Solidarity, a Bank Guarantee for the PoorestNov 15, 2016
In the DRC, savings and credit unions mainly benefit the poorest citizens who are excluded from traditional financial systems. In this country the size of a continent, more than 95% of Congolese people do not have bank accounts. Eighty eight percent of the population lives on less than US$1.25 per day and the Human Development Index is one of the lowest in the world. Access to basic financial services can make a difference to boost employment and the economy. But in order to benefit from personal loans, borrowers must often provide guarantees that they cannot provide.
In order to improve living conditions in both rural areas and towns, several micro-finance institutions supported by UNDP and UNCDF offer an original solution to the poorest members of society so that they can have access to credit. This includes the creation of solidarity groups to take out loans collectively, guaranteed by joint surety. These initiatives take place within the framework of the Support Programme for the Microfinance Sector (PASMIF) supported by Belgium and Sweden.
In Walungu, South Kivu, the group CIMWEMWESA (which means “what brings joy” in Mashi) is made up of seven members, three women and four men, all neighbours, who engage in different activities: door-to-door sales-woman, pharmacist, carpenter, shopkeeper, miller… they have all benefited from a group loan from Coopec Cahi, a savings and credit union.
“Our group was created spontaneously in 2013 to create a group savings account in an informal way. Coopec Cahi raised our awareness on the subject a year later and we decided to join as a group. We hold two meetings a month and repayment of the loan is made monthly. The amount borrowed individually by each member varies between US$200-400. We have just requested our second loan,” Ernest, the group’s president, says proudly.
Boosting borrowing capacity and stimulating social cohesion.
The secretary of the group, Jeanine, is 35 years old. She is the mother of three children and was abandoned by her husband when she was pregnant with the youngest. Her husband took off with all their money. “When I found myself alone and penniless, I had problems feeding the children and building a business. Since becoming a member of the savings group, things have changed. We help each other and we motivate each other to make repayments. If one of us cannot meet a payment deadline, we pay it for them. We have also brought in a savings system. Our commercial activities have been strengthened and we have been able to improve the living conditions of our families,” she says.
On top of the financial benefits, these groups can have a real impact in terms of social cohesion: “The joint-holding group has supported me greatly. They’ve helped me improve my house with small jobs here and there, to diversify my revenue streams whilst encouraging me to start raising rabbits. Shortly after I joined the group, I had the idea of selling shoes door to door. I took out my first loan of $100 and since I was able to pay it back without any problems, I was able to apply for a second loan of $200. These sums helped me to buy stocks of second-hand shoes from Bukavu to bring back and sell on here in Walungu. My standard of living has improved thanks to this type of credit. My children go to school and we have enough to eat every day. My dream for the future is to improve my house, pave the floor and install a ceiling. I would also like to send my three children to university.”
Coopec Cahi has benefitted from the support of the PASMIF programme to expand its activities in rural areas and open a branch in Walungu in 2014. The first grant of US$78,000 from the PASMIF programme helped provide support to invest in equipment. A second amount of US$72,000 has helped support the granting of credit, particularly to solidarity groups.
The members of the solidarity group CIMWEMWESA hold meetings twice a month in the president’s carpentry workshop. They discuss questions related to group credit and their respective micro-companies.
Article translated by Jennyfer Bradley