05 May 2007

Microcredit in Matutuine District

Last year, Dr. Muhammed Yunus and the Grameen Bank (the bank he created in Bangladesh) shared the Nobel Peace Prize for an idea that is helping people help themselves get out of poverty. Microcredit loans provide individuals the capital they need to do things like buy farm animals to raise for profit or a sewing machine to set up a tailoring shop or repair a vehicle that they use to transport goods and people. I've even heard of women buying cell phones with microloans, and then becoming the telephone service provider for their entire community.

Very few individuals default on these tiny loans. There is pride and social pressure, and people who default on loans cannot borrow again. But also, as monies are repaid, they get reinvested in new entrepeneurs. Many of the microloans go to women. In the short term, this allows women to support their families and send their children to school. In the long term, it raises their political, economic, and social status.

Today, as I was reading the BBC news online, I came across a site that connects loaners directly to low-income entrepreneurs in the developing world. You actually can pick where and to whom you want to loan money. The basic amount the loaner contributes is $25, which is about 12 large regular coffees at a fancy coffee shop.

Crap, I sound like some sort of Sally Struthers advert for starving children in Ethiopia. Cue the flies and suffering please.

I'm not writing this because I drank their koolaid or they slipped me a 1000 metacais under the table, but because I think that it is a pretty cool idea. Also, because they are operating in Matutuine District, Mozambique where I work. Right now there are 62 small businesses that have started, 63% owned by women, with an average loan size of $800. People have bought chickens, set up small grocery stores, repaired vehicles to run bus services, and repaired fishing boats and nets. In many cases, the entrepreneurs are now employing other people (and thus supporting their families). I've actually bought dry goods from one of the women entrepreneurs listed on Kiva. She operates a little loja (store) in Salamanga. Now I know how she started up her business.

The average wage in Mozambique is less than $1 per day. Things cost less, but people still work pretty damn hard for that less than $1. There are very few beggars here, most people would rather offer some sort of service or product in return for your spare change - carrying your purchases at the market, watching your car (people love to steal anything removable, including the car), selling batiks, hawking fruit and veg on the sidewalk, etc.

Occasionally, I'll have this moment where I get all weirded out thinking about the fact that I'm carrying around more money in my pocket than some Mozambicanos see in a week of working. Then I usually do something like buy roasted peanuts (that I don't necessarily want to eat right then) from barefoot and raggedly clothed 7 year olds hawking them on the street when they should be in school. But, of course, they can't go to school because they can't afford the $4 uniforms, school supplies, or tuition fees, and/or they are orphaned with no one to care them.

I'll continue to buy roasted peanuts, but loaning money directly to people with plans to put it to good use is something I can support as well.

Just another link if you are interested in Kiva:
You Too Can Be A Banker To The Poor - Nicholas Kristof

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