FINANCING
Focus 4
Microloans for small businesses
Microloans enable people to invest in small businesses (market stall, bread oven, sewing machine, etc.) and start their own businesses. We are following the model widely used in Africa and have opened a fund of CHF 10,000.00 to grant such microloans in the range of CHF 250 to CHF 500.
The model stipulates that five microloans are granted simultaneously to a group of women. Each woman has a project and a small business plan. They all require a loan of the same amount.
The «Fonds de Donomadé pour les microcrédits» pays out all loans simultaneously with the same loan conditions.
What's special about this is that the five women are jointly and severally liable for any loan defaults. This leads them to carefully review each other's projects and develop them together to ensure market viability.
Repayment takes place within 50 weeks and is accompanied by a weekly meeting between the borrowers and the fund management team. At these meetings, the progress of all projects is jointly assessed, and improvement measures are decided upon as needed.
Hypotheken für Ziegelbauten
The locally developed bricks offer significantly improved housing and living quality. They are more stable than traditional clay houses, which typically last 6-8 years, and allow for the installation of windows. This provides light and much better ventilation. A traditional clay-straw house for a family costs approximately CHF 800, while a brick house costs around CHF 1500 – twice as much. In addition to the improved quality of life, a brick house lasts 30-40 years.
The price of a brick house exceeds the financial means of most families, so they are forced to build a mud house, even though the brick house is cheaper in the long run.
With a mortgage that can be repaid in 8 years, local people can afford a brick house and after eight years have a paid-off house that can last for another 20-30 years.
