Assignment for Oxfam Novib
Eight women have gathered in the branch office of Coopec Kalundu in Luvingi. They came to be trained on the basic principles of microfinance and farming techniques. All hope to be granted a loan to increase their yields and multiply their income. Something that was unthinkable ten years ago when the Microfinance Institutions (MFI) were only present in South-Kivu’s capital of Bukavu. But with the help of GAMF (Groupe d’Acteurs de Microfinance du Kivu), a MFI network organization supported by Oxfam Novib, they have set-up offices all over the province.
Microfinance has become a real means of reducing poverty by improving both the farmer’s standard of living and economic self-sufficiency, as well as offering a pathway to education, health care and equity between men and women. But credit alone is insufficient. It is the combination of several key elements that allows farmers to invest in their farms and their futures and grow themselves out of hunger and poverty. Elements that include the delivery of microloans in the forms of seeds and fertilizers, along with the provision of agriculture trainings, post-harvest storage support and market facilitation.
GAMF not only helped the MFIs to set-up local branches, but moreover they help them in their professionalization process to better serve their clients. They offer the employees of the MFIs capacity building trainings, organize exchange visits abroad where they can learn from the successes of others and lobby local authorities on regulation.
Esperance Mutshe, a mother of five who was granted a loan four times is an example for many other women. “I tell them that if they are suffering and if their children are hungry, they should go to Coopec Kalundu and apply for a loan there. Everybody knows how it changed my life for the better. At first I was cultivating the land of someone else, but already after the first year I was able to buy my own land. This was an important move as it is a guarantee for the Coopec to grant me a new loan. If I cannot reimburse, they can seize my land.”
Constantine Mabange formed a cooperation with other farmers in the area. “Working together is the start of making profit,” he explains. “We are stronger together in finding the right market and if a buyer wants to buy 10 tons of rice, this is an amount we can now actually deliver. Together we can also apply for a loan and receive the necessary training to professionalize our agricultural activities. I am now cultivating two hectares of land and because of that I multiplied my income. I can send my wife to the hospital when she needs treatment and I can pay for the school fees of my children. I can even buy my friends a beer! These are all things I could not afford to pay before.”
But the risks for MFIs to finance the farmer’s agricultural activities are high. Climate change and diseases can cause crop failure and the farmers have little or no guarantee to offer in return. Therefore Oxfam Novib guarantees 75% of the debt obligation if the beneficiary defaults. But still the demand for credit is higher than what the MFIs can offer. The waiting list is long and applications are often rejected.
Lwabandu Muahli applied for a loan and was accepted. “But I haven’t received the money so far. I wish they could increase the loans to us and help more people,” he says. The lack and delay of receiving the financing means farmers cannot hire workers to maintain their land and help harvesting. Furthermore, there are insufficient funds to support the building of storages, a necessity to work together, find a good market and sell the harvest throughout the year.