Microfinance in Zimbabwe
Imagine a Zimbabwean woman trying to run a very small chicken farm amid the rising inflation of Zimbabwe’s unstable economy. Prices are constantly shifting, making it harder to buy the chickens and feed she needs to keep her business afloat. Her name is Nyachi and she is constantly struggling to stay ahead of the rocky economic situation in Zimbabwe.

Partners Thrive Microfinance and Whole Planet Foundation provided her with a loan of $50, equivalent to 500 Zim. Nyachi was able to buy more chickens and feed, allowing her to remain open for business. With the boost from the loan, she can pay back the money and even take out another loan. Thrive Microfinance also provides courses in business and economics, so Nyachi can be more prepared to handle the complex financing of being an independent entrepreneur. She is an example of how microfinance in Zimbabwe can change the country. Her story is just one of many featured on Whole Planet Foundation’s website, illustrating hard times for many small business owners as well as stories of hope.

The Situation in Zimbabwe

Zimbabwe is currently experiencing an economic crisis. Recent natural disasters, the COVID-19 pandemic and poor economic and financial leadership contribute to the country’s current situation. High inflation rates and the rapid devaluation of the Zimbabwean Dollar plunged the population into poverty and food insecurity. In 2015, The World Bank estimated that around 72% of Zimbabweans lived in poverty. In 2019, it was reported that 50% of Zimbabweans were food insecure and 49% were living in extreme poverty.

More and more women in Zimbabwe are taking on small-scale entrepreneurial roles. However, the male-dominated traditions make it difficult for women to get the loans needed to start and run a business. Without a bank account or the proper collateral for a loan, female entrepreneurs have a challenging road to success. These low-income businesses often struggle to profit since, without loans to start or expand a business, it is often impossible to procure necessary equipment and workers. In Zimbabwe, 52% of the population is female, yet women earn only 10% of the country’s income. This disparity is why most organizations for microfinance (MFIs) in Zimbabwe and worldwide cater specifically to women.

Simple Solution but Complicated History

Microfinancing is not an especially new concept, but its history is complex. In 1997, the wild success of Grameen Bank in Bangladesh sparked global attention. Unfortunately, many MFIs popping up in the wake of that success failed to improve or even worsened situations in their countries. Low-income borrowers in India and Nigeria were victims of MFIs with ultra-high interest rates and other issues that made paying them back difficult or near impossible, especially for those who were not financially literate.

Zimbabwe faced similar challenges when introducing MFIs into the economy and still struggles with some of those issues today. However, with more NGOs and nonprofits becoming involved in microfinance in Zimbabwe, interest rates and other predatory lenders are more scarce. Additionally, with organizations like Thrive working to teach financial literacy to aspiring entrepreneurs, the likelihood of borrowers being taken advantage of is much lower.

Today’s Goals

In 2018, the non-banking financial institution Thrive Microfinance partnered with Business Call to Action, an alliance bringing together multiple governments to address the need for low-income business owners to have the ability to engage in their country’s economics more fully. This alliance aims to provide loans and business management training to 16,500 women and girls in Zimbabwe.

The global nonprofit Kiva uses donated funds to finance small loans. Once a loan is repaid, donors can either withdraw their funds or recycle them back into the revolving lending system. Kiva is currently able to crowdsource an average of $2.5 million in renewable funds every week, making for a total of $1.4 billion in loans given to date. Their mission is a financially inclusive world where everyone is capable of improving their situation.

Programs like these lend more than money. The satisfaction of running a business, the empowerment that comes from education and the security of financial stability lend hope for the future, a loan that never has to be repaid.

– Kari Millstein
Photo: Flickr

Approach to Poverty Reduction
Extreme poverty originates in already disadvantaged groups, particularly women, people with disabilities and indigenous peoples. The impact of poverty disproportionately affects communities that already face challenges dependent upon their gender, ability or cultural background. For those who belong to more than one of these identities, poverty can seem inescapable without direct intervention and change within the systems that limit their ability to self-sustain. Trickle Up is one organization that has provided an intersectional approach to poverty reduction by engaging with these vulnerable groups since 1979 and providing women in impoverished areas the financial resources to build up themselves and their communities.

