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The MicroLoan Foundation is a UK-based microfinance charity that gives small business loans to women in Malawi and Zambia in Southern Africa. The main objectives of the organisation is poverty alleviation and gender empowerment, and consequently its main focus has been on the women living in the rural areas, who make up majority of the poor in Sub-Saharan Africa. By 2014, MicroLoan has provided over 370,000 to over 35,000 clients. With these loans and the business training offered, the women are able to start businesses thereby increasing their household incomes, business profits and assets. The women are also able to take their children to school, pay for medical care and make their families more food secure.
History of MicroLoan
MicroLoan Foundation (MLF) was founded in the late 1990s by Peter Ryan. During a visit to Malawi in 1997, Peter was astounded by the level of poverty in the country and the disparity between the rich and the poor. He recognised a need for extending financial services to the poor in Sub-Sarahan Africa, for whom these services are usually almost impossible to access due to the remoteness of the areas and the clients lack of collateral to secure the loans. These clients are also hindered by their lack of education and business training. With his experience in starting small businesses in Chiswick, Peter started the organisation in Malawi, with its first office in a garage in Malawi. Its main operations are in Malawi, which currently has 17 branches and 102 members of staff lending to over 1673 women's groups. In 2010, MLF extended its services to Zambia and currently has 5 branches, 17 members of staff lending to over 234 women's groups. MLF is also active in the Philippines where it supports the activities of the Philippines Self-Help Foundation in form of small grants.
The organisation is currently run by a management team of ten and an active board of nine trustees who give their time on a voluntary basis.
How it works
Loan Officers ride out to the rural areas on motorcycles and people about MLF. Those who are interested are then encouraged to form groups of between 12-20 members. The Loan Officers provide training of about eight sessions to the groups before the first loan is dispensed. These loans can be as little as £20 but on average the loans are about £62. These loans are charged a service-charge and are not entirely free. Like the Grameen Bank model, the women take individual loans but have collective responsibility for repayment of each others' loans. Repayments are recycled and reused to make more loans.
The training offered includes business training; how to make a business plan, marketing etc. It also aims to encourage group support and cohesion in the group. This training is participatory and takes into account the fact that two-thirds of its clients have little or no schooling. These training sessions continue fortnightly, every three weeks or monthly depending on the type of loan received to ensure the success of their businesses.
The clients are also required to save a proportion of their loans with savings services. This is to encourage them to build up capital reserves and increase their economic independence. The amount of savings also determines their loan sizes.
This approach has been successful and has led to a high repayment level of 98%, with low drop out rates.
Pro-Poor Pilot Programme
In May 2015, MLF made a commitment to meet the poorest in society; those living on less than $1.25 a day by the end of 2016. This will involve rolling out a pilot programme to 2,700 clients in two branches in Malawi and Zambia. MLF joins 51 other microfinance organisations that have done the same under the Microcredit Summit Campaign. These pilot programme involves changes to how loans are disbursed, increased support to vulnerable clients and access to savings for emergencies. These changes will hopefully help address some of the concerns in the microfinance arena, that microcredit does not always reach the poorest in society.
BBC Lifeline Appeal
On 17 May 2015, MLF was featured in the BBC Lifeline Appeal, a monthly charity appeal that highlights the works of different charities. The organisation's work was presented by Business Leader and Microfinance Advocate, Deborah Meaden.