When a micro­cre­dit loan is made, some­times more than money is needed by the bor­rower to make the loan suc­cess­ful. Some entre­pre­neur­ial train­ing, some dis­ci­pline and a fair re-payment sched­ule are also needed for the borrower.

From this IRIN story, we read about a cou­ple of micro­cre­dit suc­cesses and fail­ures that took place in Kenya.

Two years ago, fed up with a hus­band who drank too much and pro­vided too lit­tle, Julie Amunga, who lives in the sprawl­ing Math­are slum in the cap­i­tal, Nairobi, decided to start a busi­ness that would enable her to sup­port her family.

“My friends and I all had hus­bands who drank too much and beat us at home and yet they were not pro­vid­ing any­thing for the home,” she told IRIN/PlusNews. “We would sleep with other men secretly to pro­vide for our chil­dren but we real­ized we were not help­ing our chil­dren because pros­ti­tut­ing would only make us acquire HIV and die early.”

Amunga and five friends decided to pool their sav­ings and use them to start small busi­nesses; they also got a micro­fi­nance loan from the Jamii Bora Trust, which works to empower youth and women in Nairobi’s slums.

While she and another woman have man­aged to sus­tain suc­cess­ful small busi­nesses – she grows and sells veg­eta­bles and fresh fruit juice in the local mar­ket – the other three found it much harder to make the loans work for them.

“Their hus­bands cheated them and took all the money yet we were sup­posed to pay back the loan,” she said. “Oth­ers took the money with­out know­ing which busi­ness they want to start, so … they ended up spend­ing the money.”

Accord­ing to Joseph Kwaka, exec­u­tive direc­tor of Com­mu­nity Aid Inter­na­tional (CAI), an NGO that runs a micro-credit pro­gramme in Nyanza and Nairobi provinces, mak­ing micro-credit avail­able to women — and espe­cially wid­ows — helps cush­ion them from poverty, but with­out proper prepa­ra­tion and train­ing, can just as eas­ily backfire.

“Our expe­ri­ence with offer­ing credit facil­i­ties to women is that many take the money and end up using it to buy fam­ily needs like food, clothes, with­out even start­ing a busi­ness for which you gave them the money,” he told IRIN/PlusNews. “Oth­ers will tell you the hus­band took all the money and used it for drink­ing or main­tain­ing another woman, for­get­ting that this money should be repaid and the only way you can repay it is by start­ing a busi­ness enterprise.

“The fam­ily sinks deeper into poverty because the fam­ily prop­erty against which the credit was advanced is carted away by the lend­ing orga­ni­za­tion,” he added. “Micro-credit then ends up as bit­ter pill for many women to swallow.”

Train­ing key

Con­sefta Kimundu, who is rais­ing eight chil­dren alone after her hus­band passed away five years ago from HIV-related com­pli­ca­tions, joined a group of wid­ows to form a farm­ing coop­er­a­tive four years ago. The group, based in the Rift Valley’s Trans­mara Dis­trict, com­bined their con­tri­bu­tions and approached a local bank for a small loan to lease land and buy seeds and fertilizer.

They had the ben­e­fit, how­ever, of train­ing from the UN World Food Pro­gramme (WFP), teach­ing them to mea­sure the mois­ture con­tent of the maize and how to clean the maize accord­ing to WFP standards.

“We meet weekly to encour­age each other to repay the loan because we will need it again,” said Chris­tine Nyongi, the group’s chair­woman. “We are now bet­ter farm­ers because we were trained by WFP in farm­ing skills and how to keep our grains clean.”

Ear­lier this year, WFP’s Pur­chase for Progress ini­tia­tive gave the group a con­tract to sup­ply 250MT of maize.

“Now my chil­dren can go to school — I can buy their uni­forms, buy them shoes and clothes and they are happy like other chil­dren,” Kimundu said. “I can buy food for my fam­ily and I can buy some­thing for myself too.”

Accord­ing to Kimathi Mutua, man­ag­ing direc­tor of K-Rep Bank, which, with USAID, runs a pro­gramme to pro­vide micro­fi­nance to peo­ple liv­ing with HIV, it needs to be about more than just pro­vid­ing money.

“A pro­gramme like ours helps to reduce stigma that women face because it gives them hope and pro­tects them against the neg­a­tive eco­nomic impact HIV might have on their lives, but it is not enough to give them money,” he said. “Train them in busi­ness skills, how to mar­ket their busi­nesses and even cus­tomer care so that they have a holis­tic busi­ness knowledge.”

While sev­eral stud­ies have shown that micro­fi­nance empow­ers women finan­cially and improves their self-confidence and even reduces HIV risky behav­iour, a 2002 Ugan­dan study found sev­eral draw­backs to many micro­fi­nance pro­grammes, includ­ing too-small loans that enabled women to pur­chase house­hold needs but kept them in the same eco­nomic bracket, oppres­sive repay­ment peri­ods and lack of proper train­ing in busi­ness and other skills. The authors sug­gested pro­vid­ing women with suf­fi­cient train­ing and loans large enough to buy mean­ing­ful assets that would sig­nif­i­cantly improve their finan­cial position.

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