Meet Eclof Clients

House of education

The Mi amigo Jesús ( My friend Jesus ) school located in the village of Mariscal Caceres - 35 kms from Lima, the capital of Peru - just cannot seem to stop growing.

Rosa and Eugenio Trujillo opened the school in 1998 after moving to Mariscal Caceres, when Mr Trujillo retired from the navy. To do so, they used Eugenio's retirement pension and the family savings. Their decision was motivated by the fact that the only state school in the district was overcrowded and the level of education there notoriously low. There were good local private schools but many parents could not afford to pay the expensive fees.

The school began in the Trujillo's home with eight pupils. Within three years there were 95 children and the family home was bursting at the seams! Today, the Trujillos continue to look after the administration of the school, and employ high quality teachers.

Over the years, the solidarity group formed to operate the school has received a number of ECLOF loans. The first one, in 1998, helped the school to get going. A second loan, in 1999, made possible the building of a second floor to provide more teaching space. Two years later, the school used a further loan to equip a kindergarten, as well as first and second grade classrooms.

Further loans paid for a third floor to be added to the building, more classrooms, and a computer laboratory with ten workstations and PCs. The school received its latest loan of US$8,000 last January and has used the money to provide new bathrooms and three more classrooms.

Today, the school has more than 200 students in classes from elementary to 10th grade.

In some ways, Mi amigo Jesús is unconventional. It bans chocolate, sodas and artificial sweets in favour of natural more healthy food snacks. Pupils take home what they grow in the school's vegetable gardens. The school is modern in outlook; it provides computer training for children from nursery age. Parents are directly involved in the running of the school and meet regularly to discuss policies and plans.

The Mi amigo Jesús school is another example of what a series of ECLOF loans can achieve over a period of years. One wonders how much higher the Trujillo's home can get!

Growing up in Peru and becoming well educated, thanks to a very special school.

Many of the pupils at the Mi amigo Jesús school come from very poor families. Tania Gutiérrez, aged seven, was in the first grade of the Mi amigo Jesús school. Tania lived with her mother and her 20-year-old sister. Their father had abandoned them. Tania's mother was terminally ill with cancer, and her sister, who worked as a housemaid, was the only one who brought any money into the home. From her income, Tania's sister just about managed to pay for Tania's schooling. After their mother died, Tania's sister could no longer afford to pay the school fees so Mi amigo Jesús awarded Tania a scholarship for the rest of the school year. In 2004, Tania's sister enrolled her again and the school was able to help by allowing her to pay as and when she could.

Fivefold success in Arazap!

In Armenia, shortly after the collapse of the Soviet Union in the early 1990s, the privatisation of former state properties began to take place. As a result, individuals each received animals, buildings or small plots of land. Many families were then able to begin farming.

However, people had received so little that for many it was almost impossible to produce enough food for personal consumption, let alone enough to run a business. The answer was for individuals to form small groups.

That is what five members from three families did in the small village of Arazap in the Valley of Ararat. The outcome was the Arazap-3 solidarity group. Between them, group members already owned ten cows. The five farmers took out a first ECLOF loan of US$2500 ($500 each) to buy ten more cows, and with the addition of US$2400 of their own money, they also bought ten bull calves and some fodder.

The farmers housed all of their animals in a cattle shed owned by the group leader, Hmayak Asatryan, who had received the building in the share-out of state properties during the privatisation process.

The members of Arazap-3 come from a variety of backgrounds. Hmayak Asatryan used to work in the top management of a state collective farm. He has good farming knowledge and experience, including a university diploma. Marjanik Arakelyan is also a university graduate and was previously a director of the local government-run kindergarten. Mamikon Kostanyan used to work as a herdsman. The remaining two members, who are in their late twenties and much younger than their colleagues, went straight into farming from school. By the time they joined Arazap-3 they had enough experience to be eligible for an ECLOF loan.

To date, the Arazap-3 group has received three ECLOF loans that have been well used to expand cattle breeding activities, as well as the production of milk and meat. The farmers plan to increase milk production further, and diversify into cheese making.