Identity as a Predictor for Extreme Poverty

Women are more likely than men to live in poverty. Many women face the consequences of gender inequalities as they receive 24% less pay than men worldwide and face job insecurity through the informal economy. Moreover, they spend much of their time invested in unpaid labor, such as caregiving.

The Borgen Project spoke with Trickle Up’s Vice President of Programs, Barbara Jackson, who revealed the importance of targeting the obstacles that hold back women especially from emerging out of extreme poverty. She recognized that impoverished women face stigmatization even in their own communities and experience marginalization through the lack of services available to them. Disparities emerge when “men and boys are often prioritized for schooling,” leaving some women without literacy skills. As a result, women frequently must focus on balancing caregiving and wage-earning instead.

“Women are often not included in decision-making processes because they are not considered the voice of the family,” Jackson went on. They are instead “stigmatized for something that is not of their own volition.” Targeting unjust power dynamics that limit women’s ability to pull themselves out of extreme poverty is a crucial approach to poverty reduction.

The current global data demonstrates that poverty is an intersectional problem that harms those who fall under more than one disadvantaged category. Women who come from indigenous backgrounds face additional challenges. Indigenous peoples make up nearly 15% of the poorest people globally. Being both a woman and an indigenous person couples with the highest malnutrition and poverty rates out of all social groups in Latin America and the Caribbean. For this reason, Trickle Up has built a program to support and empower Guatemalan indigenous women.

Trickle Up’s Graduation Approach

About 767 million people in the world live in extreme poverty, surviving on less than $1.90 per day. Microcredit services, which involve providing small loans to individuals in developing nations, make up important support for millions of the impoverished each year. However, these services frequently overlook the ultra-poor due to the complexity of their challenges.

Referring to the ultra-poor, Jackson emphasized that “it is critical that they learn basic financial skills, learn how to save, gain greater financial stability through a diversity of income-generating activities, and develop the self-confidence they need to persevere and succeed.” Because of the economic and social disadvantages presented to them simply because of their gender, women are the primary recipients of Trickle Up’s specialized savings and social support services.

Of the many challenges of breaking the cycle of poverty, lack of services and geographic and social isolation are most prominent for the focus of Trickle Up’s graduation approach.

How Trickle Up’s Graduation Approach Works

In place of giving out microcredit, Trickle Up intends for its five-step Graduation Approach to help participants of the program “graduate out of poverty.” Each program undergoes implementation in a community and it selects the participants it deems most vulnerable. Trickle Up later approves these participants.

The selected women then receive consumption support, which is the provision of a small stipend to ensure that they may stabilize their families prior to moving forward with developing long-term investments. Trickle Up’s approach to poverty reduction involves giving livelihood coaching in addition to risk-free capital investment. The training allows for women to decide on the activities they can employ to create a sustainable income.

Prior to graduation, it is essential that women have savings and social networks set up. Jackson shared that women in these communities “don’t come together to talk about their problems and talk amongst themselves.” The savings groups provide opportunities for the participants to “sit and work” together in order to build confidence and trust.

The Desde el Poder Local Program

Desde el Poder Local is one of Trickle Up’s current six projects. Located in El Quiché and Alta Verapaz, Guatemala, the project has selected 410 indigenous women between the ages of 15 and 24 to participate over the span of two years so far. This particular program emphasizes reproductive health education and livelihood development.

Women and men receive reproductive health education in the native languages of the targeted communities. The goals of this education initiative include broadening understanding of the implications of early onset pregnancies while also acknowledging the role of parenthood. Jackson noted that there has been a decrease in pregnancies in the last two years, with no pregnancies occurring for women under 18 in El Quiche and Alta Verapaz. Trickle Up’s inclusion of male family members in both reproductive health and financial literacy programs aims to develop a sustainable change in the gender dynamics of the participant’s communities.

As of August 2020, Desde el Poder Local generated 21 savings groups and 77% of participants increased their annual income during the program. Jackson pointed out, “A dollar a week they’re saving. That’s the first time they’re making their own money.” With the support of their families, communities, and municipal authorities, these women obtain the support they need to continue generating a sustainable income once the project concludes.

