Solidarity, a bank guarantee for the poorestMar 7, 2016
In the DRC, saving and credit unions mainly reach 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. 88% of the population lives on less than $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 many micro-finance institutions, supported by the 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 “he who brings joy” in Mashi) is made up of 7 members, 3 women and 4 men, all neighbors and 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.
We became aware of Coopec Cahi a year later and we decided to join as a joint liability group. We hold 2 meetings a month and repayment of the loan is made monthly. The amount borrowed individually by each member varies between $200-400. We have just requested our second loan” Ernest, the group’s president says proudly.
Boost borrowing capacity and stimulate social cohesion
The secretary of the group, Jeanine, is 35 years old. She is a mother of 3 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 lifestyles of our families”. On top of the financial benefits, these groups can have a great 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 a rabbit farm. Just 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 lifestyle has greatly improved thanks to this method of credit. My children go to school and we have enough to eat every day. My dream for the future is to improve the house, pave the garden 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 roll out its activities into rural areas and open a branch in Walungu in 2014. The first investment from the PASMIF programme of $78,000 helped provide support to invest in equipment. The second loan of $72,000 has helped support the granting of credit, particularly to solidarity groups.
Aude Rossignol, Article translated by Jenny Bradley
* 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.