Where Credit is Due: Banking on women

Like every other day, Sheri Feyakoyo wakes up at 4 am. She wraps herself in the colourful headscarf common to Muslim women in Northern Ghana, and sets off to search for water. As she walks under the pre-dawn sky, chain lightning jumps between clouds that have so far refused to release any rain.

The young woman fills two buckets from a not-so-nearby well that is in danger of going dry, returns to the family compound of huts surrounding a common courtyard, and cooks breakfast for her husband and children.

She sends the oldest kids off to school, straps her baby to her back, and helps her husband weed their fields of millet and maize before preparing lunch.

And then, Sheri gets to work.

“I also have my own business,” says Sheri. “I buy raw rice, parboil it, dry it, and grind off the husks. People buy my rice because it takes less time to cook, and that means less time finding fuelwood.”

This budding entrepreneur lives in Sanergo village, in a corner of rural West Africa that is rich in culture and tradition, but poor economically. Seven out of ten people in this region live in poverty, according to the official World Bank definition.

Most citizens here scratch out a subsistence living in soil that can be scorched or sodden, depending on the time of year. If the harvest is healthy, some of the staple crops can be sold on the open market, although yields are usually just enough to feed a family.

But because of her small business, Sheri earns the money she needs to pay for school fees, uniforms and supplies, so that all her children can get an education. “I now have the opportunity to pay for my children’s schooling,” says Sheri. “The business lets me contribute to the family, by buying food or fuel. I can also help solve problems in the household, like if someone is sick and needs medicine.”

Sheri owns no land, and has few belongings. Her home is made with bricks of mud and straw, capped with a thatch-roof. Illiterate and with no collateral, she couldn’t just walk into a bank and fill out a loan application, even if she only needed a few dollars to kick-start her business.

So Sheri and nine other women in her village formed a ‘lending circle,’ and received a collateral-free loan from the Amasachina Self-Help Association, a community development group based in Northern Ghana. That first advance of $100 was divided into 10 micro-loans of $10 each, one for each woman to start a very small business. Sheri used her share to buy a first batch of raw rice.

As a condition of their involvement, the Sanergo collective guarantees the repayment of each individual loan. This is a defining characteristic of microcredit; the women act as each other’s collateral. “It’s a group loan, but we each have our own business,” says Sheri. “We select women who we know can make a business work. There’s been no problem paying back the loans. We have to, or we can’t get future loans.”

It takes the women to raise a village

In the nearby village of Datoyili, 70 women are members of micro-business groups. Some women make food products for local consumption, while others travel the hour’s drive to Tamale, the region’s commercial centre. That city’s sprawling market is a chaotic choreography of people selling goods ranging from magnificent crafts to mundane essentials.

The Datoyili women all started their businesses with loans and training from another community group, Maata N Tudu, which translates as Women of the North. This is their third year in the program. Once one loan is re-paid, the group is eligible for another, usually larger, advance. Flera MaHumma is the president of the loan circles in the village, and says that there were no other options for women trying to improve their economic fortunes.

“We had been looking for a long time for money to start our businesses,” says Flera. “We couldn’t find anything until we met Maata N Tudu. We’re happy to work with them, and we all started businesses because of the loans.”

“Before I got my first loan, I was in distress. I used to rely on my husband, but there were times he could not provide for me or the children. Today, when my husband doesn’t have money, I can help. Now that I am involved in the loan programs, I have seen a change in my family.”

Like most microcredit organizations around the world, Amasachina and Maata N Tudu both target women, who are often the poorest in their communities. They are usually the caregivers of the family as well, so if you help the women, the thinking goes, you help the children. If that includes education for the children, you also help the entire village.

Blessing or burden?

Back in Sanergo, her now sleeping baby still strapped to her back, Sheri Feyakoyo walks on a dusty path that leads from one family of round huts to another. In the centre of a courtyard, rice in a huge cast iron pot slowly simmers over a charcoal fire. Sheri occasionally stirs the rice with a rough hewn wooden spoon.

So could the microcredit focus on women just add to an already heavy burden? Sheri admits it does, although you won’t hear her complaining. “It takes more time but it’s worth it because of the money and the satisfaction I get out of it,” she says. “It’s my own business. It’s not too much of a burden.”

“And a lot of the businesses like processing rice can be done right in the compound alongside other chores, so we can do the work on both at the same time.”

