Introduction

Rationale for a Micro Loans Program

Sixty percent of Zambia's population lives below the international poverty line and about 70 percent of the urban population lives in slums with critical water and sanitation problems. Low income, together with a high incidence of AIDS related deaths, has orphaned more than a million children. Most orphans are cared for by grandmothers or extended family who may have never been to school, have no regular source of income, and are unable to provide adequate care. The children face malnutrition, neglect, and abuse. Extended family members need education and a means to support themselves and their families.

Research has shown that a small boost in micro loans to developing countries can lift more than 10.5 million people out of extreme poverty. Provision of microcredit expands the financial choices available to vulnerable women and is a cost-effective solution to keep children in school and generate an income. Program activities will help end poverty, ensure healthy lives, and educate all children by 2030 as outlined by the UN Sustainable Development Goals. 

Micro Loans Program Activities

New Program Activities in 2020

COVID response: To keep families safe from COVID, and to minimize its impact on businesses, the following changes were made:

• Families are educated on prevention of COVID and provided with PPE (masks and hand sanitizers, soap).
• Children from the community are invited to attend COVID education workshops.
• Business mentoring is now provided via phone calls and on-site visits reduced.
• Clean cooking stoves:  In Zambia, most families use charcoal for cooking and heating which generates smoke that is harmful to health. To reduce smoke inhalation, 7000 families were provided with clean cooking stoves. The stoves are environmentally friendly, use less fuel, generate little smoke, and are easy to use. Use of these clean cooking stoves has reduced fuel costs, and smoke inhalation. In addition, the women are encouraged to use the stoves as an income generating asset.

Ongoing Program Activities

• Active Loans: Currently, 470 women are enrolled who receive loans, ongoing training, and support.
• 143 women received business training and loans to start businesses. The goals of business training are to teach first time women entrepreneurs: (i) how to run a profitable business, (ii) overcome challenges, (iii) work as a team, and (vi) develop relationships of mutual support. All training modules are supplemented with hands on exercises, work sheets, real world examples, and group discussions. Training is provided in a safe manner to prevent the spread of COVID. PPE is provided. 
• Refresher training was provided to 300 women after completion of their second loan cycle.
• Ongoing business monitoring: All 470 women were provided with business advice on product display, maintenance of accounts, bookkeeping, inventory management etc.
• Business mentoring training provided to all 470 women.
• Weekly Support and Repayment Meetings (held in a safe manner). The women make loan repayments and have an opportunity to educate each other on issues such as HIV prevention and care, importance of school, and challenges faced.  
• Internship module: 35 women took advantage of the internship opportunity. The women have created a volunteer mentoring club with members encouraging new loan recipients to work hard and keep children in school.
• Repayments rates: Loan repayment rates are between 86-90% despite difficult circumstances faced by most women.
• Graduates: About 700 women graduates continue to run businesses that were started with this program.
• Clean cooking stoves provided to 7000 families (including women enrolled and graduates from this program).
• Malaria bed nets provided to all women and their families.
• Total businesses: A total of about 1,200 businesses are being run by women currently enrolled and those who have graduated from the program over the last 10 years. 

Program Impact: In a relatively short span of time (about 8-12 months), most loan recipients are economically stable as earnings from businesses help pay for food, medicines, rent, school expenses and household purchases. In addition, families are more knowledgeable about HIV, COVID and malaria, improve in health, more children attend school, and men come forward to help with businesses. Further, most women are more financially literate, enjoy a higher social status and there is improved gender equality. An example of a loan recipient whose family is on the path to sustainability is given below:

Jen is the sole caregiver for her four children and three nephews/nieces. She lives in a 2-room rented home with little privacy. Only three out of the 7 children are in school. Before joining the program in November 2020, she was selling sweets from a makeshift stand but not earning enough even for food. After completion of business training, Jen used her loan funds to add vegetables and charcoal to her makeshift shop. Her goal is to be able to eat two meals a day and enrol the other children in school. She says the business training helped her increase revenues and profit. Also, adding charcoal and vegetables helped grow her business. Her plan is to diversify her business and to repay her first loan so she can qualify for a second and third loan. Her niece, who is HIV+ will be enrolled in Power of Love paediatric HIV care program in the next few months.

Program Success and Metrics

Short and Medium Term: There is an improvement in the diet, nutrition, and health of families; more than 900 children were able to attend school in 2020 alone, families have better knowledge about HIV prevention and care; many women extend/build homes or purchased a plot of land; most women are more financially literate and build strong social networks.

Long term impact is illustrated by:

• Skills Development: Women learn a variety of business skills that include record keeping (leads to better information on inventory, sales, profits, receivables etc.), customer service, and financial literacy.
• Acquire new habits: Women start saving a small amount each week via mobile banks (as these are cheaper and easier to operate than commercial bank accounts) or village banks. 
• Better knowledge about HIV and malaria leading to better health and higher earnings.
• Build relationships of mutual support that are helpful in the long run.
• Change in culture as men (husbands, sons) support businesses and help with childcare.
• Quality of life: Women enjoy a higher status in the community and become role models, as they demonstrate self-reliance.
• Education: More children are in school.
• Stronger community: The community is better equipped to break out of the vicious circle of poverty and low level of education.

Further, businesses started by women who graduated several years back are still running in the community. About 700 (out of the 1174 women) graduates are still running businesses in the community. This implies a total of about 1200 businesses are running that were started by loan recipients currently enrolled/graduated from this program. In addition, more than one-third of graduates have made investments in land, shops, and home extensions so they have a sustained source of income. 

Family sustainability: Families are more sustainable, both from the economic stability and health aspects as they (i) are running successful businesses, (ii) are socially and economically empowered, and (iii) have acquired lifelong skills. Overall, a relatively small investment results in economic empowerment for the women, family sustainability, gender equity, and a strong community that can solve its problems without assistance.

Plans for 2021

• Provide new loans to 80 women to bring the total number of loan recipients to 550.
• Provide business training to 600-700 women.
• Provide refresher training and business mentoring training to 470-500 women.
• Track the 550 active businesses, so they continue to operate in the community even after graduating.
• Stay connected with graduates and encourage them to mentor/train new loan recipients.
• Provide clean cooking stoves to an additional 10,000 vulnerable women to bring the total to 17,000 stoves. Encourage recipients to use the stoves as an income generating asset.

How Micro Loans Transform Communities

Research conducted by the World Bank has shown that microcredit can be a cost-effective way to alleviate poverty. Their study concluded that even though the vast majority of microfinance is subsidized, the subsidy amount is small, at around $25 per borrower. Further, since poor people have almost no access to financial opportunities, providing them with diverse micro credit products expands their choices and results in a higher standard of living and improved well-being.

Building More Sustainable and Peaceful Communities

We measure success by ensuring sustainability of the family and not so much by repayment rates and financial sustainability of the program. Family sustainability is measured by an improvement in health, children attending school, financial literacy, and asset acquisition. In addition, loan recipients enjoy a higher status in the community as role models. To sum, program activities result in poverty alleviation, an improvement in the health of families, education for children, and asset acquisition by women. Education and training enable families to break the cycle of poverty, reduce income inequalities, and improve gender equity. In the long term, communities are more sustainable and peaceful.

Thank you for empowering vulnerable women in Zambia.