Kiva Stories from the Field

Here are some of the unique gifts I will be enjoying this Christmas in Uganda;

The Gift of Calm in the Midst of Chaos.  When I read that it is culturally unacceptable to express anger in public in Uganda, I did not really believe it.  Coming for the US, where people routinely drop “F” bombs in public, where  TV and movie plots always seem to involve violence and rage, and where the 24 hour news cycle is dominated by shouting, I found the notion of a society devoid of public anger unimaginable.  

The guide books are correct.  The people of Uganda are amazingly calm and unruffled.  They do not shout.  They may have swear words in the local language, but I can tell you they are not uttered in anger.

It is amazing how remaining calm helps you endure the inconveniences of Ugandan life.  Imagine being cramped in the back seat of a crowed, sweaty, 14 passenger “taxi” van stalled in horrendous traffic where not a single person in the vehicle complains. Uganda has reminded me that getting upset does not improve the situation.  In fact, when you complain, things only get worse, or hotter, or more uncomfortable.    This comes from a hard charging American who finds it impossible to play 18 holes of golf without swearing at himself and his golf ball multiple times.  After a month in Uganda, I don’t even think swear words, let alone say them.

The Gift of Real Family Values:  In Uganda, family comes first.  I am told funerals are a two day affair.  The first day is to bury the dead, and the second day is for a family meeting to decide how to “look after” the survivors.  If a woman loses her husband, the family decides who will care for her.  When children are orphaned, the family decides which member or members will adopt them.  Children are raised with the concept of multiple parents.  Their mother’s younger sister is “little mother” and her older sister is ‘big mother”, etc (This nomenclature can get quite complicated in large families). 

Despite crushing poverty and the constant threat of fatal disease, children grow up in Uganda secure in the knowledge the family will provide for them.  You can see evidence of this on the Kiva website.  Poor women borrowers applying for tiny loans for their humble little businesses often have an orphan or two to “look after” in addition to their own children.

Family values extend to aging parents also.  When I asked a local Baptist minister about retirement homes in Uganda, he laughed.  His eyes widened as he said that even if there were such institutions in Uganda, you would be CURSED for sending your parents to one.  In Uganda, the family stays together from birth till death.

The Gift of Cooperation Not Competition:  If you read my blog entitled Microfinance Plus Plus, you saw how farmers in Uganda work together for their common good. 

Back home, I do business with dairy farmers in up-state New York.  These are some of the finest, most productive farmers in the world.  They have turned milk production into a science.   The problem is when they make more milk, the price per gallon goes down.  These rugged individualists ultimately turn to the government for support programs to stay in business.

In Uganda, there are no government support programs.  Ugandans utilize cooperation as a business survival skill.

The Gift of Forgiveness Not Retribution:  In a country where violence and turmoil were common for  decades prior to the 1990’s, Ugandans understand the value of forgiveness.  Fighters for the Lord’s Resistance Army, a shrinking but violent band of rebels currently holed up in neighboring Republic of Congo, are welcomed back into Ugandan society when they lay down their arms and apologize for their actions.  Although this forgiveness will most likely not be extended to the LRA’s tyrannical leader, he may someday be a General without an army.

Wouldn’t it be a different world if we looked for reasons to understand and forgive our adversaries rather than creating an ever expanding category labeled “terrorists”; to be feared, avoided, insulted, or imprisoned without a trial?

The Gift of Life Without Nicotine.  Uganda is truly a smoke free society.  My unofficial estimate is that somewhere between 1 in 1,000 and 1 in 10,000 Ugandans smoke.  One day I stood on a crowded Kampala street corner waiting for the first smoker to pass.  I gave up after 15 minutes, during which time thousands of pedestrians walked by without a cigarette in sight.

When I ask westerners about this, they invariably cite economics as the reason. “Cigarettes are too expensive for Ugandans”, they say.  That doesn’t make sense because there is significant variation in income here, but no smoking.  Also, in the US, destitute people find the money for cigarettes.  Finally, Ugandans purchase beer, which is a discretionary expense not unlike cigarettes.

I got a different explanation from two Ugandans who cited the same reason for not smoking.  Ugandans don’t smoke because it’s just not the thing to do.  Smoking was popular in the 70’s and for some unexplained reason it went out of fashion. 

This highly unscientific explanation gives me reason for optimism for the remainder of the world.  Wouldn’t we all be better off if smoking was just not the thing to do? 