Maintaining Support During COVID-19

The traditional approach that Trickle Up has undergone disruption during the coronavirus pandemic. Women who work as local artisans have not been able to travel or access markets in order to sell their products. Fortunately, Jackson assured that Trickle Up staff members have continued to work alongside government staff or field extension agents, which are often women. Information on sanitation hygiene and infection prevention has undergone dissemination through cell phones and word-of-mouth.

Trickle Up has demonstrated that an intersectional approach is essential for poverty reduction. Targeting social problems that exacerbate the effects of extreme poverty, including gender inequality and racial discrimination, allows for growth within the target communities and in society as a whole.

– Ilana Issula
Photo: Flickr

Microlending Model
The international development community has both praised and vilified microlending as a means of poverty alleviation. Although the microlending model is not the apodictic poverty solution that some once believed, research on its impacts has shown that one should not easily dismiss or affirm it.

The History of Microlending

The modern-day microlending model comes from the Grameen Bank model that Muhammad Yunus created. Yunus won the Nobel Prize in economics in 2006 for his microcredit operations.

While teaching at Chittagong University in Bangladesh, Yunus would visit the impoverished households in Jobra, a neighboring village. Yunus found that those suffering in poverty often could not gain access to even $1 in credit except under unfair terms.

Jonathan Wight, a professor of international economics at the University of Richmond, explained in an interview with The Borgen Project that this barrier to traditional credit markets often pushed the poor into borrowing on the black market or from payday lenders with astronomical interest rates.

Financial markets work through financial intermediaries that loan savings out to investors, such as banks. Investors is a loose term here – it could refer to someone taking out a loan to buy a car. To get access to credit, one must have collateral – assets to forfeit if the debtor becomes unable to pay off the loan.

The poor have little in the way of financial collateral making them unfit as borrowers in the eyes of traditional banks, so Yunus decided to create the Grameen Bank. This bank would require those in poverty to join the bank in self-formed groups. The bank would then give the group a loan with no collateral requirement.

By lending to a group, Yunus capitalized on social capital relying on the groups’ links and relationships as a form of collateral: if one member of the group did not pay the loan back, they risked the loans of the entire group.

This microlending model became fad-like in its popularity in the economic development field. By the 1990s, it became the most highly lauded and generously funded poverty alleviation policy in the international development community.

Critiques of Microlending

In theory, microcredit should boost income-generating activities, but the industry has seen a move toward the support of consumption spending. Rodrigo Peláez, who worked at the BBVA Microfinance Foundation in Spain for six years, explained to The Borgen Project that a lot of harm can occur when MFIs support consumption rather than productivity. Instead of generating income, MFIs can end up making people poorer.

The intention of loans is for people to invest them so that their investment can fund the repayment. For example, when a person takes out a car loan, they are investing in that car with the expectation that they will gain a return. Buying that car may mean that they now have the ability to get a higher paying job in a city where they need to commute.

If a person were to instead spend that loan on a television, they would not get any returns on that expenditure. They would then have to pay back a loan principal that they could not pay before purchase, in addition to interest. This would make the person poorer than when they started out.

This phenomenon has deteriorated the efficacy of the microlending model as a development tool and has caused some to go as far as labeling it an “”anti-developmental” intervention.” Another critique is that even when microcredits create productive investment, the business activities those investments support are not sustainable development drivers nor are they geared toward poverty reduction.

Studies by Abhijit Banerjee and Esther Duflo, the 2019 Nobel Prize winners in economics, have found that microlending is not, in fact, a tool for creating transformative social or economic change in impoverished communities. Furthermore, in some cases, borrowers from MFIs end up saddled with too much debt having taken a loan without the income to sustain repayment or with the expectation of using the loan to create income. These borrowers then have to sell personal property or go further into debt to pay their loans.

Ben Blevins, the director of a developmental organization based in Latin America called the Highland Support Project, described first-hand accounts of exploitative microfinance to The Borgen Project. The microlending model, Blevins said, is a perpetuation of white settler colonialism policies. “The purpose of microlending is about a move to innocence for people in the Global North,” Blevins said. “It is also about extending and conditioning the entire world to the neoliberal model of debt servitude to the capital class.”

