Our Microcredit Program

Salma Daud, our program manager, and I shake hands after writing the memo of understanding for our new microcredit program.

Microcredit – it was a simple yet revolutionary idea. No one in the financial establishment would ever have considered lending money to the poor until Muhammud Yunus, a Bangladeshi economics professor, lent $27 to forty-two desperately poor stool-makers in 1976. Such people were considered bad risks, not credit worthy, undeserving. But Yunus’ radical experiment showed that the poor were not only good risks, but exemplary borrowers, with a 97 percent payback rate. Women turned out to be the best borrowers of all.

Salma and Melki Mushi, Okaseni Village Chairperson, chat before a training session for the first group of microcredit borrowers.

When we started the AVPA in 2007, we wanted to incorporate microcredit in our mandate. We therefore decided on a two-pronged approach:

1. to improve the standard of living in African villages. For this, we follow the traditional aid model and provide materials, supplies, etc., for infrastructure, education, health, agriculture, etc

2. to help African villages become self-sufficient. For this, we focused on microcredit.

During our 2008 visit to Okaseni Village, we introduced the idea of microcredit to the Village Council. They had never heard of the idea but were keen to try it. We were incredibly lucky to find a wonderful person, Salma Daud, who volunteered to run the program for us. She works closely with the women to ensure their success. Along with Melki Mushi, the village chairperson, she is responsible for finding the borrowers, arranging workshops, disbursing the funds, and keeping the borrowers on track. Both Salma and Melki have been outstanding, and we are very grateful to them.

Lydia Mushi (no relation to Melki) witnesses the loan forMargaretha Agustini while Salma looks on.

To get the microcredit program started, we deposited $1,000 CDN in the local credit union. Because we were not sure if the program would work, we used our own personal money. We did not run these funds through the official AVPA channels just in case the program lost money. If need be, we were willing to take the personal loss.

The AVPA microcredit program started in November 2008 with ten Okaseni women. The first group received their loans in January 2009. Most of the women in this group started small businesses selling bananas. They each received loans of about $ 90 US and had good pay-back rates. One woman used some of her profits to buy a pig – an excellent way to develop capital.

We were delighted with the success of this first group. A second group of five women was started in June 2009 using the funds that had been paid back so far by the first group. The businesses of this group were more sophisticated and included selling simple homemade meals to local construction workers, growing and selling a variety of legumes, and producing mbege (banana) beer. A young woman named Happiness Mushi is leasing a knitting machine from the AVPA. She makes the sweaters that the primary school students need for their uniforms – a ready market for her products. This venture is a dream come true for her.

The first group of microcredit borrowers waits for a training session to begin.

The third and current group – our “elite” group – was started in the fall of 2010 and consists of women with outstanding track records and much potential for the future. As each group has become more sophisticated in their business choices, more confident and more knowledgeable, our elite group now includes one woman who has her own store – a huge accomplishment!

The program is going very well and is now incorporated into the AVPA finances.

In April 2011, the AVPA received a $3,000 CDN loan from the Pamoja Foundation, a Canadian organization founded by Amrita Sondhi, owner of the Movement Global Design clothing company. Pamoja’s approach to microcredit is innovative. It makes loans to established and proven microcredit agencies, such as the AVPA, who then loan to entrepreneurs at the grassroots level. Pamoja’s generous loan means that we can reach many more women. Thanks, Pamoja!

Microcredit allows women to make a living and better their lives. They also put their profits into their kids – giving them an education and a more promising future. We are so pleased to be able to help them change their lives. Please join us in this endeavour – donate to the AVPA today!


Read More: Who We AreHow We Are Helping ChildrenOur Microcredit ProgramFinancial Report