The Gift of Abundant Heat, Light, Water and Air.  What more can you ask for than 12 hours of sunlight  year round, warm (but not hot) days, cool nights, enough rain to keep the countryside lush and green at all times, and no snow, no earthquakes, no hurricanes and no tornadoes?

Seasonal Affected Disorder will never be a problem here.  You never need to change your clock or your wardrobe.  Some Ugandans set their clocks to 00:00 at sunrise (7 am) so 12:00 arrives at sunset (7 pm).  The sun shines brightly, but Uganda’s 3,000 foot elevation tempers the equatorial heat.

Now don’t get me wrong.  Uganda is an extremely poor, under-developed country.  I’m not ready to move here permanently and I have no doubt many Ugandans would rush to the United States in hopes of capturing a share of the “American Dream” if given the opportunity.   

On Christmas I will be thankful for many gifts in life; my loving family, my economic prosperity, my health.  This year I am especially thankful to Kiva.org for allowing me to experience the unique gifts of Uganda which will remain with me for a lifetime.

Merry Christmas to all!

Kampala, Uganda Florence Kaluuba is a soft spoken 50 year old school principal who won’t accept no for an answer.

As a teenager she was a brilliant student, excelling in mathematics. At a time when she ranked 8th out of 160 students, her uncle refused to allow her to enroll in the next higher grade level, where she hoped to become a medical doctor. Florence still remembers his words, “She is a girl, and girls just get pregnant anyway”. The uncle decided she would train to be a primary school teacher, which required much less education.
Florence enrolled in primary school teacher training, where, not surprisingly, she finished at the top of her class. She subsequently taught at two of the leading primary schools in Kampala. After a number of years, Florence wished to move up to high school but she lacked the requisite degree. Undeterred, Florence studied the four year curriculum in her free time and passed the qualifying exams without ever entering a classroom. Later, she earned a degree in Management with honors through correspondence from Cambridge University.
Florence founded Mirembe School in response to a 1996 study entitled “Why girls drop out of school and defilement of adolescent girls”. In the course of our interview, the term defilement was used to variously describe the rape of young girls by a brother, a father, and a teacher.
The goal of Mirembe School is to equip youth with developmental education for employment and life skills for survival. The students are almost exclusively girls from age 15-19 who have dropped out of school due to pregnancy and have been ostracized by their parents and family.
Florence and her small staff train the girls to be nursery school teachers, tailors, craft makers, or elementary school teachers (if they have enough formal education). In Uganda, nursery school teachers are given lodging and allowed to bring their children to school, which is an important benefit for these destitute young mothers.
Her belief is that no youth is a failure. She provides counseling as well as training. She promotes sexual abstinence to reduce pre-marital sex, unwanted pregnancy and abortion. Students are given information to reduce the risk of HIV/AIDS and sexually transmitted disease. Florence works hard to restore their spiritual and traditional values.
Florence will not reject a young girl, no matter what her ability to pay. Even though Mirembe charges far less tuition than other programs such as the YMCA/YWCA, most of her girls cannot afford to pay. If she is lucky, monthly tuition from current and former students covers the rent.
The remainder of school overhead is paid by Florence out of her paycheck. She works as a contract social worker for the office of the wife of the President of Uganda. Florence conducts seminars and trains teenage counselors to conduct “peer to peer” counseling of other teenagers.
This week, Florence paid the final installment on a $1200 loan from Kiva through Share an Opportunity Microfinance Ltd. She borrowed the money to purchase a desktop computer, scanner and copier. The loan payment came out of her paycheck earned the previous week.
Florence reported the computer has been very important to the school. She not only trains students on it, but she also uses it to scan photos and print teaching materials; services which were previously outsourced at a high cost.
Florence has written a book, The Joy of Parenting, the first copy of which was typed, scanned and printed on the new computer. She hopes to publish 3,000-4,000 copies of the book with the help of the Children’s Writers Association. She will keep 1,000 copies for the school and sell the balance to generate income.
Florence will not abandon her students. Once, when money was tight, and she was considering closing the school, students came to her home tearfully begging her to continue. She looked me in the eye and said “I can’t stop now”.
Since its inception, the Mirembe School has graduated 500 girls, many of whom call Florence “mother”.
When I asked her what he dream in life is, she replied a bigger school, with no rent, in a quiet area where more girls can be nurtured and trained.
Her challenges are a steadily growing flock of defiled girls, the monthly rent check, a need for more counselors to share her emotional burden, and finding financial partners and supporters.
In her personal life, Florence has corrected the inequities of her own childhood. She is one of 13 children in a polygamous marriage involving 2 wives. Her mother, who was the second wife, was dropped. Florence was sent away to live with her father’s father, a tribal chieftain in northern Uganda.
Florence is happily married to her husband of 25 years, a university professor in electrical engineering. Of their five children, the oldest boy is an engineer and the oldest girl, who inherited her mother’s love of mathematics, studies statistics at Makerere University, Uganda’s leading university. The younger children are in high school.
As I said goodbye to Florence, my impression of this soft spoken woman with a soft spot in her heart for defenseless young girls is that she is as tough as nails. Somehow, some way, Florence will find a way to make the Mirembe Youth Development Project and the Mirembe School continue. This is not a woman who takes no for an answer.
Florence Kaluuba can be reached at mirembeyod@yahoo.co.uk.