The Impact of Microlending

Some have believed that microcredit has numerous positive social, educational and economic outcomes, but empirical studies have shown mixed results. In a study by Banerjee with facilitation from Duflo, researchers found results suggesting that although microcredit does not necessarily lift communities from poverty, it can foster more freedom of choice and the capability for self-reliance. The study did not find sufficient evidence to support either the proponents of microcredit or the adversaries, although, this study and more targeted studies have shown the marginally positive impacts of microcredit in niche scenarios.

A 2019 working paper for the National Bureau of Economic Research, with authors Banerjee and Duflo, found that “For talented but low-wealth entrepreneurs, short-term access to credit can indeed facilitate escape from a poverty trap.” Meanwhile, a study published in 2019 found that Haitian women who received health education training as part of the microfinance loan program, “were over 50% more likely to use condoms, over 50% more likely to have a recent HIV test, and over 60% less likely to report recent STI symptoms.” The degree of positive impacts from the model seems to depend largely upon the MFI itself and its priorities.

Some MFIs will remain in a village for years nurturing human development through financial management or other training programs, Alejandro Cañadas, associate professor of economics at Mount St. Mary’s University, explained in an interview with The Borgen Project. These institutions aim to create financially savvy citizens, foster economic growth and break poverty traps.

“These microfinance organizations, they have a different way: they go, they train, they show. They bring the training and education, and then they give the money to see it in practice,” Cañadas said. “And then people use what they learn, and they make mistakes and they fix those mistakes.” However, Peláez noted that not all MFIs have a social impact in mind. A lot hinges on the management of the institution and whether that institution cares about its social responsibility and staying true to its mission of poverty alleviation.

There is a thin line to walk between productive and nonproductive loans in the finance sector in general, Peláez said, “But microfinance is much more dangerous because it’s vulnerable people we’re talking about.”

Concluding Thoughts

The microcredit industry has proven over time, with large scandals erupting across the industry, that it holds great potential for exploitative practices.

“We wouldn’t expect that any solution as big as this one ­– microlending – as momentous as this is going to be all beautiful, all perfect,” Wight said. “There are bad apples who get in there and say ‘Hey, this is a chance to make some money. I’m going to prey on the ignorance, lack of education of a poor person. I’m going to get them to sign some contract.’”

The microcredit poverty solution is not all bad or all good. It has proven to have some positive impacts, but there are large failings in this microlending model that people need to address if they are to continue to use it in any form of development work.

– Olivia du Bois
Photo: Flickr

poverty reduction through microloans

Poverty reduction through microloans has been a successful strategy in many parts of sub-Saharan Africa. Between 2007 and 2016, Tanzania’s poverty rates have decreased from 34.4% to 26.8%. Consequently, microloans have become a necessity for low-income earners whose businesses are apart of informal sectors.

MYC4 is an online platform that helps individuals loan money to small enterprises in sub-Saharan Africa. Mads Kjaer, its chief executive, describes the importance of microcredit by stating how “people need access to capital to grow their informal and formal businesses that offer them a regular income and enable them to lead decent lives.”

As a result, governments now appreciate the impact of microfinance. They are encouraging investments by opening up the industry to foreign capital and improving policing mechanisms for customer protection. With micro and small enterprises making up approximately 32% of Tanzania’s GDP, microcredit strategies have played an essential role in reducing poverty through progressive business approaches.

New Microfinance Act in Tanzania

In 2018, the parliament of the United Republic of Tanzania passed a Microfinance Act that illustrates the framework under which microfinance institutions operate. The Act allows for enhanced regulation of the microfinance sector for the mainland of Tanzania and Zanzibar. But with only 16% of Tanzania’s population banked, 27% is financially excluded. Microfinance options and the accessibility of mobile money have expanded financial inclusion to nearly half of Tanzania’s population. For example, as of 2017, financial NGOs, mobile money and microloan providing institutions served 48.6% of the population.