Enterprising expansion

Eleven years ago, a group of 23 Kenyan women, who individually made and sold knitted goods and tablecloths, got together to try to increase their incomes and expand their businesses by finding sources of additional capital.

Since then, many group members have taken out a series of ECLOF Kenya (KECLOF) loans. Today, the results of the Ngecha Tablecloth Women's Group, as the women call themselves, show that microcredit coupled with strong leadership can produce long term development.

The group's name, explains founder-member Miriam Njeri, derives from where the women live and work. Ngecha is an area with a population of about 10,000, and lies within the Kiambu district, some 25 kms from Nairobi, the capital of Kenya. The average age of the Ngecha Tablecloth Women's Group members is 47, and it is the longest-standing client of KECLOF's regional office in the nearby town of Limuru. To date, the group has received six increasingly substantial loans. The latest credit was for a total of just over one million Kenyan shillings (US$13,300).

Everything starts somewhere. Mary Mbiyu begins another tablecloth for sale in her shop. From small origins, her business has increased thanks to a series of ECLOF loans.

 

 

 

 

With her first KECLOF loan, Mary Wangui Mbiyu increased her stock of materials for making tablecloths. A second loan meant she could increase the range of items in her shop; sales increased substantially. As a result, Mary Mbiyu bought a plot of land with the hope of having a house on it one day. After a third loan that enabled Mary to expand her business even further, this enterprising woman built her planned home. Then came a fourth loan and Mary Mbiyu diversified her business. She bought three cows and also began to buy other goods from a southern African company. She sold these goods in her shop on commission. Mary used a fifth loan to buy some laying hens, and was then able to sell eggs to local schools. Currently, Mary is repaying a sixth loan that she has used to increase her number of hens and buy the feed they need.

A pay phone, bought with an ECLOF loan, has increased the takings in Miriam Njeri's shop.

Miriam Njeri says she has greatly benefited from the ECLOF loans she has received over the years. "Poverty used to create a strain between me and my husband because we were not able to pay to educate our children", Mrs Njeri explains. "Now we can do so, and this is helping the general fight on illiteracy and dependency in our country."

With a first loan, Miriam increased the stock of her tablecloth business. She bought a dairy cow with a second loan, more stock with a third, and then, with a fourth, built some rooms for rent at the Ngecha trading centre, where she is based. Mrs Njeri also added to this loan money she had saved as a result of increased income because of her earlier loans. With a fifth loan, Miriam bought a pick up truck to transport her goods and animal feedstuffs. This saved the hefty monthly rental bill she previously had to pay for a pick up truck, and now Mrs Njeri also has the flexibility to use her truck whenever she needs it. Today, her shop sells a wide variety of food and household goods. Miriam is currently repaying a sixth loan with which she bought a payphone for her shop, plus added stock. She hopes to open a supermarket in Ngecha in the future.

With a series of ECLOF loans, Pauline Njeri built up her tailoring business, now owns three sewing machines, and can provide employment for others in her community.

 

 

 

 

According to Pauline Njeri, ECLOF's loan programme has made her dreams come true. She recently bought a piece of land and is hoping to develop it soon.

A decade ago, Pauline used her first two loans to expand her tablecloth business and also to buy a cow and sell milk.

With a third loan, Pauline bought a sewing machine to make dresses. Her business expanded and with two more loans she bought two more sewing machines and increased her stock. Her business continued to grow; now her tailoring shop employs other members of the community. Pauline is on her sixth loan with which she bought some land on which she plans to build a more substantial shop.

Whatever happened to ...?

Five years ago, New Horizons (Issue 24) told the story of Daniel Moreno and his passion for bee-keeping, on which he had based his family business in Uruguay. New Horizons has contacted Daniel again to find out how things are going today.

NH Daniel, you have received two loans from ECLOF. What were you able to achieve because of these?

DM The results have been significant, particularly because we received the loans at a time when the price of honey was low and there were restrictions in Uruguay's foreign exchange system. Without the ECLOF credit, we would not have been able to develop our business.