Friends and family have asked about the mundane details of my life as a Kiva Fellow in Uganda. “Where do you live?”and “What is your job?” are two frequently asked questions (FAQ’s).

Where I live: I am a resident of the Kolping Guest House on Bombo Road in the Bwaise neighborhood of Kampala. The Kolping is part of a worldwide chain of guesthouses operated by the International Kolping Society which was founded by Adolph Kolping as a Catholic, educational and action-oriented organization. Fr. Kolping was born on December 8, 1813, in Kerpen, a small village not far from Cologne. There are Kolping houses all across the globe, including one in the Manhattan and many in Europe and Africa.

I like this place for a number of reasons;
· It is incredibly clean, which has more than a little appeal after returning from a dusty day in Kampala and the surrounding countryside. The Kolping has a full time cleaning staff, but when the other employees have a free moment, they also find something to clean. I recently saw one of the dining room staff gently bathing the leaves of a potted plant on the terrace, removing dust that had gone unnoticed by me, but not by the Kolping staff.
· It is quiet and spacious. Kampala is a bustling city of over a million people. My mode of transportation is the ubiquitous 14 passenger taxi vans that ply most of the main roads. I’ve gotten accustomed to having my 6’2” frame jammed into a crowded, un-air conditioned van, often stalled in heavy traffic, in hot, steamy weather.

My room at the Kolping is quiet and my balcony overlooks a grassy courtyard set back several hundred yards from the noise and fumes of Bombo Road. At the end of the day I enjoy relaxing on the balcony, sipping a cold Bell beer, and quietly reflecting on the events of the day. At dawn I am awakened by the Muslim call to prayer broadcast from a nearby mosque, and I enjoy watching birds fly by as the sun rises over the hills of Kampala.
· The Kolping has a restaurant, which is a major consideration for a clueless husband like me who has not cooked for himself in over 30 years. I start the day with a complimentary breakfast of 2 eggs, toast, fruit, juice and hot brewed coffee. I often eat dinner there also, ordering from a non-controversial menu that agrees with my American digestive system.
· The TV in my room is inoperative and the TV in the restaurant is permanently tuned to an English soccer game, which I generally ignore, unless I am really bored. This is good. One my the goals on this trip is to wean myself from the 24 hour TV news/sports cycle back home. That shouldn’t be a problem at the Kolping House.
What I do at work: Back in October, when I was given access to the Kiva training material, I quickly paged through the documents looking for a Fellows job description. There wasn’t one. The duties of a Kiva Fellow are largely undefined to allow for maximum flexibility once we arrive at our overseas destination. Essentially, we are assigned to a Microfinance Institution (MFI) to make the relationship between the MFI and Kiva run as smoothly as possible. The role of the Kiva Fellow varies according to the needs of the MFI.

In my case, I sat down with the manager Share an Opportunity (SAO) for four hours on my first day at work. We talked about the history of the business and the most pressing needs of the organization. Based on that conversation, I was able to create five objectives to accomplish prior to my departure on February 20, 2008.
Objective #1. To visit all 45 entrepreneurs in the Kiva/ SAO portfolio, and visit at least six SAO branded SACCO’s (Savings and Credit Cooperative Societies), out of a total of fourteen , for the purpose of collecting information, and writing and publishing journals for the Kiva website.
This is one of the few formal Kiva requirements. It serves three purposes;
1. It acts as field audit to confirm that the money loaned by Kiva lenders actually went to the person shown on the website and that the loan is being repaid.
2. It provides feed back in the form of Journals which are published on the Kiva website and are emailed to every lender who funded the Kiva loan.
3. It helps me learn about microfinance at the grass roots level.