Nonprofits that are Helping

Opportunity Tanzania, a nonprofit organization that provides loans, savings, and insurance to impoverished entrepreneurs, has helped over 3,625 clients in Dar Es Saalam. Its microfinancing services provide entrepreneurs and their families with a path out of poverty. Only 20% of Tanzania’s population has access to a formal bank within an hour’s walking distance of their home. Therefore, Opportunity Tanzania is now working to build a regulated bank that will offer clients savings products and provide them with a secure place to store their money.

The International Labour Organization [ILO], in collaboration with the UN joint program on Youth Employment, established a five-day training program for financial service providers to create outreach strategies that will educate youth on microfinance resources.

High population growth and substantial poverty are still present in Tanzania. However, the expansion of microloan services play a crucial role in supporting entrepreneurs and creating more job opportunities for youth. In short, poverty reduction through microloans is an important avenue for growth in Tanzania.

Erica Fealtman
Photo: Unsplash

Known for its tropical vistas and banana plantations, Costa Rica has also developed a well-deserved reputation for stability. Indeed, since abolishing its military in 1949, the small Central American nation has celebrated seven decades of uninterrupted democracy. While this stability has allowed Costa Rica to make great strides in alleviating poverty, however, nearly 21 percent of the country still remains impoverished. To this end, many in Costa Rica are increasingly turning to microfinance as a potential remedy.

Why Microfinance?

Microfinance is a banking service that focuses on delivering small loans to communities underserved by traditional banks. These ‘microloans’ can be as low as $100 and are specifically designed to help meet the needs of low-income families.

Because the principal of a microloan is much smaller than that of a traditional loan, lenders can afford to take on risks they otherwise could not. This means less stringent requirements on things like documentation and property, which are traditionally the largest obstacles to acquiring credit for those living in poverty. As a result, microfinance has become a favorite tool of activists in the developing world.

Costa Rica is no exception in that regard. With more than half of Costa Ricans unable to raise needed funds in an emergency, microfinanciers provide the country a crucial service.

Keeping Small Farmers and Rural Communities Afloat

One reason microfinance has been able to take off so quickly in Costa Rica lies in the country’s history. In the 1980s, a prolonged economic crisis prompted traditional banks to retreat en masse from Costa Rica’s rural areas. This left many small farmers suddenly lacking access to badly needed credit.

To help combat this issue, organizations like FINCA began seeking ways to encourage sustainability in rural financial markets. One such solution was microfinance.

Beginning in 1984, FINCA Costa Rica set about building a series of ‘village banks’ in the areas hit hardest by the loss of financial services. These were largely community-run, shared-liability ventures whose purpose would be to offer microloans to farmers. It did not take long for the model to become a success. Village banks quickly began to attract Costa Rican farmers, many of whom would have had difficulty acquiring a standard loan. In fact, the village banks would prove so popular that within a decade they had already become self-sustaining.

Others in Costa Rica soon took note of FINCA’s success. Though not all would copy the village bank model, many other microfinancing operations began to sprout up around the country.

Empowering Costa Rican Women

While FINCA’s village banks primarily served a demographic consisting of rural, male farmers, modern microfinanciers pursue a more diverse client base. Women in particular are a focus for many.

Research demonstrates a sharp gap in financial access along gender lines in Costa Rica. Thirty-nine percent of Costa Rican women lack a bank account, for instance, compared to 25 percent of men. This is a pattern that largely holds consistent across the developing world. Although in many cases women provide necessary income for their families, they often lack the means to build upon those earnings. This leaves them more vulnerable to the sudden economic shocks that can devastate a household, like personal medical emergencies and unexpected changes in consumer trends.

Microfinance institutions empower these women, however, by offering them the credit needed to start a business of their own, and by providing them with a newfound resiliency.

Thanks to the efforts of organizations like Fundación Mujer, women now own more than 22 percent of Costa Rican businesses. And, as the number of women gaining access to loans and other financial services increases, that percentage is only expected to grow. This means greater social mobility for Costa Rican women and a stronger ability to weather the storm in times of crisis.

The Future of Microfinance in Costa Rica

Microfinance in Costa Rica has come a long way from its first experiments with village banks in the 1980s. As it stands, Costa Rica is now one of the world’s largest microfinance markets. And, with the industry expected to grow by a further 5-10 percent in Latin America over the next decade, it is unlikely that will change any time soon.

