Cash Alone Won?t Make Microfinance Work

Monday, December 28, 2009

NAIROBI/TRANSMARA, Kenya – Two years ago, fed up with a husband who drank too much and provided too little, Julie Amunga, who lives in the sprawling Mathare slum in the capital, Nairobi, decided to start a business that would enable her to support her family.

“My friends and I all had husbands who drank too much and beat us at home and yet they were not providing anything for the home,” she told IRIN/PlusNews. “We would sleep with other men secretly to provide for our children but we realized we were not helping our children because prostituting would only make us acquire HIV and die early.”

Amunga and five friends decided to pool their savings and use them to start small businesses; they also got a microfinance loan from the Jamii Bora Trust, which works to empower youth and women in Nairobi’s slums.

While she and another woman have managed to sustain successful small businesses – she grows and sells vegetables and fresh fruit juice in the local market – the other three found it much harder to make the loans work for them.

“Their husbands cheated them and took all the money yet we were supposed to pay back the loan,” she said. “Others took the money without knowing which business they want to start, so … they ended up spending the money.”

According to Joseph Kwaka, executive director of Community Aid International (CAI), an NGO that runs a micro-credit programme in Nyanza and Nairobi provinces, making micro-credit available to women – and especially widows – helps cushion them from poverty, but without proper preparation and training, can just as easily backfire.

“Our experience with offering credit facilities to women is that many take the money and end up using it to buy family needs like food, clothes, without even starting a business for which you gave them the money,” he told IRIN/PlusNews. “Others will tell you the husband took all the money and used it for drinking or maintaining another woman, forgetting that this money should be repaid and the only way you can repay it is by starting a business enterprise.

Source: PlusNews East Africa (link opens in a new window)