Objective #2: Help create and execute a new SAO product; “Business Skills Training Course” targeted to existing and potential direct borrowing clients.
a. Review development of the program to date
b. Finish the written program and prepare presentation materials by mid-December.
c. Promote “Business Skills Seminars” to SAO customers and prospects in December
d. Schedule seminars and participate in presentations in Jan/Feb
e. Train SAO personnel to conduct subsequent seminars after I leave

Objective #3: Help create a stand-alone website for SAO MF distinct and separate from SAO Uganda
a. Familiarize myself with the customer requirements of SAO clients.
b. Review the current SAO Uganda website for useful content.
c. Design new content and user –friendly website architecture for the new site.
d. Launch a new website by 15 Feb, 2008

Objective #4: To assist SAO MF in obtaining sources of funding to compliment KIVA’s funding, so that KIVA represents no more than 30% of SAO’s funding as of 15 Feb, 2008.
Objective #5: Review and revise the SAO Business Plan/Strategic Plan by 30 Jan 2008.
a. Review existing Strategic Plan
b. Make suggestions based on practical experience with SAO customers and SAO staff
c. Integrate suggestions, if accepted, into Business Plan

Just about everything I do during the workday relates to accomplishing one of those objectives.

In addition, Kiva recently asked me to train another Microfinance Institution that recently became a Kiva partner in Uganda. I will be delivering that briefing on Saturday, December 15. If this account requests additional support, I will follow up as directed by Kiva.

That pretty much answers my FAQ’s.

Kampala, Uganda   I’m learning there is more to microfinance than simply loaning money to poor people. My boss at Share an Opportunity (SAO) took me on a field trip to Ngogwe, a village about 40 miles outside of Kampala, to show me what he calls “Microfinance Plus-Plus”.
The elements of SAO’s “Microfinance Plus-Plus” are;
1. Rural Development. SAO focuses on rural development, where 90% of Ugandans live and work. Improving economic opportunities in the countryside reduces the incentive for urban migration, which is a serious problem throughout Africa. As you can see from this picture, the streets of downtown Ngogwe are not exactly clogged with traffic. I found this to be a beautiful area. Lush and green, with red topsoil and abundant rainfall, Ngogwe appears to have the potential to support a robust agricultural economy.

2. Enterprise Solutions. SAO encourages “enterprise solutions” to agricultural planning, value addition and collective marketing of crops as opposed to subsistence farming by individuals.
Share an Opportunity helped form a Community Based Organization (CBO), called the “Ngogwe Integrated Community Development Association”. Made up primarily of local farmers working on very small plots of land, the association encourages its members to focus on maize (corn) production. Maize is well adapted, and with two harvests a year, it is an excellent “cash crop”. Demand from drought-stricken Kenya and war-torn Sudan is good, and worldwide corn prices have strengthened in competition with ethanol.
I found this hand lettered statement of principles on the wall in the CBO office.

3. Savings Mentality. Share an Opportunity trains borrowers to save rather than spend when times are good. Poverty reduction requires savings, but villagers often spend all they take in. I saw this poster in the SACCO (Savings and Credit Cooperative Society) office, illustrating the benefit of saving for educational expenses.

4. Value Addition. The SACCO loaned money to the Community Based Organization (CBO) to build and operate processing and storage facilities that add value to the crop, thus maximizing financial return to the community. With SAO’s help, the SACCO financed the purchase of two hammer mills used to transform dry corn into corn flour, increasing the value of the crop 200-300%. They also loaned money for the storage facility shown in this picture. This storehouse enables the accumulation of a large enough quantity of corn flour to attract wholesale buyers and allows the CBO to withhold product from the market when prices are low.

5. Best Practices. SAO informs farmers of the latest and best agronomic practices. Through the SACCO, they finance crop inputs such as improved seed and fertilizer. Increased production per acre and improved soil fertility reduces the “slash and burn” practice of clearing virgin land, using it for two crops (one year), and then abandoning the land as treeless scrub. This picture shows “Tall 6” hybrid corn, a variety developed by Ugandan plant breeders. Properly fertilized, this variety will produce high yields on the same plot of ground year after year.
6. Retained Earnings. The money earned in Ngogwe is saved and loaned within the community, again and again; providing the foundation for future growth and more poverty reduction. This picture shows a new classroom and dormitory building at the Ngogwe private school financed with a loan from the Ngogwe SACCO.

