POL Posts: Blogs, Reports & Updates
April 20, 2015

Impact of POL's Microloan Program in 2014

Power of Love’s (POL) microloans program empowers women impacted by HIV and AIDS to take their first steps toward self-reliance. By learning basic business practices, our new women entrepreneurs are better equipped to run small businesses and are therefore able to take better care of their families. The POL program is located in the community of Matero, in Lusaka, Zambia. Matero is one of the largest and poorest compounds in Lusaka, with a population of approximately 85,000.

This community is characterized by a high incidence of HIV and AIDS, which has a prevalence rate of 14% among adults aged 15-49. The unemployment rate is also staggering at upwards of 60%. As a result, the majority of the community are poor and live on less than $1 per day. Women in Matero regularly provide care for one or more sick family members. POL microloan recipients have been able to thrive in this difficult environment by learning marketable skills and running a profitable small business, thereby supporting all dependents in their households.

Direct Impact of our Loans Program in 2014

1.  Diet and Nutrition: Almost all 225 women are able to provide two or more meals per day for their families as compared to one meal per day before they joined our loans program.

2. Schooling: Most women have been able to support their children with school requirements such as fees, books, uniforms, shoes, writing utensils, and transportation money for those who use public transport. In 2014, as a result of this program, 22 children were enrolled at the University, 123 children returned to school due to their caregiver's financial stability, and 52 children started grade one this last month alone. In addition, 156 children are able to continue their education because their caregivers were able to pay for school expenses (uniforms, shoes, books, and stationery).

3. Household purchases: A majority of the women were able to purchase household items such as TV stands, pressure cookers, televisions, radios, DVD players, dinner sets, cooking pots, etc. These purchases would not have been possible without the earnings from their businesses.

4. Savings: About 175 women have been saving via bank accounts and an additional 40 women are saving at home. We are proud of these women who are saving a certain amount each week, as this is new habit for them. The amount saved each week is small, but it helps the women to take care of unexpected expenses and to continue to run their business after they have been weaned off the loan program.

5. Capital Acquisition: A group of 16 women pooled their savings to rent a piece of land for growing cotton and beans. These ladies got the idea from their mentors who themselves had purchased a piece of land for farming purposes and are doing well. An additional 16 women have purchased a piece of land each for purposes of constructing a house (for rent or as a home for themselves). Two of the ladies have laid the foundation for construction.

6. Business Expansion: Out of the total group of 225 women, 187 women have expanded their businesses and increased their capital by 50-60%. These dynamic ladies have invested funds in projects and products that will help sustain their businesses even after they are weaned off the loans program after three loan cycles. Moreover, they will continue to mentor new loan beneficiaries and have become role models for others in the community.

POL’s Program is Unique

Loans provided to POL microloan recipients have immediate impact on the entire family - the program is completely integrated with POL’s pediatric HIV care and malaria prevention programs. As such, the pediatric HIV care and malaria prevention programs provide microloan recipients with the extra support they need (via food, medicines, packages of healthcare services, and mosquito bed nets) while they learn how to run their businesses.  These factors significantly increase their chance of success in business.

Women and children have been disproportionately impacted by the HIV and AIDS epidemics in Africa; hence, they are the main beneficiaries of POL’s comprehensive programs. The vision behind all of our programs is to strengthen communities impacted by HIV and AIDS by empowering women.

How POL Microloans Work

  • Selection of the recipients – POL uses a community referral system and conducts in-person interviews with applicants. POL’s microfinance coordinator analyzes the need of the applicant and her family, her ability to learn and run a small business and her willingness to work hard and make it successful.
  • Business training – POL’s microfinance coordinator works in conjunction with the team’s loans officer and other experts to train the loan recipient in accounting, sales, costing, marketing and basic business practices. On the last day of training, loan recipients provide a credible business plan and submit a request for a loan.
  • Working as a team – Loan recipients are expected to work together with 3-4 other women as a group so that they can support each other in running their businesses. This is a critical component for success of the program.
  • Loan capital – Once approved for the program, microloan participants receive approximately $145-150 to start their business. This loan capital is a revolving fund used to finance future program participants.
  • Loan repayments and weekly support meetings – Loan recipients make 25 equal repayments at weekly loan/support meetings. These weekly meetings also provide them with the opportunity to ask questions and discuss topics that are relevant to their businesses and home.  Often, valuable partnerships are built in these meetings.
  • Business mentorship meetings – Successful women entrepreneurs from the community, including our microloan program graduates, are invited to talk to the new participants about their own experiences in running a business.  They discuss how to overcome challenges, and other business-related issues like inventory management, store location, design and layout.
  • Monitoring – The POL loan officer regularly visits the businesses to advise the women on business-related issues and to help provide workable solutions to any issues that they may encounter.  
  • Assessment – At the end of the 25-week repayment schedule (the first loan cycle), the loan officer administers a questionnaire to the micro loan recipients and asks for feedback regarding the loan process.  The discussions include plans, if any, for expansion of the business, possibly moving to a new location (which may require rent payments for the first time), and increasing inventory and product variety.
  • Refresher training – All participants receive refresher business training at the end of the first loan cycle.
  • Additional loans – Micro loan recipients who have successfully repaid the first loan are then eligible to receive a second micro loan to expand or further develop their businesses. This process is repeated once the second loan debt has been repaid.  For example, a woman may rent a knitting machine in her first loan cycle, but by the end of her third loan cycle she may have accrued sufficient funds to purchase a used knitting machine.  

Profiles of POL Women Entrepreneurs

Microloan recipients range in age from 33 to 65 years old. Of these women, 70% are single or widowed. On average each woman cares for a total of 6 or more people, of which 5 are usually children. Prior to receiving a POL micro loan, fewer than 5% of these women had bank accounts.  The vast majority of the women use their micro loan to start new businesses and the rest use loan funds to expand existing businesses. Businesses started with these loans are diverse and range from selling bananas along the roadside to brick-and-mortar stores selling cell phone chargers and accessories. Most businesses sell groceries, used shoes, toys, clothing, dried fish, charcoal, popcorn, mealie meal (a Zambian staple) etc.  Many women distribute fish to local restaurants, fry donut-like snacks for stores, or make their own floor wax.

Measuring Success

Since 2005, POL has provided micro loans to over 600 women in the community of Matero in Lusaka, Zambia. Since then, over 380 women have graduated from the program.  Currently, there are 225 women running successful businesses in this community.  These women are providing for their families by feeding, clothing and educating them, as well as acting as role models for other women within the community.

Repayment Rates – POL has experienced repayment rates in the range of 85-90% over the last five years; extraordinary given the difficult circumstances of the women

Other Financial Stability Indicators – Loan repayment rates provide an overall indication of the success of the POL program, but they do not give a full picture.

Savings – Since most Zambians are not raised to have a savings habit, POL participants are educated in the benefits of saving a small amount each week and are encouraged to open bank accounts.

Bank Accounts – Typically, fewer than 5% of the women have a bank account before participating in the POL program; after receiving POL micro loans, however, over 40% of the loan recipients have bank savings accounts.  Bank accounts in Zambia are not free and the remainder of participants choose to save at home.

Asset Growth – POL micro loan recipients grow their inventory and capital asset base by purchasing, for example, a knitting or sewing machine.  In addition, some women pool their resources with other POL participants to buy and sell larger quantities, and to invest in higher value assets such as the addition of a room for rental income or purchase of a small plot of land.

Health and Education – All POL participant families are eating better, typically moving from eating one meal a day to three meals a day.  Most families are also able to pay for school expenses such as books, shoes, and uniforms.  And, finally, many women come forward for voluntary counseling and testing for HIV.

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