Wednesday, February 22, 2006

Trabalhamos Juntos (We work together)

Sorry for the delay in the posting over the past few days. We’ve had a ton of visitors come through the office lately and it has caused me to neglect my blog. On Monday we had our big Project Steering Committee meeting where we had to present the work of MMF in front of the representatives from CIDA as well as the Bank of Mozambique and ministries of finance and rural planning and development. MMF will come to a close here by the end of November unless CIDA and the Mozambican government decided to renew the partnership commitment between them and MEDA. We put forth a good presentation I thought but now we have to play that proverbial waiting game as the bureaucratic wheels continue to turn and decide on our future here in Mozambique.

But for the time being I will write another report on the trip up north. After our two days with Caixa das Mulheres de Nampula, Cremildo and I met up with a microfinance institution by the name of Ophavela. Now Ophavela has a unique lending methodology that I had yet to see during my time in Mozambique. They facilitate what is know as rural savings and loan programs for poor, subsistence communities throughout the rural districts in Nampula. Unlike most other MFIs who receive funding for client loans from international donors and development organizations, Ophavela sets up self-sustaining associations of 15-30 members whose loan capital comes from the pool of savings that they are able to accumulate as a group. This methodology works extremely well in these rural areas where the communities are extremely poor and depend on each other as a means to survival.

So Ophavela will go out into these rural districts (where not many NGOs dare travel!!) and train local communities on how to run these credit associations. The members receive basic training in money management, record keeping and, recently, some basic information on HIV/AIDS. After a two month intensive training period the groups are reviewed by Ophavela officers and approved for the next “maturation phase.” This involves less monitoring by the Ophavela officers and community activists and more sovereignty transferred to the association members. The groups each have some flexibility in designing the conditions of the savings and loans as well as the terms of membership in the association. They will meet once a week to collect the savings contributions, provide credit to willing members, collect loan payments and discuss any emergencies or general issues of the day, all in addition to some good hearted singing, laughing and socializing with their friends from the community. Each member knows that their contribution is important to the overall wealth of the group, working together to foster greater prosperity for the community.

We spent the first half of the day with Ophavela interviewing their staff at their head office in Nampula. The staff were incredibly friendly and eager to talk about their operations as well as their HIV/AIDS program that was currently being developed. They have done a lot of work already and clearly highlighted areas where they would need further technical assistance. After the meetings in the morning we headed out to see some of the associations that operated just outside of Nampula. Being the visitors from the “big city,” Cremildo and I received a royal welcome from the association members complete with singing, dancing and refreshments (coke and egg sandwiches!!). For communities whose members often survive on less than a dollar a day, such an outpouring of hospitality was very touching.

After we conducted our group interviews, the members would proudly present “the box” containing their savings and social security contributions. Each member would then present their weekly savings, often no more than 10,000 MZM (50 cents). While these savings seem quite insignificant by our western standards, they are a considerable sacrifice for families with little to no income. And members know that if they continue to make these savings they can apply for a small loan (no more than three times their accumulated savings) or receive the group payout that happens every eight months. This payout comes from the accumulated interest on loans (10% per month) as well as any financial penalties assessed for late payments and is distributed accordingly amongst the joyous members. The happiness that the members share for being a part of the association is remarkable as it provides them with the added financial security to get through what they call the “hunger times.” The spirit that they show, despite the hardships the surround them everyday, is truly an inspiration.


Anonymous Seannykins said...

sounds good - and not to look for anything wrong - but can you explain a little more - is all MFI work "tied aide"? Do they have strict rules on what they must do to qualify for this service? If so, (and not really objecting to that) - are they cookie cutter solutions for all - or do these MFis go in and set up custom packages for each community? What is your take on the current practice as well as alternatives?

10:36 a.m.  
Blogger jpmozambique said...

Well I think the best way to answer this sean is that these MFIs are doing everything they can to achieve operational sustainability. This requires them to put in screening procedures and some degree of "strict rules" in order to prevent deadbeat or delinquent clients from dragging down the rest of the group or the the institution itself. In this respect they are no differant than commercial banks that screen their clients...although they do target a needier segment of society. Microfinance in Africa is a difficult business and there have certainly been attempts at "Cookie cutter" solutions that have failed becuase they were not entirely appropriate for the community they were serving. That being said, there are far more success stories, and far more satisfied clients here, than failures and it is encouraging to see the industry develop further and continue to reach those in need.

12:19 a.m.  
Anonymous sean said...

okay - I'm not against it - and I'm certainly not trying to compare them to the IMF or big commerical banks...I just don't know.

What do YOU think is the best way to set up the support/loan system? I imagine you've observed good and bad qualities in each of the MFIs you've worked with, any thoughts? ...or is not your mandate to evaluate the organizational structure of these MFIs?

9:49 a.m.  
Anonymous sean said...

To clarify: not against the rules or their practices - would be pretty friggin' high and mighty of me to weigh in on something of which I know absolutely nothing about. (Proof that people can change!)

9:50 a.m.  
Blogger jpmozambique said...

sean I really think that it is conditional to the financial needs and capabilities of the target community...and as for my beleifs on the best microfinance structure, the jury is still out on that one I'm afraid. There is still so much for me to learn before I could make a judgement call like that.

4:49 a.m.  
Anonymous sean said...

does it hurt?... you know, sittin gon the fence - ever experience tearing of any kind?

Jokes - okay, this obviously is something that you'll have to explain to me over a (dozen?) standards!

11:54 a.m.  
Blogger jpmozambique said...

you name the place and time my friend and i'll be there...perhaps ol JB will have to accompany us as well!!

12:55 a.m.  

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