Remember the loan we made to Zareena in Pakistan? She wanted to buy a cow to start a milk selling business. This was a sustainable endeavor that would allow her to have a continuous supply of milk for the entire live of the cow and sell her milk for profit. Zareena had two sons and two daughters, one of which was in school while the other three were too young to attend. We hoped that this loan would allow her to become profitable enough to send all her children to school, so they would spend their time in a safe, stimulating institution and work towards having a job that will raise their standard of living for themselves and their family.
We are happy to announce that Zareena has become profitable enough to start repaying the loan even earlier than required! We received our first repayment of $2.29 this month, and will continue to receive payments through August, 2012 when the loan should be entirely repaid. Remember, we are only receiving our principal amount. This project is exclusively outreach-based. We are not receiving interest.
See what just $25 can do to enrich the lives of a family in a developing country? We will continue to make microloans to individuals and groups in areas where entrepreneurs have no access to credit. Check back soon and stay informed!
Today we contributed $25 to a group of 15 women in Senegal, all of whom live together in a village and have their own trade businesses.
Group loans work a little differently than individual loans. They ask for a large sum of money that is divided between them according to their business needs. The chair person of the group requests the loan, but each person is responsible for paying back their portion. Every now and then, the group gets together and discusses how their business situation is going. If one person is struggling to pay their loan back, the other members step up and cover it for them so they will be able to keep a high repayment rate and request more loans in the future.
The “Aba Ndiaya” solidarity group formed over two years ago. They asked for $2,950, collectively. A portion of the loan will go to help the chairwoman, Mrs. Fatou (first name not given), to buy palm oil and lemon juice. Mrs. Fatou, 53, has sold these products for several years, but wants to increase her inventory to improve the standard of living for herself, her husband, her five children, and four other children she cares for.
Senegal is located on the northwest coast of Africa, along the same latitude as Nicaragua. The average annual income per capita is USD$1,759. The microfinance institution administrating the loan is charging 17.5% interest. Remember, the interest stays with the institution, and is not transferred back to the loaner.
So far, the loan is 52% funded. The group still needs $1,400 in order to reach their requested amount of $2,950. By the end of the day the loan should be raised to the full amount. I will keep you posted….
Today we contributed $25 to Zareena, a woman in Pakistan who runs a livestock business. Her main responsibility is to buy baby goats from animal markets, raise them, then sell them for profit. She is asking for a loan of $925 to buy a buffalo, in hopes that she will be able to sell milk in her community.
Zareena has one school-age daughter, and three young children who are not old enough to attend school. We hope that this loan will enable her to earn enough money to provide for her children and have them all educated.
The average annual income per capita in Pakistan is USD$3,004. The Field Partner assisting Zareena with her loan is charging her 34.08% interest (keep in mind that interest goes to the institution, not the loaner). This seems high, but this rate is low compared to what some microcredit institutions charge. I think it defeats the purpose of helping these businesses to become profitable if they have to pay ridiculously high interest on their loan. Therefore, I only support Field Partners who charge their borrowers less than 35% interest.
So far, 8% of Zareena’s requested loan amount has been raised. Hopefully, the remainder of the funds she needs will be contributed by the end of the week. I will update you when this happens, and we will soon make our second loan!