We employ a group-lending model that was introduced by the Grameen Bank in the 1980s. Potential clients form their own groups of four or five women and come to the WomensTrust office for an initial screening. In order to track impact, our staff records information about their businesses, their incomes, their families, their education, and their homes.
Once the group is accepted, each woman receives a beginning loan of $105 U.S. Each group member must repay her individual loan before the whole group is eligible for its next loan. We charge 15% interest for each four-month loan period. That rate is well within Ghanaian banking guidelines and is set purposely high to compensate microfinance institutions for the risk they are willing to assume making uncollateralized loans to the poor and very poor. It also discourages loan clients from gaming the money— i.e., loaning it out at higher rates to others.
Each of our loan clients is issued an individual ledger book with the date and details of her loan and weekly repayments. Once a group has successfully repaid their loan in full, they are eligible for the next level loan and can progress up the scale to a maximum amount of $350. Beyond that, women may be eligible to receive higher level loans in our EntrpreneursClub up to $5000.
Our repayment rates remain close to 90%, and we use the interest to cover the administrative costs of the offices and the salaries of our four full-time office staff. The interest is also put back into the loan program for new and continuing loans. Clients who are delinquent in their repayments are recommended to the local arbitration board, which pursues the defaulted loans until they are repaid.
In our experience accountability encourages self-esteem. We assume the responsibility of maintaining a thriving loan organization, and the women are accountable for repaying their loans. On each of our semiannual trips Ghana, we hold focus groups to check in with our clients and make any necessary course corrections that we jointly agree will make the loan program more relevant and user friendly. We come with questions, and we encourage dialogue. As in any partnership, our negotiations are ongoing, the process connects us, and the result is our mutual success.
Microlending ~ Quotes from WomensTrust Founder
Microlending really works -- it's happening all over the world. It's working in Mongolia, Uzbekastan, Mexico, Peru, and in Ghana.
Why not help at the grassroots level, one village at a time.
Why not? If we can create a vehicle and structure that match their grassroots needs with our grassroots support, we can connect as communities. They want help, not handouts. We can share directly.
Our goal is to set up a microlending program for women to get access to capital -- with $100 loans -- they can expand their businesses and make enough profit to save money; with money saved, they send their children to school, and they get access to healthcare.
Microloans are about self-sufficiency, about job creation, about a social safety net and the beginning of middle class stability. Microlending marries two loves of mine: entrepreneurship and democracy.
Dana Dakin, Founder
