A huge thanks to Peter Ryan, Founder and CEO of the MicroLoan Foundation, for contributing this blog post. MicroLoan Foundation is a Whole Planet Foundation partner in Malawi where WFM sources WTG vegan cane sugar.
We chose to set up in Malawi because it is one of the poorest countries in the world. This past year the country has been tested to the limit. The former President alienated the large international donors, cutting off much needed donations, (40% of Malawi’s GDP is aid) and the resulting 50% devaluation pushed inflation to 34% damaging livelihoods and damaging the profitability of small businesses. Falling prices for tobacco on the international markets accentuated the problem, particularly in poorer communities as they don’t have the capital to invest in businesses to generate the profits to weather these all too familiar shocks.
But there are glimmers of hope. In 2013 MicroLoan will help close to 30,000 of the poorest, most marginalised women in Malawi, the majority living off less than $1.25 a day US equivalent. You try living off $1.25 a day (0.82 GBP)!
Yet even women at this level, some with loans as small as $7.50 (4.94 GBP) will start a new business and with it establish a future. Typically they will have no collateral, business experience or education, but nevertheless are intelligent and street wise.
We support them with tailored training and regular monitoring visits so they can develop their simple but profitable income-generating activities. In time, these women will graduate to managing the bigger businesses and higher-value loans that will provide the food, education and healthcare for 150,000 dependents and invigorate depressed rural economies.
Training, with role play, songs and pictures is crucial to reinforcing the essential messages for a successful business. Understanding our clients also ensures that we don’t over burden them with loans that are too large to handle safely.
This is why our repayment rates always exceed 98% (99% in 2012) and why we have the social performance data to assess the level of poverty as they join and exit the programme. This depth of training and poverty outreach is core to MicroLoan’s model.
Catherine and the ‘MicroLoan Multiplier Effect’
Last November, I visited Nkhotakota, where I had set up MicroLoan in Malawi. Ironically it was the former centre of the slavery trade, until David Livingstone signed a treaty with the local chiefs in 1867 to abolish it. There I met with Catherine, the first woman from the first group in Malawi.
When I first met her ten years ago, Catherine was eking out a small living for herself and her growing family selling fish in the nearby market, and living in a simple home near the beach. She applied for a loan from the MicroLoan Foundation to buy a fishing net, which her family trawled from the shore. Gradually and over time with the profit from her fish she opened her own shop in her home. With her savings and a string of successive bridging loans (the largest loans MicroLoan gives, usually around £150 or $228) she was soon able to buy her husband his own boat and a set of nets.
Now he has three boats and she long ago ceased going to market herself but sends each catch to other sellers in the market. She has built a brand new house, pays for her grandchildren to go school and installed a water pipe in her village. She has started to form a herd of goats for food, and for sale later on. There are also plans to build a house to rent out on a neighbouring patch of land that was left to her husband by his parents when they died.
Ambrose, her husband, is justly proud and fond of his enterprising second wife.
As she herself says, none of this would have been possible without the help of the MicroLoan Foundation.
I calculated the amount of people being helped by MicroLoan from that very first loan of $30 (19.78 GBP), it is $130 (85.71 GBP). We have called it the MicroLoan Multiplier Effect. Thank you all for your support over the last 3 years. Please support the Whole Planet Foundation going forwards, they are doing remarkable work. Your generosity will keep on giving in ways that you cannot possibly imagine.