NH From your experience, is it always right for micro-enterprises to seek loans?

DM It is a very positive thing to do but some considerations should also be taken into account. First, before any individuals request a loan, they must calculate whether their business plans will bring in enough money to repay the debt as well as make a living. The calculation should also take into consideration the fact that the market price of what is produced may go down, and production costs may rise. Then, there is always a chance that there might be bad weather, when little or nothing can be produced.

NH What happened to you after you received your loans?

DM On this point, let me tell you that during the 1999/2000 season, we endured a period of drought caused by the El Niño phenomenon. During this time, we produced no honey and, to make matters worse, we lost a high percentage of our beehives. As a result, we were late in making our loan repayments. Thankfully, the next season we recovered and paid the amount we owed.

NH How is your family business doing now?

DM Thank God, it is doing well and we are in a healthy situation. The high price we received for our honey from the last two harvests have allowed us to pay all our bills; we are now planning a 30% growth in the business through the use of our personal assets.

NH Why are you concentrating so firmly on bee-keeping?

DM Because it has many advantages compared to other agricultural activities. For example, honey can be exported and we get paid in US dollars. In addition, the market is such that we can sell everything we produce. The business provides permanent jobs for local people; this prevents migration from our area. Investment costs are low and we also do not have to own the land on which we keep our hives.

NH Do you work outside your family business?

DMYes, I am an adviser to others who wish to invest in bee-keeping. For the last three years, I have been a consultant to a group in Artigas, a region in the far north of Uruguay. I also belong to a group of beekeepers in my own region and we work with seven similar groups from other parts of the country. As an association, we act as consultants to more than 130 honey producers. In addition, the members of this association now combine efforts and we have begun the direct exporting of the honey that we all produce. There are many other ways in which we cooperate with each other. For example, we buy and sell bees to each other, and we support various research projects to improve both the quantity and quality of the honey we produce.

NH Do you think these experiences can apply to other regions or countries?

DM I believe so but they must be adapted to local and regional realities.

Sporting chances in Brazil

An ECLOF loan of just over US$28,000 has enabled a sports clothes manufacturer in Brazil to expand and provide significant additional work for local people.

Onda Sport is based in Barrio Uruguay , which is a poor area of the city of Salvador in the State of Bahia. In this region, a low-income family needs three salaries in order to meet their basic costs. Almost 55% out of a total population of 54,000 are in this position.

Until the 1940s, Barrio Uruguay and the surrounding area was the centre of Brazil's textile industry. Then, it moved elsewhere and people had to find other ways of earning a living. Recently, a shopping centre opened in Barrio Uruguay with products and prices suitable for residents in the area. Items on sale include goods produced by local micro-enterprises, such as jewellers, tailors and other clothing manufacturers. Most of the 240 shops and businesses in the centre have signed a Local Production Agreement. This agreement is a local initiative of organizations in the textile industry to develop cooperation and common policies.

Onda Sport

One of the businesses that has helped to re-introduce the clothing industry to the Barrio Uruguay area is Onda Sport. In 1991, Onda Sport began to make a number of clothing items, including shirts, blouses and swimsuits. Six people, using four sewing machines, worked in the factory at the beginning. After a year, Onda Sport received a commercial bank loan to buy more sewing machines and increase its working capital. In 1999, the factory began to make polo shirts, and, in 2000, moved to its current location, where many micro-enterprises connected to the clothing industry are located.

Quality control at Onda Sport is a key part of the company's success.

More than profit

The enterprise has an impressive approach to social responsibility. On one day each month, the clothes produced are donated to local children in need. Any fabric left over from making these garments is given to community groups to use for handicrafts and other small income-generating products.

Onda Sport is well known for its high quality and well-designed products. Over the past 14 years, it has increased its workforce substantially. As a result of the ECLOF loan, Onda Sport was able to take on 20 new employees. The total workforce now stands at around 80, of which 92% are women. Many of these women have had little schooling (25% reached first grade and 51% second grade). In addition, 40% of Onda Sport's female workers are mothers who represent the only source of income for their families.

