26/11/2010 - Nicolas de Reforest'Action
A microloan is an economic development tool used primarily in developing nations. The idea is to lend small amounts of money to people living in poverty to help them start up profitable businesses and activities. Microloans are based on the premise that everyone has the potential to be an entrepreneur and should be given the means to help themselves. As part of reforestation projects like those funded by Reforest 'Action, microloans are an interesting complementary tool to the extent that it helps the villagers start a business of farming or livestock that allows them to improve their living conditions while waiting for the newly planted trees to supplement their income. According to Wandifa Maria, manager of the microloan cooperative of the Community Natural Reserve of Koar, in Eastern Senegal, everyone should have access to the benefits of microloans. Wandifa's cooperative takes care of the daily needs for 10 local villages. In 2009-2010, he approved 58 of the 63 loan requests. The average loan amount is 350,000 F CFA (730$ or 550€) and is repaid over 6-9 months. The loans are essentially for seasonal farming supplies for crops or livestock (fertilizer, animal feed...). Women account for 1/4 of the loans to commercial retail operations. Without equity, the microloan cooperative cannot cover all claims, specifically those concerning the establishment of firewalls and dykes against flooding. Loaning at a 10% interest rate (this is considered low for the region), the cooperative is indeed profitable. Last summer, the cooperative bought edible grains to help the villagers survive the rainy period, called the 'lean season'. An interesting point of which Wandifa Maria is very proud : 100% of the loans are reimbursed so no guarantees are required ! Each borrower can therefore hope to take out another loan to build his business.