What do you do if you went through hell and back living in the bush with the LRA? What if after being reintegrated to you home community, you make less than a dollar a day and every single shilling you earn and food you eat comes from your garden? What if you are the only income earner in a household that includes your child, 4 brothers, and their 5 children. It is on your shoulders to garden the fields, run a bakery business, make sure that 6 children’s school fees are paid each term, and 11 mouths are fed. What do you do? What do you do if you are taking care of infant twin boys, their two older brothers, and two additional children from your former co-wife that is no longer in the picture? You are trapped. These are the true stories of former ChildVoice graduates Scovia, Stella, and Mercy. I have spent the summer hearing these and other girls’ stories, and trying to come up with a plan to help them help themselves out of the trap that war and poverty have ensnared them in.
Last summer, CVI gave out 7 microloans ranging from $40-$80. Some women repaid the loans in full, some partially repaid, some didn’t pay back a single shilling, and even one girl had the supplies she bought the loan with stolen. It has been Brad (another intern) and my mission this summer to find out what worked, what didn’t work, and how ChildVoice can make improvements to the program to give the best chance for the girls to start and maintain a successful business, while ensuring the best chance for ChildVoice to recover payments.
It has been an awesome experience creating surveys to interview the girls who have received loans. We constructed an extensive questionnaire that targeted the positive/negative aspects of the loan process, got a breakdown of household income and living expenses, identified the availability and prevalence of savings among the women, and gauged the interests in potential new financial services that could help the girls all in order to paint a complete financial portrait to move forward. We interviewed in Gulu, 30 minutes away in the village of Lukodi, and even two and a half hours away in another district altogether. It was very eye opening and humbling to sit down and talk with the women in their own villages and to get an idea of the economy of village life for many women.
In my microfinance blog post from about a month ago I talked about the principle of group liability whereby a loan is given to a group (usually women) and if a member misses her payment then the rest of the group is liable for her share or else they will be disqualified from future loans. The purpose of this method is to shift the burden of administration and liability to the group rather than the lending organization. This helps trim costs and mitigate the high risk of lending to the poorest of poor. While interviewing the loan recipients, we also visited local and international microfinance institutions in Gulu to see how they ran their operations, but also to see if they could be potential partners to issue loans to ChildVoice graduates.
These microlenders utilize the traditional group loans, and because of that we decided to implement our own individualized loans for a couple of reasons. The biggest reason for doing so is simply geographical: the girls are scattered around northern Uganda and the ability to meet regularly as a group would be much too impractical. The most successful groups are made up of people from the same village, and there is a fundamental element of trust and cohesion that acts as a natural screening process to weed out people that would hold the group down. The other reason we moved away from the standard group model is because ChildVoice is not and never will be a financial institution. The purpose and mission of ChildVoice is to restore and to renew women who have been broken by war. ChildVoice exists solely for the aforementioned Scovia, Stella, and Mercy and girls like them. This is by no means a blanket statement for all lending institutions, but I get the impression that many exist for the bottom line rather than the welfare of the recipients. They take a hard line stance and measure success in repayment without regard to the psychological impacts on the women.
With that being said, we’ve added aspects to the program that we hope will help mitigate the risk. We feel the most important aspect is compulsory savings. Whatever the loan amount is, let’s say 100,000 Uganda Shillings (about $40), the girls have to save up 25% of the loan, which in this case would be 25,000 UGX (about $10). ChildVoice would keep this money in a safe, and if the women pay back the loan on time then they get the savings back in full, but if they default (after 4 months) then ChildVoice will retain the savings as collateral. Balancing grace and firmness is a delicate dance, but we feel like the compulsory savings is a far more compassionate action then humiliating the women by confiscating property or taking legal action. Additionally, it promotes a culture of savings that is sorely lacking in the region.
ChildVoice has a very unique and I believe exciting opportunity with their microloan program. The girls that graduate from CVI have a profound amount of trust and gratitude toward ChildVoice, and ChildVoice has a firmly entrenched commitment to see these girls not only be rehabilitated, but to thrive. This relationship, forged through 18 months of emotional and spiritual counseling, vocational training, business classes, and flat-out love, is something that is extremely rare in the complex and challenging world of international development. So yes, there is an extreme amount of risk in giving an individual loan to a formerly abducted girl, a girl who does not have a pre-existing business in which to add capital (a huge faux-pas in the world of microfinance), but if ChildVoice does not give this loan then who does? How does the girl who has to support 10 others in one small hut make money if jobs are not available and she cannot save enough money to start a business on her own? ChildVoice knows there’s huge risk at stake, but if the reward is a woman lifting herself and her family up—or evening keeping themselves afloat—with dignity then they have to go for it.