So I've made the first big change in my plans! Rather than studying group versus individual loans, I'm going to give all the loans as group loans, and study how the repayment rates vary between groups that repay weekly and those that repay monthly. I feel much better about this plan! I realized that trying to give individual loans, given the circumstances, was just doomed to fail. Most MFIs that give individual loans, as far as I know, give them to borrowers who already have a business and either have proven themselves reliable in the past through group liability loans--it's sort of a graduation to reward people for repaying responsibly, or have collateral to offer. Individual loans are generally bigger and are given to wealthier borrowers. So to give first-time borrowers who are very poor and are starting new businesses individual loans, without requiring collateral, seems not to be the best idea.
I met with members of Project Have Hope at their weekly meeting on Saturday to discuss the loan program. I had been planning to require weekly repayment installments, since the literature suggests that this yields better repayments. It's hard for people to save their profits, with friends and relatives asking for money when it's available. So while they may have the profits one week, if they don't have to make the repayment for another three, their profits can disappear and they may default. The women, however, said that they would prefer monthly repayment, because that way they can balance out good weeks with bad weeks and be sure to repay. So I think I'm going to divide groups randomly into weekly and monthly repayment groups, and then if the monthly groups repay as well, they can continue with that in the future.
Apart from the loan program, things here are good. Grace offered to let me stay in her home, which is incredibly generous. It's going to save me a lot of money, leaving more for the loans! It's been fun, too, because there are several daughters and nieces in the home who are about my age. I enjoy the company!
2 comments:
i miss you. sounds like a wonderful project.
Hi Katie!
So happy to be reading your blog posts and keeping up with what you're doing in Uganda.
One day last week, ABC Evening News included an informative short feature segment on the Kiva microloan program. The next day, Charles Gibson reported that since the story aired, Kiva had received over $100,000 in new loans. I thought you'd be interested in hearing about that if that news hasn't already reached you. Quite something, eh?
Keep up the good work--and have fun while you're at it!
Love and Hugs,
Aunt Peg
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