Micro-credit loans can play a strong role in improving livelihoods, as illustrated in this week’s news story by Sawa Pius. Micro-credit lending organizations are typically established to provide loans to people who cannot access credit from traditional banks. Like the Rwandan women who borrowed money to establish small banana-processing operations, micro-credit lending can often help people to start a small business.
In this week’s featured script, two women discuss different types of micro-credit loan systems and how they work. You can find this script online at: http://www.farmradio.org/english/radio-scripts/57-3script_en.asp. This script is part of a three-part series on women and credit. The other two scripts are “Women start a revolving loan fund” and “Women set up a purchasing and marketing cooperative”.
Narrator: Program host.
Sylvia: Woman farmer.
Joyce: Woman farmer, Sylvia’s friend.
Program host: Like many of the women in our audience, Sylvia farms a small plot of land and uses most of the food she grows to feed her family. Sylvia would like to sell vegetables at the local market to make a little extra money, but she doesn’t grow enough to feed her family and sell at the market.
Do you have the same problem? Would you like to earn an income by selling some of your produce at the market? Today’s program is about credit — or borrowing money — and how it can help you to make more money from your farm. Let’s join Sylvia and her friend, Joyce, as they discuss micro-credit programs for women.
Sylvia: I am a hard-working farmer, but I am not able to get ahead! When I am in the market, I notice that there is a lot of demand for vegetables, but I do not grow enough to sell at the market! If I had a water pump for my vegetable plot, I could grow more vegetables. But I will never save enough money to buy a water pump!
Joyce: I agree a water pump would be a good idea. It sounds like you could use some credit to help you improve your farm.
Sylvia: I don’t know very much about credit.
Joyce: Well, credit is money that you borrow from a bank or credit union. When you receive the money, you agree to pay it back over a certain period of time. You also pay an extra charge for using the money. The extra charge is called interest.
Sylvia: Oh, I tried to borrow money from the bank, but I was refused. It was difficult to fill out the application because I can’t read. Then the loan officer told me that I couldn’t borrow money because I don’t own any livestock or land, or anything of value that the bank could take if I wasn’t able to repay the money. I only wanted a small amount of money!
Joyce: Don’t give up. There are other ways that you can borrow money. Have you heard about micro-credit programs?
Sylvia: Is micro-credit different from borrowing money from the bank?
Joyce: Micro-credit programs lend small amounts of money with lower interest payments. They are to help women earn extra money. There are micro-credit programs for women all over the world. Some are organized by local banks. Others are organized by rural organizations. And there are many micro-credit programs started by women like us!
Sylvia: Lower interest payments would be very helpful! I borrowed from a money lender in the village who charged me twenty percent interest. It was very difficult to repay the money and the interest. But if I don’t have any livestock or title to my land, how can I borrow money?
Joyce: The Grameen Bank in Bangladesh is a successful credit program that uses group encouragement to make sure the money is repaid. Women form credit groups of five people. If one woman in the credit group does not pay back the money she borrowed, the other four will not be able to borrow money. This is called group liability.
Sylvia: That may work for them. But why would other women in my village want to join a credit group with me?
Joyce: Each woman in the credit group will take a turn borrowing money. Think about how much you would benefit if you were able to purchase a water pump. You would be able to repay the money by selling more vegetables in the market.
Sylvia: I know that I would encourage other women in my credit group to repay their loans so that everyone could improve their farms.
Sylvia: (Sylvia’s excitement suddenly turns to worry) But I have no experience handling credit! What if I cannot repay the money?
Joyce: Women everywhere have faced difficulties, but they have shown they can manage. Don’t be afraid to try.
You should first discuss the idea of borrowing money with your husband and your family. Explain to them that it would help you raise the family income. If you have their support, it will be much easier to succeed.
But before you borrow the money, do some careful planning. Decide how you will spend the money and how you will repay it. Decide how much money you will spend to get your vegetable stall going. You will have to set a price for your vegetables that will earn enough money to repay the loan.
Don’t borrow too much money. It may take you several weeks before you are able to repay it.
Sylvia: Well, perhaps with a good plan and support from other women, I can succeed. I would like to find out more information about micro-credit programs in our area. Can you help?
Joyce: Let’s ask our friends and neighbours in the village and then go to the health clinic or the school for more information.
Sylvia: Perhaps we can start our own women’s bank with our neighbours!
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Contributed by: Noelle Grosse, Researcher/Writer, Canada.
-“Gender and microfinance: guidelines for good governance,” Susan Johnson, Centre for Development Studies, University of Bath, UK, BA2 7AY.
-“The Grameen Bank and Women in Bangladesh,” Abu Wahid, Challenge, Sept/Oct. 1999, pp. 94-101.
-MicroStart — A Guide for Planning, Starting and Managing a Microfinance Programme (Version 1.0), United Nations Development Programme, 1997.
-The Virtual Library on Microcredit