Friday, October 23, 2009

Micro-loans Programs

Micro-loans programs in developing countries are all the rage. 

Probably because they work. 

Let me introduce you to Caroline, a participant in our community centre's micro-loans program and the protagonist of one of our success stories.

Caroline lives in Kibaale town and is a single mother.  She has two children and cares for a child that has been orphaned and is of no relation to her.  Before Caroline joined a group of women and became a recipient of a micro-loan, she was unable to adequately provide for the basic needs of her family, nor send her children to school.

After forming a group with some other women in our community, Caroline received the first of five loans from our centre and began to grow a charcoal distribution business. 

Being a part of a group is a pre-requisite to receive one of our loans to encourage accountability and transparency and guarantee re-payment.  10% interest is charged on the micro-loans and the repayment term is 6 months, although grace is extended when a longer period of time is needed to repay the loan.  While this interest rate may be considered high compared to what is paid in developed countries, it is lower than what all other micro-finance and banking institutions charge in our area.  Loan recipients are encouraged to attend the seminars that our centre organizes that teach basic bookkeeping and business management skills.  Our micro-loans program is managed by Vincent, one of our former students, who is now an integral part of our staff and promising future leader in our centre. 

The subsequent loans Caroline received (the total we have loaned her is about $500) have enabled her to expand her inventory and stock on hand in her small store.

Caroline now has a successful business that earns more than double the average monthly income in our village. She has built herself a very nice home, is able to send both of her girls to boarding school (the goal of most parents in Uganda), has four storerooms in "town" FULL of charcoal as she has monopolized the charcoal market in Kibaale, and perhaps most importantly, in my opinion, has become a vibrant, confident, happy and empowered woman who is able to contribute positively in her community.

It is encouraging to see women (the predominant recipients of loans) making tangible differences in their family’s lives as they take advantage of our micro-loans program.  Stay tuned for more stories of success!

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