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Making loans to entrepreneurs working together is a great way to help low-income communities
There is a group of women in a remote part of Zambia who know first-hand the benefits of microfinance. Women like Anna Mphande, 64, who is married, and has five children and three grandchildren. Anna’s business is the rearing of chickens – and it is a business that is really taking off.
Anna is a member of an all-women organisation – Tiyamike group – that has taken out Lendwithcare’s first group loan. Group loans are a great way to advance the economic growth of a community, empowering its members and supporting community economic and social development.
Zambia is the latest country to join Lendwithcare, a microfinance initiative from international development charity CARE International UK. It enables people in the UK to lend small amounts of money to entrepreneurs running their own businesses in poor communities around the world. As a lender, you can choose the person or group you would like to help and you will see your supported entrepreneur(s) work their way out of poverty. 100% of the loan goes to the entrepreneur(s).
The Tiyamike group is made up of 17 women entrepreneurs aged between 18 and 65. They live in Kaluba village, in the Lundazi district – a remote community in the east of Zambia on the border with Malawi.
Members of the group have various ways of making money, including selling secondhand clothes and shoes, peanuts, small freshwater fish called kapenta, beans, rice and other foodstuffs.
Why group loans work
Group loans provide a way for low-income communities to approach a microfinance organisation. In many cases, the customers have never approached a lending institution or commercial bank before. This is particularly true for women living in rural areas.
In group loans, the members take joint responsibility for the repayments and support each other when necessary in order to keep a good collective credit record. They are more likely than individual borrowers to get a loan, as they all act as guarantors for each other.
There are other advantages too: the members organise themselves, plan together and follow up on payments and consecutive loans. They develop important skills such as organisation, teamwork and time-management. The fact that they take a risk together and meet regularly also enables the groups to develop a strong bond.
The MicroLoan Foundation, Lendwithcare’s partner in Zambia, works with groups of women. It has seen how providing microfinance services to groups has enabled their participants to work their own way out of poverty, helping to feed families, send children to school and pay for healthcare.
Creditworthy
The Tiyamike Group took out their first loan of $1,283 in 2012. They are now applying for their fourth loan so they can buy more products to sell. The group members have noticed increased profits and most of them have been able to send their children to school. Some of the group are even building houses.
For her chicken-rearing business, Anna Mphande took out her first loan of $96 from MicroLoan Foundation in 2012. She started her business with little capital but, with the help of these loans, it has grown consistently. With her increased profits, Anna has been able to send her eldest child to college, and two of her other children to secondary school.
Anna is now applying for another loan to purchase more chickens to sell and more chicken feed to keep them fat and healthy. She is confident that increasing the quantity and quality of chickens she rears will mean that her business profits rise, and her standard of living will improve further.
To find out more about Lendwithcare, or to buy a voucher to send as a Christmas gift to your friends and family, go to lendwithcare.org
