Micro Finance

DEEDS' savings and credit unions aim to promote micro-enterprise as a means of poverty alleviation. Access to commercial savings and credit facilities is not available to much of the community as they have little or no assets against which to guarantee any loan. Several of the DEEDS women's associations run savings and credit unions to provide these facilities, giving small loans for the women to start businesses and to meet other expenses such as healthcare.

The communities in the project operational area are severely inhibited by a lack of access to proper credit and savings facilities. Often the only option when seeking credit is to borrow from a local moneylender at massive rates of interest. Money is often borrowed in the form of advanced pay from their employers, locking the people into a cycle of debt that becomes impossible to break. Violence is frequently the result of defaulting on a debt. The villagers also have no knowledge of the banking system and no confidence to approach such institutions, storing what money they do have in their houses.

The establishment of a micro finance system includes a credit union and a savings account that is opened at a local national bank. Training and awareness sessions are given in the management of these systems and records are meticulously kept (capacity building). Members democratically decide on a sum of money that each individual will deposit in the savings scheme each month. This sum is usually between Rs.10 and Rs.20. Members are entitled to apply for a loan from the credit facility that can be used for a number of reasons:

• Family expenditure during festival time
• Health and education of the members
• The purchase of agricultural inputs (seeds, fertilizers etc)
• Establishing micro enterprises
• Expanding existing micro enterprises

DEEDS provides a small sum of money that acts as a start up fund for the credit unions. This helps with the initial loans and enables the unions to start operating as soon as possible. In turn this helps to instil confidence to the members that such schemes will work by demonstrating the process quickly, instead of waiting until sufficient funds have been raised by the members themselves. Members may lose interest if they cannot see the scheme working.

There are plans to introduce a scheme in the near future whereby a portion of the repayment is set aside as a Child Rights Fund or Village Development Fund and utilized in educational and developmental projects based within the village. Such projects will gradually ensure the sustainable development of the community and encourage self-sufficiency.

Written by ex-DEEDS volunteers, Paul Gunstensen and Stuart Cameron.