Being cruel to be kind
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CTA. 2001. Being cruel to be kind. Rural Radio Resource Pack 01/3. Wageningen, The Netherlands: CTA.
Permanent link to this item: http://hdl.handle.net/10568/57379
Patrick Mphaka reporting on the work of FINCA who, despite having a strict programme of repayments, have given small business loans to over 20,000 Malawians.
Being cruel to be kind Cue: While many credit programmes target rural populations, FINCA, the Foundation for International Community Assistance, works in the towns and cities of Malawi, and offers credit to women in particular. It has a strict policy on repayments, demanding that these be made on a weekly basis. Patrick Mphaka spoke to both the Managing Director of FINCA Malawi, as well as one of the beneficiaries, and discovered that this policy causes problems for both the givers and receivers of credit. IN: ?There is a saying among Malawians? OUT: ? if FINCA were targeting men.? DUR?N 4?52? BACK ANNOUNCEMENT: Patrick Mphaka reporting on the work of FINCA who, despite having a strict programme of repayments, have given small business loans to over 20,000 Malawians. Transcript Mphaka There is a saying among Malawians which says, ?Ask a woman to bring you her favourite food and she will bring you a full plate of nsima, the local staple food. Ask a man, he will bring you a packet of cigarettes?. The adage seems to have convinced a good number of money-lending institutions that a woman, not a man, knows man?s real needs. This has resulted into a number of them targeting women for credits. In addition to women using money for essential needs, they also have a reputation of high repayment rate. The combination of the two qualities equals development and satisfaction on the beneficiary and the lending institution respectively. It is this satisfaction that attracted the Foundation for International Community Assistance ? FINCA, to target women in urban and semi-urban areas of Malawi. The institution started its activities in 1994 with one group in Blantyre of twenty women. Today, the institution has members throughout the country as the Managing Director of FINCA Malawi, Mr. Ishtiaq Mohiuddin, explains. Mohiuddin We started in Malawi in 1994 with one group, about twenty members. Right now we have about twenty thousand clients. We work all over Malawi. Mphaka FINCA has indeed helped women to start small scale businesses which are in turn alleviating household poverty as one of the beneficiaries, Mrs. Zione Zulu admits. Zulu I for one decided to join FINCA because of the poverty in my home. My husband had just been retrenched from his job and he was just staying without doing anything to earn any money. The result of this directly affected me. I have five children who look up to me for food, clothing, and what have you. I also needed money to pay for water, buy firewood and other daily needs. The positive side of FINCA is that first and foremost, it enabled me to have a start up capital for my small business. Secondly, FINCA has taught me how to use a Banking Hall. I have an account and I have learnt how to do a transaction although my account does not have much money. Mphaka These two seem to be the major advantages of FINCA as seen from the eyes of the beneficiaries. One problem, which is cited time and again however, is the repayment period. Mrs. Zulu. Zulu FINCA has its own shortcomings. The first one is the repayment period. Since one needs to pay back the loan on weekly basis, this makes one a slave of the loan on daily basis, since you have to ensure that you are doing something to earn something to repay back by the end of the week. Sometimes if you fall sick, or the child falls sick, or there is a funeral, you become worried to death. You still have to find ways of earning something, somehow, which you can pay back to FINCA. Mphaka It is ironic that the issue which the beneficiaries detest, the lending institution does not like also. Why not do away with it then? Mr. Mohiuddin. Mohiuddin Actually we have tried bi-weekly loan repayment not only in this country but many other countries because it is more costly for us to have a weekly system, because under weekly system a credit officer goes to the field to collect money on weekly basis. But actually we have seen that in the long run, it is more difficult for the client to pay bi-weekly because if they miss one payment, next time, actually, the payment is equal to four weekly payments. And we have seen that they have this difficulty. Mphaka Many money lending institutions with better repayment periods were there before FINCA, have been there during FINCA?s time and they will continue coming. The sad experience which they all live to tell is that more than eighty percent of their clients default on loan repayment. Consequently, they close down. FINCA has the reputation that the repayment rate is above ninety-five percent. No wonder it is expanding. There are many families who have benefited from it. There are men who are using FINCA money borrowed by their wives to run big businesses. One wonders whether the woman would have had the same opportunity of using her husband?s loan, if FINCA were targeting men. End of tape.