Microfinance - Project in making
Microfinancing is a type of banking service that is provided to unemployed or low-income individuals or groups who would otherwise have no other means of accessing financial services. Ultimately, the goal of microfinance is to give low-income people an opportunity to become self-sufficient. Although most modern microfinance institutions operate in developing countries, the rate of payment default for loans is surprisingly low with more than 90% of loans repaid. The World Bank estimates that there are more than 500 million people who have directly or indirectly benefited from microfinance-related operations.
We believe that by providing training opportunities at the DevCentre, we will be moving the community towards becoming more economically active. In addition, the DevCentre has the resources by way of computers, fax machines, photocopiers and telephones, for assisting entrepreneurs build up their micro-enterprises. However, without having access to funding, their options become limited.
With the DevCentre, the bakery and the sewing centre projects forging ahead, all providing resources to support entrepreneurs, the DevCentre is the ideal platform from which to administrate a microfinance operation for the communities.
We have begun negotiations with ABSA and Merrill Lynch to collaborate with us in this endeavour. To date, we have secured a commitment of R 1 million over three years from Sicpa to kick-start this initiative.
The banks support will provide clients without any credit history, access to micro-loans. The financial products offered will be tailored towards further developing and promoting entrepreneurial activity. This project will provide the community with access to a formal banking sector which is currently largely unavailable.
Additionally, ABSA has developed a training program for administering these products. This would provide additional skills-development and employment opportunities for suitable candidates from within the region.
In a community that has a 70% unemployment level and 36% relying on remittances from migrant labour, we believe that these projects have the potential to advance economic development in this region.