 
The benefits of microfinance are plain to see in Ngogwe:

This is just one village in a country the size of Oregon. Share and Opportunity is just one of many Microfinance Institutions in Uganda.
As “Microfinance Plus Plus” is repeated hundreds and thousands of times across Uganda, you can envision a more stable country with less poverty, less urban migration, less environmental damage, and greater food security for its people.

I first met Rose Kasoma at the office of Share an Opportunity (SAO) Microfinance, Ltd in Kampala, Uganda where she came to pay the monthly installment on her $1,200 loan funded by Kiva lenders.  We talked briefly and I asked permission to visit her. 

On November 30, 2007, accompanied by Stuart Tamale, a young college educated Ugandan loan officer working for SAO, we went to Rose’s store. 

The store is well located in the Ugandan version of a strip mall near a “round-about” on a busy thoroughfare on the outskirts of Kampala.  All shops in the brick strip mall open to the outside air toward the road.  There were approximately ten shops in the mall, all the same size; about 5 paces wide and 5 paces deep.  Rose’s store was well stocked, clean, and the merchandise was nicely displayed.  I saw no shops in the immediate area offering the same product selection as Rose.  Her shelves were better stocked than some nearby shops.

When we arrived at 9 am, Rose’s youngest son Brian was alone in the store.  Brian was well dressed and polite.  Like his mother, he is soft spoken.  Brian is 14 years old and on vacation from Senior 2 grade, which is the equivalent of ninth grade in the US.

Next, Stuart took me to Rose’s home.  It was not easy to find.  He navigated down a winding dirt path to a dead end.   Rose’s compound, perched on the edge of a swampy jungle inhabited by monkeys, consists of a small brick house, a brick chicken coop, a broken down confinement structure for her 3 cows, and an outhouse.  

Rose greeted us warmly.  We talked as she hacked stalks of sugar cane into foot long segments for sale at the store.  At one point, she went to the chicken coop, removed a chicken, gently calmed the frightened animal, and then proceeded to offer it to me as a gift.  I was overwhelmed by her generosity, considering this bird represented a significant portion of her farm assets.  I declined the gift, explaining that I didn’t know how to cook (or butcher) a chicken, and I was staying in a hotel with no kitchen.  I thanked her profusely for the offer.

Rose is one of seven children.  Her husband, who was away the day we visited, is also one of seven children.  Rose’s father refused to pay tuition for her schooling but her mother somehow found money to pay for Rose’s limited education.  Her understanding of English is excellent, but she preferred to answer my questions in the local language, which Stuart translated.

Rose has two sons and one daughter.  The oldest son, Nicholas, is in medical school training to be a doctor.  The daughter, Victoria, is in nursing school.  We met the younger son Brian at the store.  Rose does not intend to have more children.

Rose first became acquainted with SAO Uganda when its social service component gave her tuition assistance for Nicholas and Victoria in elementary school.  

When I asked Rose how business was going, she said it was only “so-so”.  Sales are stable, and with the Kiva loan she is able to maintain a good inventory of general merchandise for her customers.  Occasionally she is asked to extend credit, but she resists because she has to make her monthly loan repayments.  She pays cash for her stock and does not accept trade credit when offered.  Rose is a serious, but cautious businesswoman.

The big event in Rose’s life right now is a small plot of land her husband recently inherited in a nearby township.  The ground is well drained and more suitable for raising livestock than their current swampy location.   She and her husband would like to move there and add pigs to their collection of cows and chickens.  To do this they will need money to build a new home and farm buildings.  When I asked if she would sell her current home, she quickly replied no, it was being saved for the children.

When I asked Rose what her dream in life is, she paused, and then explained that she is old and wants to retire to the new farm to raise livestock.  Rose is much younger than I am, but the average life expectancy in Uganda is less than 50, so she considers herself old.  She often works till midnight at the store.  Although her children are well educated, Rose understands the vagaries of Uganda’s economy well enough to also train them to be self-sufficient entrepreneurs, in case all else fails.  She intends to pass the store on to one or more of the children.

Our interview ended as we delivered Rose to her store.  It was time for work, not talk, so I bid her goodbye with confidence that Kiva’s funds are well invested and secure. 

David Groves is a hero.  I will probably never meet him, but if I do, I will shake his hand and thank him for boarding an airplane in Australia bound for Kampala, Uganda in 1991, armed with nothing more than the name of the author of an article published in the Baptist Union General Society Newsletter about the terrible plight of Ugandan war orphans following years of civil strife.