While experts caution that microfinance cannot be seen as a ‘miracle cure’ for poverty, it is undeniable that it can provide real benefits to those in need. To see that, one only has to consider the success of microfinance in Costa Rica.

– James Roark

Photo: Pixabay.com

Microlending Organizations
In the fight against global poverty, one hot-button issue is how to provide aid without the implication of paternalism, the idea that one person or group knows the interests of another group better than that group knows its own interests. Tariq Fancy, the founder of the nonprofit The Rumie Initiative, recalls hearing a Kenyan relative’s view on problems with international aid, saying “don’t walk in assuming that from your perch in North America you figured out all the answers for Africa.” Putting resources and power in the hands of communities both provides aid and acknowledges that they can make decisions about local interests. Microlending organizations have the power to do just that

Microloans are small loans at low-interest rates. Individuals living in poverty often have difficulty securing loans from traditional financial institutions due to a lack of borrowing history and assets to use as collateral. Even when people can get loans, interest rates are often high. People often use microloans to finance small businesses in their early stages, enabling people to overcome barriers and progress toward lifting themselves and their families out of poverty.

Microlending organizations can also issue loans for community projects, like building wells or funding schools. Microlending organizations typically, but not always, issue loans funded by individuals rather than by banks or other financial institutions. Here are four companies and organizations that use microlending in different forms to empower people living in poverty.

Four Microlending Organizations that Empower the Poor

  1. Kiva: Kiva crowdfunds loans from people around the world and uses partners to issue them. The nonprofit has enabled the funding of more than $1.33 billion in loans. Kiva emerged in 2005 and has partnerships with financial institutions throughout the world, where it transfers the crowdfunded money. The local field partners then loan money to Kiva’s lenders. Kiva has a 96.8 percent repayment rate and operates in 78 countries. On Kiva’s website, lenders can sort loans by region or category, such as agriculture, women and eco-friendly.
  2. Zidisha: Zidisha is the first direct person-to-person microlending service that focuses on entrepreneurs and job creation. Its name” comes from the Swahili word meaning “grow.” Unlike Kiva, Zidisha does not loan through financial institutions but facilitates direct lending between people. Zidisha’s loans total more than $16 million and have financed more than 240,000 projects.
  3. Building Resources Across Communities: Building Resources Across Communities (BRAC) is the largest non-governmental development organization in the world in terms of number of employees. Hasan founded BRAC in 1972 and it employs more than 120,000 people in 11 countries. BRAC has a microfinance program, primarily in Bangladesh, which has loaned to 5.6 million borrowers, 87 percent of whom are women. Unlike Kiva and Zidisha, which operate person-to-person lending services, BRAC distributes loans to lenders on its own using donations and other funds. BRAC also does work unrelated to microfinance, investing in schools and in water, hygiene and sanitation services.
  4. Women’s Microfinance Initiative (WMI): Women’s Microfinance Initiative (WMI) began issuing loans in 2008 and trains local women in managing loan hubs. WMI has loaned more than $4.5 million to rural women in amounts of $100 to $250 at an interest rate of 10 percent. According to WMI, 99 percent of its borrowers report doubling their income within six months of being involved in the program. WMI reports a 98 percent repayment rate.

The efficacy of microlending in pulling people out of poverty is up for debate, but some cases have shown promising results. A microfinance program in Uzbekistan resulted in 71 percent of participants reporting an increase in food intake quality. One study showed that when a microfinance program was put in place, there was an 18 percent decline in extreme poverty. While different studies report differing results, microlending organizations like Kiva, Zidisha, BRAC and WMI have certainly been a success.

– Meredith Charney
Photo: Flickr

Poverty and Patriarchy
While poverty and patriarchy may seem like separate issues, the two connect deeply. As long as poverty exists, women’s rights and livelihoods will suffer. Likewise, women’s oppression leads to their inability to contribute to the economy and prevents a family’s escape from cycles of poverty. Here are some examples from around the world of poverty and patriarchy reinforcing each other, and some ways humanitarian aid can improve these situations.

