Microfinance Makes the Difference in Zambia
Our first visit of the trip was to the FINCA Zambia Village Loan microfinance program around Lusaka. The program’s loans start as low as $30 and it’s organized around a group support model. The members of the groups guarantee each other’s loans, as well as offering support and business suggestions to each other. They have four weeks of training, and each group has a leadership team. The loan default rate is only three percent. One of the main reasons for default is illness either in themselves or in their family.
The first group we visited lives in a peri-urban area. This group is in its first loan cycle (a loan cycle last approximately 16 weeks) with small businesses such as selling charcoal, fish, and crushed stones. They were quite shy, and talked timidly when prompted, and averted their eyes. But with unmistakable pride, they told us that with loans to purchase products wholesale and resell them with a greater profit margin, they provide more for their children’s education (such as books and better schools), give them better food, and no longer have to ask anyone in their village for hand-outs or favors.
The second group is finishing their ninth loan cycle, and have been able to build up their businesses, such as salons, small grocery stands, and selling wares in the market. The contrast in demeanor with the first group was remarkable: these clients stepped forward, stood tall, and looked us right in the eyes and told us their business and how the loans had changed their lives.
Many of these women are AIDS and TB widows and taking care of children orphaned by these diseases of poverty. One woman lost her three daughters and sons-in-laws to AIDS, but with the help of her microfinance loan, is able to take care of her grandchildren.
All the women were so grateful for the opportunities their small loans gave them. A few of them are even now able to send a child to college! It was inspiring to see how much such small loans can do to change lives and break the cycle of intergenerational poverty.