Onda Sport used its ECLOF loan to increase further its working capital in order to improve its ability to buy raw materials and keep production lines running all year round. This means workers can be employed continuously rather than on a seasonal basis. It also ensures that stock is available in periods of high demand, for example, around Christmas and the end of the year.

Onda Sport sells almost three-quarters of its production to retail shops. Interestingly, the factory also sells 20% of its clothing to sacoleiras : women who sell in market places and door-to-door. Many of these women belong to micro-enterprise solidarity groups. The women have not only improved their own life chances but through their doorstep selling in remote communities, they also provide quality clothing products to those who have no access to regular shops.

Lending to lenders

To reach a population it could not otherwise reach, ECLOF Uganda has moved into providing loans to other microfinance institutions (MFIs).

Uganda has one of the lowest GDPs in the world. An estimated 80% of the population lives below subsistence level. Most citizens (more than 80%) depend on subsistence farming and small-scale trading activities for their livelihood. Therefore, the demand for microfinance services is very high. The large financial institutions have traditionally failed to provide credit to the poor, which makes organizations such as ECLOF vital.

On its own, ECLOF Uganda does not have the capacity to reach and service large numbers of additional clients. One answer to this is for ECLOF to lend through other microfinance institutions (MFIs). It increases client and area reach at reasonable cost, whilst minimising risks. For ECLOF, it also means lower overheads and increased networking, and staff are freed to concentrate on loan collection.

Problems and solutions

This approach is not without its drawbacks. It takes at least three months to set up a new process and disburse the first loan. Some smaller MFIs that could be involved chose not to be, whilst larger MFIs have more options open to them. Smaller MFIs represent a larger risk than bigger agencies, and their need for capital is seasonal and unpredictable. It is also difficult to standardise terms and conditions for all MFIs. In addition, most smaller institutions do not have property to offer as collateral.

To cope with these problems, it is necessary to set fairly stringent conditions and target a few well-established institutions. In doing this, it makes sense to use local microfinance associations to market products and vet applications from MFIs. Strict collateral conditions that apply to MFI directors' personal assets are also required.

 

In line with its policy of lending to the poor and most marginalized, ECLOF Uganda has formed a partnership with the Uganda Finance Trust Limited, which is a microfinance institution formed in March 2004 to assume the financial services business of the Uganda Women's Finance Trust Limited (UWFT).

UWFT offers a woman-friendly financial environment whereby women are counselled and introduced to the benefits of saving and using credit appropriately. Today, UWFT has over 21,000 borrowers and 90,000 savers. Operations are run at 21 branches in 20 districts. ECLOF Uganda supports the organization by providing capital for on-lending activities to UWFT's clients.

Youth job creation in Tanzania

Many young people have found employment in Tanzania thanks to a project that has grown significantly over the years.

Back in 1983, Afri-Youth Development Services (AYDS) was created to tackle malnutrition among children and sick elderly people, as well as to provide vocational training for young men and women who were not able to go on to secondary education from primary school.

AYDS now produces clothes and foodstuffs, such as flour, soya drink, soya meal, cinnamon and honey. Originally based in the city of Arusha, where there has always been a good demand for AYDS products, the group has expanded and recently opened new branches in Moshi and the capital, Dar es Salaam.

Afri-Youth Development Services received a loan from ECLOF Tanzania in 2002 and ploughed back into the business the extra profits the loan made possible. In turn, the group was able to improve and increase its business with the result that AYDS opened its two new branches.

Young people who complete their training at AYDS are able to remain with the project at a guaranteed regular salary, though some opt to leave and begin their own businesses. After completing a tailoring course, fourteen girls branched out on their own. Three others remained with AYDS and, as part of their work, look after bee hives in their backyards.

From food production, the group has moved into food processing. The market for its goods is so buoyant that AYDS finds it cannot keep up with demand. More financial support will be needed if Afri-Youth Development Services is to build on its current success and fulfil its potential.

Bottling honey needs a steady hand at the Afri-Youth Development Services, where many youngsters find steady employment.

Feeding corn into the mill to produce fine flour.