Microcredit in Bangladesh Has Left Millions of Women At High Risk For Domestic Violence

From the 1980s to the mid-2000s, people thought that micro-loans would be the future of international development. In Bangladesh, most of these loans went to women on the belief that women could handle money more responsibly than their male counterparts. They received a small amount of money to invest in materials to start a business and earn an independent livelihood in order to bring their families financial stability. Unfortunately, when these women were unsuccessful at lifting their families out of poverty and their families plunged into greater debt as a result of the loans, they often suffered spousal abuse. For other women, as soon as they received the money, the men and their families took it and used it, leaving them to pay off the loans by themselves. As a whole, micro-credit has not had the intended impact on the people of Bangladesh that the international community once hoped for, and rates of violence against women have climbed, increasing the correlation between poverty and patriarchy

Solution: Investing in women’s education will provide them with the knowledge they need to become financially independent and ensure greater legal protection for victims of domestic violence could greatly combat this issue.

Poverty As a Weapon Against Women in the Democratic Republic of the Congo

Sixty-one percent of women living in the Democratic Republic of the Congo live in poverty, compared to only fifty-one percent of men. This is because people have systematically excluded women from peace-building efforts in the country. Because there are no women’s voices at the decision-making table, countries set policies that prioritize men, often at women’s expense. Disturbingly, women’s rights activists in the country are often a target for violence. Many think that those who advocate for women-centered poverty-relief efforts are distracting from larger issues within the country.

Solution: Studies that researchers conducted in the Democratic Republic of the Congo demonstrate that in areas with high levels of poverty, there are high levels of violence against women. Providing food security, as well as funding institutions and organizations to empower women, are important steps in relieving both poverty and oppression in the DRC.

Time Poverty Makes it Nearly Impossible for Indian Women to Contribute to the Economy

In India, the average man works seven hours per day. Although women usually work for nine hours a day, the vast majority of their labor is unpaid housework and childminding. This means that they have little time to earn any outside wages, and therefore, remain financially dependent on the men in their families.  The power dynamic that this situation creates is extremely dangerous. Women lose any agency they may have because they depend on their fathers, husbands or brothers for everything. This means that they have no power to go against their male relative’s wills. It also hurts the Indian economy, as women have little ability to contribute to it.

Solution: In rural India, women spend upwards of four hours each day gathering fuel and cleaning utensils to cook with. Providing them with solar or electric cookers could save them three hours of unpaid labor, giving them more time to do what they want to do or contribute to the economy as an untapped workforce.

These examples display just how poverty and patriarchy intertwine and push women and their families into poverty. If women could gain an education, receive food security or use alternative cooking equipment to limit labor, they might be able to improve their situation and lift themselves out of poverty.

Gillian Buckley
Photo: Wikimedia

Mann Deshi Bank is Changing Lives
A time-tested way out of the poverty cycle is starting a small business. Talent and hard work, when supported by capital investment, can build a business, bringing an idea to life. Today, rural micro-credit institutions like Mann Deshi Bank are changing lives by doing this as the next chapter of the small entrepreneurship revolution story is underway.

The Foundation

Chetna Gala Sinha, the founder of the Mann Deshi Bank, started the bank in 1996 with a determined team of a few rural illiterate neighborhood women. It all started when Chetna’s friend and neighbor, Kantabai, came to her for some friendly advice.

Kantabai wanted to open a savings account to make a daily deposit of 10 rupees (less than 15 cents), but the Bank would not open her account as the amount was too small. According to a recent World Bank report, India has around 224 million people living under the poverty line of $1.90 a day; there are millions of women facing the same predicament.

Unfazed by hurdles, Chetna and her friends decided to take matters in their own hands. After months of persistent effort, they were able to obtain a banking license from the Reserve Bank of India. They started Mann Deshi Mahila Sehkari Bank, the first cooperative bank in India solely run and owned by rural women.

There are numerous rural banks in India today that bolster the growth of small-scale businesses and first-time business owners through micro-loans, loans that are only a fraction of a traditional loan amount at maybe $25 or less. What makes Mann Deshi Bank unique, though, is the extra mile it goes. It builds community and long-term support helping customers along the tumultuous journey of a small-scale woman entrepreneur.

