M’PHIKA FUNDS (loan division)…
Funded by the Loreen JM Banda Foundation(originally posted on the 27th of December 2020) I can´t believe that a year has elapsed since the Loreen JM Banda (LJMB) Foundation launched the M´phika funds in Malawi. The impact the Foundation is having on the families that have benefited from the it is amazing. Seeing how much of a difference these mini loans are making in the lives of the beneficiaries is just unbelievable. I am literally speechless with the success of this programme especially considering that the year 2020 has been unprecedented, very volatile and cruel on the most vulnerable people in our communities across the globe due to the COVID-19 pandemic. As am writing this article, 43 women from Ntchisi (implying over 40 families) have already benefited from the M´phika funds with 1 defaulter. This means that the model being used is working and worthy replicating in other areas once finalised in the current catchment area. Not only are the women repaying their loans on time, but the fruit of their work is visible for all to see. In the upcoming articles we will be sharing stories of these women and how M’phika Funds is helping them to improve the quality of their lives. Note that a different model was being used in parallel to this one in Lilongwe Urban but the results have been dismal that it has been discontinued. LJMB has found the Ntchisi model to be the ideal one and will therefore focus on it in today’s article. how it works… In each T/A women come together to form a group and select leaders of the group who are in charge of vetting members and ensuring that each and every member who has taken the loan has paid back on time as agreed. The group acts as surety in case a member fails to pay back. This is possibly one of the main reasons why so far we have had only one defaulter. Throughout this whole process, it is paramount to have the backing of the village headman and other leaders in the community to ensure that the programme is accepted by all. These women are not living in isolation, they need the support and understanding of their families for them to progress and become independent. It should be an idea that is sold to the whole community. The group commenced with 10 women. The number has been increasing gradually each month with a maximum number of 5 women incorporated every month. It was deemed important to reach the target number of 45 gradually not at once in order to give the Foundation time to learn on how to run such kind on an initiative. The initial sum to be distributed as first loan to each individual is 10000MK which is roughly 11 Euros. Though this amount is very small, the idea is to allow the women to use it as a top up on the finances that they are already having and to vet both their commitment to the group as well as willingness to repay back the money on time including ability to manage finances. The 10000MK is expected to be repaid back in a period of maximum 3 months though an individual can choose to repay it earlier or later. During this repayment period, the candidate formulates her business/financial plans/ideas. This is known as the initiation stage. Once the idea/plan has been formulated, it is shared with me for review and approval. Only those plans/ideas that seem to be viable or lifting the lives of the family are approved. The word ideas and plans is being used because not only are we supporting business plans/initiatives, we are also supporting these women to send their children to school. Some women are using the funds to top up on school fees for their kids and repay it back in smaller instalments. After approval, it implies that the woman has reached the maturity stage in the group and funds are released. The maximum limit that each individual can collect at a time in the maturity stage is currently at 300,000MK (around 320 Euros). In the future we would like this amount to reach 1,000,000MK (around 1070 Euros) per individual. The interest rate was capped at 2% of the principal per month in the first phase of the project and the loan repayment period at 3 months. This brought the interest rate to 24% per annum which was 6% higher than what was indicated in my previous article. As mentioned earlier on, the LJMB Foundation is work in progress with input from each one of you to make it better and stronger. When we visited T/A Vuso Jere and told the women that they can start collecting the loans at an interest rate of 1.5% of the principal per month they asked us to peg it at 10% of the principal per month which is far much lower than what they are giving to village banks. Discussions with the women took place to highlight that the reason of this low interest rate is to enable them to uplift their lives and not to be stuck in debt. After that discussion, it was agreed to keep it at 2% for a short period and to revert to the desired LJMB Foundation rate of 18% per annum. From 20th of February 2020, the interest rate has been revised accordingly to 1.5% of the principal per month. Anyone with an outstanding loan by that date had repaid it back at the revised interest rate. When an individual reaches the maturity stage, for each loan taken, two trees are planted. The type of tree and where it is planted does not matter so long as it has been planted. This is our way as a foundation to tackle the environmental crisis that the world is facing, a topic that am very fond of and hopefully can discuss more about in the future. At the same time we are demonstrating that in order to receive something we need to give something. If we are to grow and prosper as a nation, we need to stand on our feet and not only receive donations. They say that if you give a man fish you only feed him/her for a day, but if you teach him/her to fish, you will have fed him for a lifetime. This is what LJMB foundation is striving for, teaching the women to fish. target…. The LJMB Foundation believes that women are more at a disadvantage in the world generally compared to their male counterparts in many areas due to several factors. In less developed countries like Malawi, the social and economic disparity between men and women is very apparent. Up to this day, especially in the rural areas, men are considered as the main bread winners while women are supposed to be housekeepers. As housekeepers, women are the ones who ensures that the little money earned, or grains harvested is well rationed to feed the family up to the next payroll or harvest season. In the villages, it is women who go in search for relish on a daily basis in the fields or bushes (black jack, amaranth, etc) while men await a ready meal to fill their stomach. A topic that I will visit in detail one of these days. It is because of this great social and economic disparity between men and women that the LJMB Foundation is prioritising women in the M´phika Funds project. Our first catchment area is T/A Vuso Jere in Ntchisi where we are aiming to reach a total of 45 women by January 2021. Our ultimate goal is to reach 45 women in each and every T/A in Ntchisi and possibly the other districts in Malawi. The LJMB motto of each small step taken is transformed to each T/A reached with the M´phika Funds project. Though our goal is 45 women per T/A, the actual number of women supported in each T/A is expected to be higher than the mentioned 45 because we will be maintaining the number 45 as maximum number at each period minus those women who might have repaid back their loans and are independent. There have been interests from men to benefit from M’phika Funds project. Currently we are still looking at ways on how we can incorporate them. The LJMB Foundation is all about inclusivity and will work hard in ensuring that all benefit from its work with priority on women. upcoming articles/posts… We would like to focus more on the women themselves. To let them share their stories, struggles and successes in their own words. It’s amazing how a difference each of us can make with a little contribution/support to others. …Let us continue this journey together, taking small steps to make a better world for all through the Loreen JM Banda Foundation…