> Posted by Steven Werlin
[The following post is Pt. II of a two-part series. In this post, Steven Werlin explains what his organization, Fonkoze, is trying to accomplish through group microfinance. The first part, by Beth Rhyne, appeared on November 17, 2011.]
It is easy to imagine solidarity-group microcredit as a method that both minimizes the costs an MFI faces in making its loans and protects the institution from risk. It’s easy to imagine both those things, because they are both true.
Using groups to makes loans means that the loans can be delivered and reimbursements collected at central locations without the borrowers’ having to come in to a branch. The borrowers save much of the direct transportation cost they would otherwise be stuck with if they live far from a branch, and the branch saves mileage because its loan officer doesn’t have to find each borrower individually. Borrowers and loan officers meet halfway, in a credit center.
The group also significantly reduces the lender’s risk. Group members can be held responsible for one another’s delinquent payments. Their need to vouch for one another means they are likely to choose fellow-members carefully, selecting friends whom they believe to be good risks. And making members agree on the size of each loan can protect against the over-indebtedness responsible for many write-offs.
But to imagine solidity-group microcredit merely as an effective way to lend money misses its essence. At their best, solidarity groups help poor women organize themselves to benefit from financial and other services they need, but also to build networks of mutual support and leadership development that can help them transform themselves into agents of progress for their families and their communities.
From the beginning, Fonkoze in Haiti has looked to the solidarity-group method as the key to its comprehensive approach to fighting poverty. We have invested in developing these centers in several significant ways. I’ll mention two of them.
First, though our members make their repayments only once each month, their centers meet twice. We even send the credit agent to this second meeting to participate in the discussions, even though these extra meetings significantly decrease the number of members an agent can serve and, so, very much increase our costs.
These second meetings are important, because they provide our members, who are generally very busy, a great chance to talk about business, to ask one another for advice, and to discuss problems. We have even developed and published a book of stories that members can use as topics for discussion at these meetings. The stories give credit agents and the centers’ elected chiefs a tool they can use as they learn to lead discussions, and they help ensure that these regular discussions touch on a range of important subjects. The books are not so much a fixed curriculum as they are a tool designed to help members use the time they spend together effectively by helping them structure their conversations.
Second, though our education programs were succeeding in some ways when we were hiring experienced educators as teachers, we felt that bringing these mostly male teachers was making it harder for our members to develop leadership themselves. So we stopped hiring outside educators and began to recruit borrowers willing to serve their fellow borrowers.
We made the decision to do so even though we knew it would make the task of preparing teachers of our programs much harder for us. Few of our members have teaching experience they can draw on. In many cases, the most educated center member we can recruit has no more than a primary school education. The simple approach to training we used with professional educators — reviewing the principles of adult education, familiarizing them with the module they were to teach, and explaining the paperwork they’d need to do — would not be enough. We had to develop more supporting materials, such as simple lesson plans, and we had to rethink the way we spend our week of training.
But we felt that as some members discovered their own ability to teach, and others learned to look to their fellow members, rather than to male professionals, the members’ solidarity and their sense of their own power would grow. This prospect seemed more than worth the trouble we anticipated as we looked to implement our decision.
The solidarity group is not a device that aims at efficient, low-risk lending, though it can have both these effects. It is, more fundamentally, a philosophy of development, one that starts from the assumption that poor women will make more – and more comprehensive – progress if they are helped to work together.
Have you read?
Haiti, Fonkoze & ‘The Female Vision’ – Alex Counts Book Project
Haiti in the Spotlight as Alex Counts Begins Book on Fonkoze
On the Anniversary of the Haitian Earthquake: Fonkoze and the ‘Super Poor’