Support Group

Mann Deshi Bank started in Mhaswad, a drought-prone village in the state of Maharashtra, India. Today, the bank has branches at six different locations within the state. When a customer borrows money from any of the bank branches, she comes in contact with a family of female entrepreneurs. These individuals face similar socio-economic hurdles in their entrepreneurship journey including the facts that:

  • They are women who are traditionally dependent on male family members for money.
  • They live in small villages.
  • They save small amounts of money on an everyday basis.
  • They want to start a business.

Workshops, classroom lessons and annual cultural events give a sense of belonging to women entrepreneurs by regularly discussing motivational success stories, offering them customized advisory services and providing a place to network. Together they build a community that engages small business owners, providing them strong emotional and social support essential for successful entrepreneurship. Sugrabi Mulani, one of the beneficiaries of the Bank says, “Mann Deshi’s financial management training was very helpful and the bank also gave me several loans to expand my business. But most of all, I met so many women and I knew I was not alone.”

Financial Literacy

Most customers of Mann Deshi Bank have never been to school. Many of them run businesses that survive on daily or weekly income. To help them overcome everyday challenges, Mann Deshi Bank is changing lives by offering short-term vocational training courses in sewing, basic computers and cattle breeding, etc. In addition, business development workshops that the Bank offers helps new entrepreneurs understand key aspects of running a profitable business, such as:

  • The ratio of profit and investment.
  • The importance of insurance.
  • The significance of marketing.
  • Inventory management among others.

On average, trainees report a 25 percent increase in average annual income which includes 35 percent of women who expanded their business through weekly/regional markets.

In 2006, Mann Deshi Bank established Mann Deshi Business School for Rural Women and designed an affordable year-long MBA program in collaboration with CRISIL and National Payments Corporation. Students can leverage this program to learn essential skills related to marketing, expansion and management of a business. To date, 40,000 women have participated in various programs that the Bank and its schools run.

One of these women is Kavita Bhivre. Kavita participated in one of the Business Development Workshops offered by the Bank. After learning the basics of profit and loan, she went on to pursue her MBA that Mann Deshi Bank Business School offered. Employing her newly earned skills and a small loan from the bank, she opened a bangle shop and successfully turned herself from a stay-at-home mom into a businesswoman. Today, she is not only financially independent but also supports her family. Like her, 67 percent of women have started earning an income after graduating from the specially designed MBA program.

Sports Tournaments

Sports can act as a lever to uplift a whole family from poverty in a single lifetime. A state-level player can easily afford a house, electricity, clean water and education for children. However, less than 2 percent of girls participate in sports in Maharashtra. The bank took the initiative to organize open-house sporting events under the scheme called Mann Deshi Champions. The initiative serves two important purposes including to:

  1. Nourish physical and mental well-being.
  2. Promote sports as a viable career option in drought-prone villages.

In 2010, when the tournament started, 500 children participated in various racing competitions. Over the course of nine years, 4,000 children have benefitted from such events. Every year, hundreds of school-going children between the age of 10 and 16 go to the tournament grounds to participate in sporting events like wrestling, long jump and marathon running.

Under the program, children receive sports training sessions under the guidance of qualified sports coaches. Moreover, prospective outstanding athletes garner specialized professional training.

Young girls like Vaishnavi Sawant, Reshma Kewate and Poonam Kalel, who received training through initiatives of Mann Deshi and went on to win medals at a Northern Virginia regional competition in 2017, inspire the Champions. They hope to play in the Olympics and win medals for their country one day.

The Impact

Mann Deshi Bank is changing lives and has become a way of life for thousands of people. What started as a microfinance bank 30 years ago, is now a reliable partner in growth for women who want to earn a livelihood or financially support their families. With $13 million in deposits spread across 90,000 women account holders, Mann Deshi has become a force to reckon with. The Bank also broadcasts a community radio which has 150,000 listeners spread across 110 villages within a 50 km radius. The radio programs consistently encourage women to start their own business. Last year, with six other peers, Chetna Sinha, the Chairman and Founder of Mann Deshi Bank, chaired the 48th Annual Meeting of World Economic Forum in Switzerland.

– Himja Sethi
Photo: Flickr