Emmanuel Yamoah (National Projects Manager) and Harry Jung (intern, Bowdoin University) from Patriots Ghana went visited SRF Microcredit for a brief meeting. The purpose of the meeting was to discuss with Justice Arthur (Head of Marketing and programs manager of GAFI) how the institution goes about giving out loans, who are their clients and under what terms of agreement. Although visiting a not-for-profit MFI would have given us more direct answers, visiting a for-profit institution offered an indirect and yet insightful new perspective.
Many interesting points were made by Justice. They include a fact that Ghanaian government regulates MFIs to operate in a single branch and focus on one area. As a for-profit MFI, Justice’s clients are salary workers, foreign students, and corporations—people or organizations whom are established and have credible financial backing. Apparently, it is a very profitable business; for a group of 6 full-time staff and a few interns, they serve more than 2,500 clients. With profit in mind, their interest rates are naturally higher than ours, which is a non-profit microfinance project. For example, Justice showed us as a typical balance sheet has interest rate at 8%, which applies to all outstanding loan balance monthly. We follow the same method, but ours is set at 4.5%. Something we don’t do—they charge upfront processing fee of 3.5% to cover for initial operational cost like drawing up paperwork, transportation, etc.
They are very successful at getting their owed money back in time. This is due to multiple factors. For example, for salary workers, their income bank account is linked to their lender, so lender automatically takes out monthly dues from the income bank account. This can’t be done with our project since our clients are technology adverse and don’t have bank account. All their transaction is done by cash. Furthermore, collateral is used. For example, a student must turn in a phone worth 2500 cedi and keep it with the bank for the duration of the loan to access to a loan of half of the phone’s value of 1250 cedi. PG does not use collateral during the loan screening process since no collateral in our client’s procession can match the money loaned out. Lastly, Justice’s MFI charge daily penalties for each day due is late. The rate is 12.5%. We use group liability in a high social capital area in the hopes that the members will keep each other at check since if one is late on repayment, the other group members are liable to repay on the person’s behalf.
Besides having clients who are educated and have stable income, the aforementioned ways ensure that for-profit like the one Justice works at minimizes arrears and defaults. Our choice of what sort of clients to work with in our microfinance project, illiterate and some of the poorest women in Ghana, brings up multiple intertwined constraints. Though mission and mindset between a for-profit, like SRF and non-profits are fundamentally different, there are lessons we can take away from the successes of for-profit MFI. One is that strong enforcement like penalty on arrears do decrease arrears and the risk of defaults. Finding creative solutions for achieving stronger enforcement, while not forgetting non-profit mission, tailored to the unique socioeconomic environment where we operate is a key step.
Credits: Harry Jung (intern, Bowdoin University)
Trissanne Keen, a previous intern of Patriots Ghana has been offered an internship position on the microfinance project. Trissanne is a Florida State University student, a recipient of the 2018 David L. Boren Scholarship Award and through the program, She is currently studying at the University of Ghana (UG). This Award provides students with the opportunity to study less commonly taught languages in world regions critical to U.S. National Security. She spent two months in Gainesville learning how to speak Twi and she is currently also taking a twi class at UG among other classes. You can read more about the award here : https://www.borenawards.org/
Last year, during her internship, she worked on the child labor and trafficking project, and served as a team leader. She led efforts of 7 local and international volunteers to implement innovative project activities and strategies to address child labor and trafficking in the Awutu Senya East and West Districts. Her team carried out several child rights advocacy and educational awareness campaigns, research and one on one tutoring. She also carried out a capstone project that analyzed the academic and social performance of sponsored students after they have been rescued from child labor and trafficking.
Below is what Trissanne had to say:
“It’s already been three weeks since I’ve been in Ghana. After completing my Twi summer class and enrolling in courses at the University of Ghana, I’m proud to announce that I will begin my internship with Patriots Ghana next week. For the fall semester, I will be working on the Patriots Ghana Micro-Finance Project. This projects empowers women by equipping them with financial knowledge to start and expand their small businesses. The project also facilitates a stronger sense of community among women. Having the opportunity to intern with Patriots Ghana last year, I know that I will be surrounded by dedicated and passionate Project Coordinators. I’m looking forward to having a great experience again!!!”
From September to December 2018, she would be playing the role of Project Development Intern. In the next couple of months she would be working directly with Patriots Ghana and our Partner organization, Gadrage Aid Foundation International (GAFI). One of her main tasks would be to work with project team to develop a document that facilitate learning of basic twi language for international volunteers to ensure effective communication in the project. Other tasks she would be engaged in are:
We look forward to working together towards providing interventions that lead to social and financial freedom for women.
International Women’s Day (March 8) is a global day celebrating the social, economic, cultural and political achievements of women. The day also marks a call to action for accelerating gender parity. International Women’s Day (IWD) has occurred for well over a century, with the first March 8 IWD gathering supported by over a million people in Austria, Denmark, Germany, and Switzerland. With the World Economic Forum’s 2017 Global Gender Gap Report findings telling us that gender parity is over 200 years away – there has never been a more important time to keep motivated and #PressforProgress. And with global activism for women’s equality fuelled by movements like #MeToo, #TimesUp and more – there is a strong global momentum striving for gender parity. And while we know that gender parity won’t happen overnight, the good news is that across the world women are making positive gains day by day. Plus, there’s indeed a very strong and growing global movement of advocacy, activism, and support. (https://www.internationalwomensday.com)
On this day, we honour Madame Cecelia Essel. Cecelia is one of the first five women that received a loan from the microfinance project in 2014 – a project that provides low-interest micro-loans to support rural women in agri-business and trade. Due to her commitment and vibrancy in the group, she became the first group leader of the women who are beneficiaries. She currently manages a gari processing business and also runs the only grocery retail shop in her village, Akuful Krodua, Central Region, Ghana.
Before being enrolled in the project, Cecelia was running her little retail store in the community and was gaining little to no profits. Through our financial management and literacy training, she identified gari processing as a viable business in the community and received our loan as her initial capital. The cost of producing the gari is Three hundred and Seventy-Five Ghana cedes (Gh¢ 375.00) and makes an average return of Five Hundred and Fifty Ghana cedis (Gh ¢550.00) per production cycle – every 5days.
Through the project, she has expanded her retail store, can now purchase raw materials for the gari production throughout the year and can afford to hire others. It takes her about 5days to finish the production cycle and she transports them to either Kasoa or Bawjiase market for sales on Tuesdays. During recent evaluation visit she mentioned, “Almost, I ensure all my products are sold to the latter before returning home”. This is because she has created a commendable goodwill in the community and the Kasoa market. She has also created a good communication structure with her customers and thus she produces based on the demands of her customers. Those that patronise her products make orders and she produces to meet their needs and this helps to reduce her losses.
“I am glad to benefit from this loan, I am now able to financially support the needs of my children, especially in their education. Particularly, I am happy that I no longer have to randomly borrow money to buy inputs for my business, I have a regular income to buy them with cash whenever I need them for my work” – Cecilia.
Patriots Ghana is committed to empowering more women in rural communities to press for progress and driving gender parity in Ghana and we are proud of Madame Cecilia Essel and other beneficiaries of the microfinance project through our partnership with Gadrage AID Foundation International. If you are interested in donating to support more rural women in business, please email us at email@example.com.
Happy International Women’s Day! Press For Progress!
Source: Emmanuel Yamoah (National Projects Manager)