Mr. Groves ultimately located that author, Pastor John Ekudu, General Secretary of the Ugandan Baptist Union, and formed a Non-Governmental Organization (NGO) called Share an Opportunity, Uganda (SAO) dedicated to the support of parentless Ugandan children orphaned by the dual scourge of war and HIV/Aids.

 In 1993 SAO hired its second staff member, a recent business school graduate and Kampala native named Samuel Mayanja Ssekajja; Sam for short.  Fourteen years later, in 2007, Sam is the Manager of Share an Opportunity (SAO) Micro-Finance Ltd in Kampala, and my new boss as a Kiva Fellow.

What follows is the history of Sam’s evolution as a micro-finance banker, whose work has positively impacted the lives of tens of thousands of poor Ugandans, multiplying the altruism of David Groves many times over.

Sam has an unquenchable thirst for knowledge.  After completing his undergraduate degree in Business Management, he went back to business school to earn a degree in Purchasing and Supplies Management.  He returned a third time to undertake a degree in Accounting followed by a Post Graduate degree in Micro-finance and then an MBA specializing in Project Management.  He did all this while raising a family of five children with his wife Juliet and working full time for Share an Opportunity Uganda, a not-for-profit social service organization.

Above all else, Sam is an entrepreneur.  The first day we met, I peppered him with questions non-stop for four hours to piece together his story of perseverance and creativity in one of the most chaotic business environments I can imagine.

Sam’s first assignment in 1993 was to create a program for income generation at the 10 centers across Uganda where a total of 50 orphans were housed with families in villages served by a Baptist church.  The problem was the number of centers, and the number of orphans in each center, was growing faster than the budget to support them.  By 1998 there were 25 centers with 40 children per center, a fourteen fold increase in orphans in only five years.

Sam developed a program to increase farming productivity at the centers.  Typically, villagers engaged in subsistence agriculture; raising chickens, pigs, and other animals as well as growing maize (corn), cabbage, passion fruit, egg plant, and bananas.  Uganda is located on the equator which means farmers can plant and harvest two crops each year.  Planting season is September and March, the two rainy months, and harvest is in late August /early September and February.

Sam purchased improved hybrid corn seed developed in Uganda at the National Research Organization (NARO).  The 3 new hybrids, called Long 4, Long 5 and Long 6, greatly increased yields compared to open pollinated seed saved from the previous crop.  Farmers were not required to pay for the seed until after harvest.

He obtained professionally grown cabbage seed, eliminating the possibility seed borne plant disease, thus increasing the odds of a successful crop. 

Sam went to the Ugandan government to obtain a locally bred hybrid passion fruit that crossed a disease resistant, but bitter, yellow variety with a local purple passion fruit, a good tasting variety that was susceptible to disease.  The new Purple Hybrid produced a healthy crop of big succulent fruit. 

He advised villagers how to increase banana yield through improved cultural practices.  In the climate of Uganda, a banana plant grows from seed to a full grown plant in 9 months.  Three months later, the new plant produces its first bunch of bananas.  Sam showed villagers how trimming the banana plant back to three suckers of different lengths encourages continuous banana production.

SAO Uganda also distributed essential farm implements to the villagers.  In Uganda, the majority of farming is done by hand, using simple, but essential, tools.

Finally, he encouraged the members of the village committees to focus their efforts on the most profitable crops, what he calls an “enterprise” approach.  Previously, each family made independent planting decisions and then consumed what they produced.  Sam encouraged them to pool output to create a marketable crop to attract cash paying commodity buyers.

The income generation program yielded three results;

1.        Agricultural output increased, generating income from surplus production, and sustaining the orphan program.

2.       Other villagers, beyond the original families housing orphans, joined the local committees.

3.       The idea of credit and paying for inputs after harvest was introduced.

By 1997, Sam broadened SAO programs to include value added services like bakery production and primary health care education to reduce disease.  These programs were implemented by volunteers within the villages.  The number of centers increased as word of SAO and Sam’s success spread.

Fundamentally, Share an Opportunity was a charitable social service organization, not a business.  Sam began to see problems with that approach.

Some of the villagers, who volunteered with orphans or in the various social service programs, saw their crop inputs as payment for services rendered and not debts repayable after harvest.

Other local committees had problems with self dealing of committee members, resulting in bad debt collection problems.

The fundamental problem, as he saw it, was the lack of savings at the local level.  Villagers saved very little, and relied on the charitable parent organization when problems arose.  Equity was not growing in the centers.

