Micro credit is basically about money… It has to do with raising, disbursing, collecting and thinking money.

Micro financing schemes have significantly empowered the poor and will continue to do so, according to Dr Makonen Getu, Deputy Regional Director for Africa of Opportunity International, a US-based micro finance institution.

Dr Getu made his remarks in a clear and concise introduction to the world of micro financing at the World Council of Churches Eighth Assembly in Harare last December. He was one of the panel at an ECLOF seminar that made up part of the Padare element of the WCC Assembly (Padare is a Shona word meaning “meeting place”). Mr Moffat Ndlovu, Chairman of ECLOF Zimbabwe opened the meeting which brought together micro credit experts, churches, donor agencies and many ECLOF clients from Zimbabwe as well as Colombia, Uganda and Zambia. The event received wide coverage on radio and television in Zimbabwe.

In his presentation, Dr Getu explored the benefits as well as some of the dangers of supplying money to those whom estab-lished financial institutions see as a bad risk.

Empowerment
The poor are disempowered, said Makonen Getu, because established lenders believe they cannot do anything which would be credit worthy. On the other hand, micro financing groups believe the poor do not lack ability but only opportunity and they will lend to them. As a result, the poor become empowered.

Businesses can begin or grow and that, in turn, creates more employment and raises incomes.

Enslavement to local moneylenders who charge exploitative interest rates is reduced or ends. Many poor people depend on loans and help from relatives, friends and neighbours. They borrow and borrow with ‘shame and pain’ clearly on their faces. By contrast, micro credit can mean a move from dependency to self-reliance.

Micro credit also brings better food, health, housing and education. No longer, for example, do families have to select which child to send to school; now, all can go. As the poor form groups in order to be part of micro financing schemes and then receive basic training, awareness grows. This leads to increased knowledge and confidence. People are more able to speak up for themselves and to pressure the authori-ties to provide necessary services. Money gives once-silent and ignored people a voice.

Poor women are among the most disad-vantaged and disempowered.

However, between 80-90% of those who receive micro credit are women. They are no longer economically entirely dependent on their husbands and can make their own financial contribution to their household. As a result, family relationships have improved and many women have also been empowered and have become involv-ed in local political and community life.

Dangers of Credit
Money and Spirituality
As well as great benefits, micro credit can also bring serious dangers, including a spir-itual one, warned Dr Getu. He quoted the words of Jesus from the Sermon on the Mount, “Where your treasure is there your heart will be also”.

Micro credit is basically about money, admitted Dr Getu. It has to do with raising, disbursing, collecting and thinking money. However, when micro finance institutions fail to realise life does not consist only of possessions and focus on money generation alone as the answer to all ills, they add to the enslavement of the poor. Micro finance schemes must not strengthen peoples’ love of money, which, as St Paul taught, is the root of all evil.

Interest Rates
Micro financing institutions (MFIs) have to charge realistic interest rates if they are to survive, and operate along commercial business principles. They must also be inno-vative and efficient in order to keep costs as low as possible and interest rates within rea-sonable bounds. Inefficiency can lead to hyper-interest rates which would make the MFIs as bad as local moneylenders and the result would be tantamount to enslaving the poor once more.

Family Life Damaged
As micro entrepreneurs spend more and more time on their businesses they are likely to spend less time with their families. Early mornings and late evenings add up to little quality family time. Cases exist of family separations and even divorce following economic independence among women. Another problem comes when a woman’s work load increases as she con-ducts business and still works in the home. MFIs have the responsibility of alerting their clients to these dangers and providing information on how to deal with them.

Management,Training, and Outreach
Management practices of MFIs must be effective and they should invest in client training to help people expand and diversify their businesses. In order to remain financially sustainable, there is a tempta-tion or MFIs to lend only to strong and established businesses, and to ignore weaker, newer ones. Micro financing must not marginalise the poor as others have done. Dr Getu told those at his Padare presentation that though micro financing is not an end in itself, it does bring positive results. ‘Best Practice Microcredit has proved to be a powerful tool in empowering the poor economically, socially, politically and spiritually’.

Micro credit also brings better food, health, housing and education. No longer, for example, do families have to select which child to send to school; now, all can go.