Micro-credit Revolving Loans (MCRLs)
The MCRL program is currently seen to be the signature piece of the Salama SHIELD Foundation (SSF).
Impoverished women are given loans through the support and accountability structures of base communities. Effectively, there is virtually an unprecedented 100% repayment rate for these loans. Over the years, the 10 only defaults to the repayment of loans (10 members) were due to death: 1 of a heart attack, 3 women died in child-birth, 5 died due to HIV/AIDS, and a Catholic nun was murdered. In these instances, the default was not of personal choice or design: in these instances, the associated women’s groups paid back a portion of the loan, the whole loan (re-cooping from their collected savings), or were forgiven by SSF on compassionate grounds.
SSF allows for what it calls redemptive and forgiveness moments, where there is flexibility given in the repayment of loans due to unexpected funeral expenses, critical illness care, or other personal crises. Usually as mentioned, the other women in the base community step in to pay back the outstanding loan on time, so that all members remain in good standing with SSF. These loans are difficult at the best of times to repay – when loans are repaid within 6 months at 2%/month. When you reflect on this success, it is almost unprecedented – virtually unattainable in North America.
According to economic researchers from the USA and Canada who found it hard to believe, they ultimately determined that this success is attributed to the “trust” factor — “trust” obtained between the women themselves, “trust” of the SSF, and recognized “trust” in themselves as individuals capable of succeeding.
As of September 2015, the MCRL program in Uganda has 1,053 active clients represented in 99 “base community groups” from 96 villages; in Malawi there are 39 active clients from two base community groups.
SSF’s micro-finance program targets “un-bankable” women, those too poor to qualify for loans, lack collateral, and are socially and culturally dependent on their husbands. The problem is that when a husband dies, his brothers taken over all the assets that were in the marriage (land and home), leaving the widow and her children destitute. In SSF’s MCRL program, women become a part of a base community group (an intentional community of care and support) of from 5-25 other women from their village, so that no one woman is left alone to support her family when a husband dies.
With the educational support of the MCRL team, they take part in a business-training program where they learn skills such as savings and record keeping, group dynamics, financial and project management, entrepreneurship and business skills, managing an enterprise for profitability, and resource mobilization. Demonstrating our integrated approach towards development, these women are also trained by our staff in sanitation and hygiene and environmental protection. These trained women are then training other women to make energy savings stoves, supported by the SSF team and staff from the Red Soil Project.
The revolving loan scheme allows repaid interest to be re-loaned to current members who want access to bigger loans, or are provided to new members joining the group. Small businesses are often formed around agriculture and animal husbandry, agri-business, retail, or other essential services. Additionally, our goat and pig programs are used to provide nutritional support, income generation, and the development of entrepreneurial skills for vulnerable youth (not only women) and their dependents.
The program started in 2008 with just 5 women’s groups (comprising 25 women) and with an initial fund of Uganda Shillings [UGX] 3,000,000 (approximately US $857.00). It has grown to a fund of over UGX 496,176,000 (given out in April, June, October, and November 2015, which is approximately US $141,700), while in the bank they have UGX 7,039,600 (or US $ 2,011). As previously mentioned, there have been 10 defaults to date due to deaths. For 2 of these persons who died, their spouses paid off the loan; group members used savings to pay off the loan for 3 of the women who died; and for 5 women who died, the loans were written off because many of these women left behind numerous orphaned children. The clients are encouraged to save as they generate income resulting to date in over UGX 76,414,319 (or US $21,832) in savings to date. The average savings per month range between UGX 3,000 (around 85 cents) and UGX 5,000 (approximately US $1.42) per client with an average observed minimum of UGX 2,000 (US $ 0.57) and a maximum of UGX 150,000 (US $ 42.00) saved per client each month.
Stories of success in the MCRL program are evidenced in personal narratives. Caroline’s story is one of hundreds that speak to a development approach that addresses more than poverty reduction. Her story also speaks to an integrated model whereby health, water, sanitation, and mbuntu principles are synergistically addressed and solutions advanced and actualized. Perhaps most significantly, the business success of these women has changed the perception and behavior of men. When in the past the household management of income largely fell on the shoulders of women and moving forward was on the “backs of women”, men are now treating their wives differently, showing more respect, and actively assisting their wives in new business ventures where all members of the family win. Essentially, this program is addressing issues of gender equity and the reduction in sexual and gender-based violence and associated behaviors because of this poverty reduction strategy.