Sam saw a demand for micro credit, especially crop loans, but for ethical reasons SAO’s partners at Baptist World Aid did not wish SAO to be a banker.   Locally owned SACCO’s, or Savings Credit Cooperative Societies, were Sam’s compromise to satisfy both local credit needs and his partner’s principles of maintaining community relationships.   

A SACCO is based on the principle of local ownership.  Members purchase share capital and pay a membership fee.  In a SACCO the borrowers are the owners.  The original methodology was group loans where members guaranteed each other’s loans and each borrower contributed 20% of the loan amount in compulsory savings. 

Village committees were aggregated to parishes (6 villages), sub-counties (6-7 parishes), and districts (5 sub-counties). 

When Sam received permission from his board to form the first SACCO, he did what many entrepreneurs do; he went back to the customers who knew him, trusted him, and respected him. 

His first SACCO was in Zirobwe, a rural sub-county in Luwero district, 45 miles outside the capital city of Kampala, which had been one of the original orphan centers. 

Convincing villagers to invest their meager cash savings in a cooperative society was not an easy task.  Uganda has a long and tarnished history of co-ops.  For several decades, warring factions plundered agricultural co-ops, stealing their stocks of cocoa, coffee, and cotton, and selling them in neighboring countries to finance armies.  Banks were robbed. No savings institution was spared.  Savings societies lost everything.

In 2000 Sam fearlessly ventured into this difficult business environment, selling founder’s capital in SAO’s first SACCO, many times to villagers who stored cash in buried coffee cans.   His first meetings were held under a tree.  Sam and a college intern crisscrossed the Zirobwe district meeting with small groups of men and women.

This was a different approach than social services.  Previously, many SAO programs centered on the distribution of free goods or free education, paid for by a distant funding source.  With the SACCO, it was all business.  The customers were the owners who were borrowing their own money.

Although Sam’s board authorized him to pursue the SACCO concept, it did not provide start-up capital. They allowed him to petition five centers in Central Uganda, where his Income Generation Programs had generated a diminishing pool of retained earnings.  Sam asked the committees to give up control of those funds (about US $3,000) so they could be used as loan capital for the Zirobwe SACCO.  It wasn’t much money, but it was significant because this was the first SAO Uganda program to be completely self funded.

By 2001 Sam had mobilized three SACCOs, Zirobwe and Ngogwe in rural settings and Wakisso, in an urban location.  As usual, growth was faster than funding.  Just when Sam needed more money, a large umbrella organization for co-operative societies in Uganda named Uganda Cooperative Alliance advertised for smaller organizations to join them.  Interestingly, the large organization had attempted to establish a SACCO in Ngogwe and failed. 

As an inducement to join, UCA offered a free start-up pack for SACCO’s:

1.       Office rent

2.       Salary for two staff

3.       Safe

4.       Furniture

5.       Stationery, including pass books

6.       Supervisory audits

No start-up capital was offered, but since Sam was out of money, he enrolled the three operating SAO SACCO’s and used funds for the start-up packs to loan even more money through new SACCO’s.

Today, Share An Opportunity Micro Finance Ltd. supports and loans to 14 branded SACCO’s, serving  more than 10,000 poor Ugandans.

As usual, Sam did not limit his services to funding loans.  He recommends “enterprise solutions” wherever SAO lends money.  In Zirobwe, he encouraged the cultivation of upland rice, which produces higher returns.

In Ngogwe, he help convert farmers to maize production.  Previously, they supported themselves by growing coffee or fishing from canoes on nearby Lake Victoria.  In 1997, wilt disease wiped out the coffee crop and the government granted fishing rights for export to modern fishing vessels, which greatly diminished the local catch.

Soon after Ngogwe farmers switched to vanilla production, that market crashed.

Sam encouraged them to focus on corn production.  Due to their critical mass of production (100 sack of corn are needed to fill a lorry), and increasing demand from drought stricken Kenya and war ravaged Sudan (as well as ethanol production in the US), maize prices are strong and the Ngowe SACCO is prospering.  Additionally, SAO loaned money for the purchase of a flour mill in Ngogwe, which allowed local farmers to add value to their crop, increasing sales revenue 200-300%.

 Sam and his new Board, composed of professionals of diverse backgrounds and business skills, completed a strategic plan in 2007 which concluded that in order to be sustainable; SAO Micro-Finance Ltd had to operate as a stand-alone for-profit business.

