Women Start a Loan Fund

Joyce, do you think we could take some of our extra vegetables to the local market? I understand that the prices of maize and beans are good these days and we could make a fair profit.

That’s a good idea but how do we get the crops to market before they spoil? We don’t have a vehicle – not even a bicycle – to help move the vegetables. We need money to pay for transportation so we can carry more vegetables and make it worth our effort.

We need to get a loan so we can get transportation to take our crops to market. Once we make a profit from the sale of the vegetables we can pay for future transportation.

I don’t know much about loans. Who would be willing to lend money to poor farmers like us?

A loan is money you borrow from a person or institution. Later you pay back the money you borrowed, plus some extra money which is called interest. You agree to pay back the money back within a certain period of time.

Where can we get a loan or more information about loans?

I know that most banks give loans. But last season I tried to borrow money from the bank and it was very difficult. The money they charge you to get a loan is very high. That charge is called interest. And the bank wanted my husband’s signature as well as something called “collateral”.

What is “collateral”?

Collateral is something you own that the bank will take if you don’t pay back the loan. It is a guarantee that you will pay back the loan and the interest to the bank. A title deed to land is the most common form of collateral. But I do not have a title deed. I don’t have any collateral at all so I was not able to get a loan.

You mean that if I want a loan, I must show the bank my deed or proof of ownership. Once I have proved that I own the land I will have a much better chance of getting the loan. But if I get the loan and can’t pay it back in time, the bank will take my land. Is that it?

Yes, that’s exactly how it works. But our problem is that we don’t own anything valuable enough that the bank would accept as collateral.

You know Sylvia, I have heard of a women’s group that became their own bank. Each woman contributes a small amount of money every month. Each month all the money collected is given to one member who uses it to buy something she needs. The next month, another member receives the funds until everyone has a chance to use the money. Do you think we could make our own loan project?

Yes, let’s go talk to our neighbours and see what they think. Maybe we can start our own bank.

Over the next few months Joyce and Sylvia talk to other women farmers in the village. Together they decide to start a revolving loan fund. To begin all the women sign a contract which outlines the terms of the agreement. The contract says that the project will continue at least until every woman has received her share of the money. Each month all the women contribute a small amount of money to the fund. And each month all the money collected is loaned to one of the members.

Some time later Joyce and Sylvia meet in the local market…

Hello Sylvia, I can see you’re doing very well with your vegetable business!

Yes, thanks to our “women’s bank” I was able to buy a donkey cart last month to help me take my vegetables to market.

Well, my turn is next month and I think I will also use the funds to help me market my crops.

It was difficult to convince our neighbours that we could each benefit from lending money. Some people were afraid that they would never see their money again but we have done very well.

Yes, we have been successful for three reasons. We kept good records of everyone’s contributions. We encouraged one another not to give up easily. And we were all honest. Now we have succeeded in starting our own loans project. This is the first step in improving our lives!