5-8 miles to get to school. We use the car headlights to open the shop and everyone crowds inside. She sets her items up on the shelves, proudly displaying bags of sugar, flower, sweets, notebooks. With support from Camfed, Saziso was able to complete school and through a Kiva loan of $500, she has started this business. Because of the area, teachers are her main customers. However, when their benefits were cut by the Zimbabwean government, she lost some business. These unpredictable conditions make business ventures riskier and flexible lending crucial. With the profits from her shop, Saziso is able to support her three children, pay for medical bills for her mother-in-law and build a new kitchen for her family.
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Saziso standing in the window of her Tuck Shop (Photo Credit: Alan Mathers)
The second borrower, Beauty, has accompanied Saziso to her shop. When I ask Beauty what her business is, she hands me a thick binder, filled with projections, charts, agendas and goals for her horticulture marketingbusiness. My main cash crop is tomatoes and I hope to own a green grocer one day. It is my wish that my project be monitored regularly (monthly), so that I be evaluated and get expert advice. This will make me a successful business lady. 
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I look over Beautys business plan with her (Photo Credit: Alan Mathers)
Beauty has received two Kiva loans. Her first loan allowed her to buy seeds and garden tools. With her second loan she was able to buy a generator and a water pump. She explains that her biggest competition are the larger farms who have an irrigation system. They can afford to lower their prices. Beauty hopes to take out a third Kiva loan to create her own irrigation system, make more profits, and eventually open her store. With the proceeds from her business, Beauty wants to help vulnerable children in her village. Orphaned at 15, she understands the importance of community support and leadership which is why she also serves as the chairperson for the Camfed (The Campaign for Female Education) group learner guides. Camfeds model is to educate girls in the most impoverished, rural areasand provide leadership opportunities in those communities. The combination of education and leadership can create systemic change in the poorest areas. When these girls graduate, they are eligible to take out a Kiva loan to start a business. Instead of paying back interest, they work as volunteers, returning to their schools to mentor the younger girls. Beauty pays back the interestfrom her loan by organizing activities, sports, empowerment meetings, and most importantly, ensures that the girls are staying in school. When asked which achievement she was most proud of she listed three.  Ive accomplished food security for my family, Ive helped uplift educational standards for our local school and Ive also bought some building materials for my house, helping to create shelter for my family.
A few hours later, we wave Beauty and Saziso goodbye and start our journey back down that road. Our long journey is nothing compared to the bumpy road to starting a business in Zimbabwe, impeded by crop flooding, diseases, strikes and a lack of liquidity. And yet, thanks to these micro loans, hard work and perseverance, these entrepreneurs not only make it work, they succeed. As we sit in the truck, rocking back and forth with the curves of the rough terrain, I start to have a greater appreciation for technology and its ability to connect people across great distances. Saziso and Beauty were able to start their businesses because people all over the world sat down at a computer, read their stories and lent money. Anyone can help empower women in the farthest reaches of the world, like Saziso and Beauty, through the simple click of a button. And the organizations that support these borrowers, on the ground, work hard to make the road to microfinance, just a little less rockier.

Two Camfed staff members sit in the bed of the truck on a borrower visit. Photo Credit: Alan Mathers

3 Responses to “The Long Road to Microfinance

  • Nice to see an MFI on Kiva that actually states its intrest rates – 0%, albeit interest is paid in kind. Given this lack of interest expense, could the author explain why 70.99% of loans from this MFI are in default, according to the Kiva website?

    http://www.kiva.org/partners/305

    This is generally not considered a sign of success.

    • Natalie
      5 years ago

      The default rate is actually only 0.13%. The 70.99% you’re referring to is the delinquency rate, which is a result of late repayments. As the author illustrated quite nicely, many of Camfed’s borrowers are located in very remote areas so, as you can imagine, getting to the bank to make repayments isn’t an easy task. And conditions during rainy season make this that much more difficult. They haven’t defaulted, they just need a little more time.

    • Hi Hugh,
      Thanks for your question! As Natalie mentioned, the stat you site is actually the delinquency rate, not the default rate. Delinquency refers to late payments and default rate refers to non repayment and can be reevaluated on a case to case basis. As I highlighted in the article, these women face many challenges in starting a business and making timely repayments which is why the kind of flexible lending Camfed and Kiva work toward is so crucial to their success. I am happy to expand on why the delinquency rate is so high. Severe drought in some districts, and disastrous flooding in others, have seriously affected agricultural businesses, destroying crops and introducing disease. I’ve seen these impacts first hand, as maize crops are disintegrating from lack of water in some and have been swept away from floods in others. Other fledgling ventures have felt the severe impact of reduced spending power in the local community, most of which depend heavily on agriculture for their livelihoods. In some areas, like Saziso’s, teachers are the main customers. Recently, the Zimbabwean government cut teachers benefits which made Saziso lose business. As you can see there are many unpredictable conditions that women in rural areas of Zimbabwe face. It’s not that they don’t intend on paying back, its that due to these challenges it may take them a little longer than the predetermined loan schedule. These women more often than not overcome these challenges, start a business and are the sole breadwinners for their family. I consider that a sign of great success!

      If you’d like more information, Camfed recently posted a status update on the partner page addressing these very challenges: http://www.kiva.org/partners/305

      Let me know if you have any other questions!
      Tess

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