The problem with loaning to SACCO’s is that it is a low margin business.  SAO loans to the SACCO at a 1%/month interest rate and the SACCO loans to its members at a 3% per month rate, using the spread to cover operating costs.  The loans are small, so Share an Opportunity was perennially short of funds with which to grow.

Sam and his Board saw an opportunity in making loans directly to individuals in and around Kampala at substantially higher interest rates.  In addition, he wanted to grant loans referred and guaranteed by his SACCO customers that exceeded the SACCO’s maximum loan size.

Once again Sam had an idea for expansion and no way to fund it.  His eyes sparkled as he related to me the serendipitous story of how the very same week in February 2007 when he launched the direct lending program (“I have to start”, he told himself), he received a letter from Kiva.org inviting him to apply for funding of direct loans to poor borrowers.

Since February 2007 Share an Opportunity Micro-Finance Ltd. has funded about 50 individual loans through Kiva, totaling approximately $US 50,000.  I will be calling on those borrowers and posting journals on the Kiva website to chronicle the impact of micro-finance on their lives.

SAO Microfinance Ltd currently has 6 full time employees, including Sam. 

When Sam talks about the business, he speaks in terms of products.  He’s looking for unfilled customer requirements and a profitable way to provide them. 

He spoke of “school/crop loans” for the SACCO’s.  In Uganda school begins in February (1^st term), May (2^nd term) and September (3^rd. term).  It is not free.  Farmers are often forced to sell their harvest right out of the field, at the lowest possible price, in order to pay tuition for their children.  Sam sees an opportunity for short term school loans, repaid by storing the crop and selling it at a higher price later.

He wants to finance more equipment and storage facilities to add value to crops at the village level.

He has been approached by at least one local employer about offering “salary loans”, which are loans to employees guaranteed by the employer and repaid through payroll deduction.

He is very interested in “double bottom line” projects which are both profitable and environmentally friendly.  He sees a need for increased agricultural productivity; getting more food from existing cultivated acres, so farmers will be less likely to convert virgin, environmentally sensitive, land into marginal farmland.

As you can imagine, Sam is a natural born salesman.  Walking down the street beside him is like being with the mayor.  He greets everyone with a smile and a comment, and he knows every name.  In the rural community of Ngogwe he is affectionately known as “Uncle Sam”.  He was so smooth in negotiating a 45% discount on my hotel rate; everyone was smiling when the deal was struck.

It is no surprise that Sam sees my arrival as an opportunity to create new “products” and attract new customers.  We talked about creating a business skills training module for his customers, based partially on my experience in US small business.

He wants me to look at their website, which was created when SAO was still a social service agency, and suggest ways to make it more valuable and user friendly for SACCO’s and commercial borrowers.

There is a perpetual need for updated and revised business plans.  Sam pointed out micro-finance is the fastest growing business segment in Africa and it changes monthly.  Commercial banks are now involved and the competition is increasing.  I will be working with him on SAO’s planning.

My first meeting with Sam obviously covered a lot of ground.  He is an energetic individual, to say the least.  The moment that most impressed me was when he handed me a deposit book from one of his SACCO’s. 

It was a simple little affair, kind of a pocket-sized version of the “blue book” we all used for college exams.  The blue cover was printed with logo of the SACCO and the address.  Inside the front cover was a rectangular outlined area to glue a photo of the owner of the pass book.  The white pages inside were printed with a simple spreadsheet to record deposits and withdrawals.

The whole thing reminded me of my first “bank book” in third grade back in the 1950’s.  Mom gave each of us five cents a week to deposit.  We would carefully place the nickel in the envelope containing our bank book and close it securely using a string that wrapped around two circular tabs.  At school, the teacher would announce “bank day” and collect our envelopes.  Later, when she returned the envelopes minus the coin, we would all check our bank book, and sure enough find a new entry showing the 5 cent deposit.   That bank book was very important to me.

Sam described how SACCO members are proud of their pass books.  For many, it is the first time in their life they ever had personal savings.  For many it represents the first official transaction they ever completed.  The picture on the pass book is sometimes the only one they ever owned.

Many members, especially women, refuse to take their passbook out of the SACCO office.  They are so proud of it and so fearful of losing it (or letting their husband have access to it), they insist on keeping it in the office safe.

As Sam told me this story, I realized he is a business man with his own “double bottom line”.  He is clearly driven to succeed, but he also has a soft side that recognizes the profound effect he is having on the lives of others.

This is a man I can work with.

More later….

Drew