Not so micro credit
26 February 2010 at 01:45 leznicki 5 comments
One of the questions Alidé, Kiva’s field partner in Benin, asks clients when they’re applying for a Kiva loan or writing their journal update is What are your personal ambitions? What are your dreams for the future? Many of Alidés clients don’t have the luxury of thinking very far ahead (maintaining my business, reinforcing my business they respond). Of the dreamers, they all answer the same thing – they’d like to acheter une parcelle et construire une maison (buy some land and build a house) be it for their home or business (though that’s often the same place), a real one out of cement.
Sadly, this is a pipe dream for many of Alidé’s clients; building a house is expensive (can be up to a few thousand dollars). Which is why I was really excited to hear about the launch of Alidé’s newest type of loan. Up until last week, Alidé offered six types of loans, all for business use and almost all for under US$1,000 (in fact, based on my calculations, approximately 70% of Alidé’s loans are under US$225). This week they launched Crédit Akowé, which can be used for personal use and be for greater sums of money. So far a few clients have signed up and it appears as though all plan to use their loan to build a house.
Unfortunately, to qualify for Akowé you need proof of a consistent income, as from a salary, so most of Alidé’s regular customers won’t qualify. But for these clients and the ones that will follow, it is great news. It’s hard to get a loan for the sums they’re requesting (in the low thousands) at a big bank, and if granted those would come at higher interest rates. Only a few micro-finance institutions in Benin offer loans of this size and nature, so it is a big deal both for Alidé and their clients to be launching this program. While it’s not serving the “poorest of the poor” (and in reality, no micro-finance institution ever does) nor will it be offered as a Kiva loan (it’s above Kiva’s caps for the region), it is allowing these deserving folks to realize their dreams.
For loans currently available from Alidé, click here.
Marie Leznicki is a Kiva Fellow serving her placement with Alidé in Benin.
Entry filed under: Africa, Alidé, Benin, KF10 (Kiva Fellows 10th Class). Tags: Alidé, Benin, blogsherpa, Kiva, Kiva Fellows, Marie Leznicki, microfinance, microloans, West Africa.
1. Fehmeen | 26 February 2010 at 12:29
Having your own home is a major security for a lot of people here, in Pakistan, as well. While it is understandable the low-income group should strive for this impossible feat, plenty of middle-class families work toward this end as well. Other, more privileged people have the luxuries to not worry about mundane goals.
2. sidetrips | 26 February 2010 at 07:39
Great post, for the clear-eyed precision on micro-finance in the region. No doubt most readers will be surprised to read who is served and who is not and by whom. But if Kiva’s role in the region is like a stepping stone from one working class to the next, then I would still be very satisfied.
Stepping stone or milestone? Both? Kiva is still helping and inspiring.
3. Jeff | 26 February 2010 at 05:07
Hi, Marie. That’s the first time I’ve heard that a loan from a big bank can have an interest rate higher than that at a micro-finance institute.
4. leznickiva | 1 March 2010 at 00:16
Hey Jeff- Alidé’s regular loans are definitely still at interest rates high than normal banks (they’re at 24%). It’s just this new offering (personal use, bigger sums) that’s lower (it’s actually only 2.3%). I was alarmed by this difference and by how low 2.3% is general (especially as I’ve heard inflation in Bénin to be 3%). No one here has given me a great answer as to why it’s so low but it appears to be a combination of an inaugural low rate to help get the program started and the fact that unlike our regular micro-loans we’re not going to have to check up on these people at their places of business, which tremendously cuts down costs. I’ll keep you posted as to how the program progresses.
5. Not so micro credit « Marie in Benin | 26 February 2010 at 02:40
[...] Published my second fellowsblog.kiva.org post today: Not so micro credit about the Crédit Akowé loans. [...]