The women involved in lending circles in Northern Ghana have gained respect in the household and the village because they are bringing in money through their efforts. The micro-loan method strengthens dignity and independence in a way a handout could not. That, advocates say, is one of the main non-monetary benefits of microcredit.

The women here do seem more confident and ready to assert themselves. And that’s been difficult for some men to accept. When one husband is asked if the new business ventures are good for his family, he acknowledges that they do help feed the kids and pay for school. He then puts down his meal of rice and groundnut stew, and complains that the men have never received a single penny. He also thinks the husbands should have more say in how the profit is spent. The women strongly disagree, and they let him know.

No panacea to poverty

There are many ideas other than microcredit that could contribute to change. For example, most of the microcredit women earmark their earnings for school fees and uniforms, so lower-cost education is one obvious way to help families.

Flera MuHumma, of the Datoyili loan groups, offers her wish list. “Besides the loan, we need a mill. The women who make shea butter or husk rice have to transport it all the way to Tamale to have it milled, and that’s too far away. We have to arrange a truck to take us and that costs money. But if we had a mill that we could walk to, our profits would go up.”

“What would also help families in the village,” she adds, “is water. We don’t have clean water. The women have to spend many hours looking for water and walking far, and that is time we can’t spend on our businesses. And electricity. If we had light, the children could study at night and do better at school. And I wouldn’t have to spend money buying kerosene for light.”

The loans have fronted the start-up costs of many micro-enterprises in Northern Ghana, and the women have earned much-needed cash. Yet microcredit can only take the poor so far down the path of development. For those hoping to sell their products beyond their regional borders, marketing and distribution support is needed to take the next step.

A lack of credit is not the only cause of hardship in the Southern World. Many factors contribute to under-development, and providing business loans may or may not be the best way to lift the poorest of the poor out of poverty. But while the debate goes on, Sheri and Flera say they can’t wait. They are too busy trying to turn small change into a better economic future.



What is Microcredit?

Microcredit is a development tool that offers a hand-up, not a hand-out. It’s a way to provide small business start-up capital – often $100 or less – to people who don’t qualify for traditional bank loans because they have no collateral or credit history. An amount that small may not seem like a lot, but for many living in the Southern world, it’s enough to kick-start a micro-business selling food or crafts or telephone calls to people without phone service. In most programs, groups of people form lending circles, and act as each other’s collateral. If one fails, the collective carries the loss.

Without access to capital, it’s difficult to start or expand a business, even the tiniest of operations. In the absence of alternative banking options, many people are forced to borrow from money-lenders who charge outrageous interest rates. The poor can get trapped deeper in the pit of poverty.

In most cases, microcredit participants can borrow additional money once earlier loans are re-paid. Like business people everywhere, the entrepreneurial poor often need access to credit for a number of years to accumulate enough assets and savings to become self-reliant.

Many people argue that microcredit is not a panacea to poverty. The scheme can’t help everyone lift themselves up by their bootstraps. For some people, just getting those metaphorical boots is the struggle. Konlan Lambongang is the executive secretary of Maata N Tudu – a microcredit group in Ghana that boasts of 7,000 members – and he admits that it’s a challenge to help the poorest of the poor.

“There are people who might need grants at first so they can just survive, so they can just eat and live. They need to get themselves healthy enough so that they can make use of the loans, and have the ability to pay them back. We are actually reaching the entrepreneurial poor.”

Microcredit was popularized – but not created, as earlier initiatives can be traced to South America – by Nobel Peace Prize Dr. Muhammad Yunus and the Grameen Bank, which he founded in 1976. It all started when he lent a few dollars from his own pocket to a group of poor artisans struggling to make ends meet. They had no savings, and to buy the supplies needed for their wares, they had turned to a loan shark. At the end of the day, their hard work amounted to mere pennies.

But because of the professor’s investment of about a buck-and-a-half each, the 42 enterprising street vendors dramatically increased their profit margins. And all the ‘micro’ loans were re-paid. These artisans became the first borrowers of the Grameen Bank, which today has seven million clients, helping over 30 million family members.

Globally, microcredit is being bankrolled by non-governmental organizations, community groups, foreign aid agencies, multilateral development institutions, credit unions and progressive banks, and social investors. Many programs also include skills training, and some encompass community development initiatives including health and education.

Today, microcredit programs around the world are helping over 100 million people get credit where credit is due.

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