A client’s business under the spotlight

Part of what we’re also looking at with the Social Performance Management work we’re carrying out here at MicroLoan Foundation (MLF) is protecting the clients from over-indebtedness. One way in which this is currently addressed is by the savings clients have to have as a deposit in order to access a loan: 10% for their first loan and 20% for subsequent loans. This ensures clients are taking loans that are appropriate to their means. Another way is the group themselves. If they feel that a client is asking for a loan that’s too high, they will step in and suggest she reduces the amount requested. For example, they would know that she might have struggled to pay her loan back in the last cycle because, say, there was an illness in the family, so would advise she does not put undue pressure on herself in the next loan cycle until her family situation has settled down again.

In addition to this, we’re also looking at how business assessments might be integrated into MLF’s operations. These would give further insight into the relationship between the client’s business and her ability to repay her loans. I’ve therefore been trialling the methodology and in the process have gained some fascinating insights into what it means to be a MLF client and small businesswoman. I’d like to share just one client’s story with you now…

Magret Msimuko is a widow and on her 6th loan from MicroLoan. She is based in Nkamenya, a small trading town in the Central Region of Malawi. Her first four loans were spent her business of trading chitenjes (the colourful cloth used as skirts) in the local villages for maize. The maize she would then sell in the market-place. Before setting out she would work out how much maize she needed to trade for the fish and cloth in order to ensure she made a profit. It was hard work, and involved walking long distances between villages to carry out her trading business, but she made a profit, was able to send three children (one of whom is an orphan) to secondary school and make regular savings into the MLF group savings account.

Recently in her 5th cycle, she decided to change her business to a small restaurant which doesn’t require her to spend her days walking. It’s based in the bustling main market centre of town, and she serves tea and scones, as well as the staple nsima (made of maize) with vegetables and meat or beans. With the two most recent loans she has set the business up, buying tables, chairs, pots and plates as well as the necessary food-stuffs and fuel. Though she set up in the rainy season, a difficult time of year before the harvest when people are at the most vulnerable to food insecurity and don’t have much money, she is optimistic that now the harvest is in full flow the business will start to take off.

Why clients decide to leave MLF

Part of the piloting activity we’re doing is to look at why clients exit MicroLoan Foundation. The Branch Managers have been working hard, visiting clients’ homes and carrying out questionnaires looking at the client’s business and any problems she might have had, what she thinks of MicroLoan’s procedures (interest rates, repayment frequency, savings and so on), how the group functioned and what changes she would suggest making. I went out with the Central Regional Manager, Susan Kondowe, this week to do some follow-up unstructured interviews with a selection of the ladies who’ve already done the exit questionnaire. This allows us to compare the results from the questionnaires and the more informal interviews, to see if we’re really getting to the heart of the issues clients are facing. We’re pleased by the level of similarity between the two methods of data collection, which goes to show the Branch Managers are doing a great job.

The types of reasons clients are giving for exiting are varied but include personal or family illness, having to focus on farming during the rainy season and disliking the repayment frequency of 2 weeks.

To give you more of an insight into the types of issues a client might face, here is Mary Chauma’s story. Mary runs a successful small restaurant in the centre of Kasungu, and originally joined MicroLoan a few years ago right after the death of her husband because she wanted to grow her business. After 5 loan cycles she decided she didn’t need any more loans, as she’d done what she’d set out to do with the business and it was thriving. Then last year she was keen to rejoin, wanting to further strengthen the business, but sadly her younger sister was very sick and ultimately passed away, meaning she had to spend time nursing her and then paying for her funeral costs. This meant that the funds she had set aside for her deposit to access a MicroLoan loan were diverted to the funeral costs. Despite these family tragedies the restaurant continues to flourish and is assisting her with her household financial needs, and she’s hoping to rejoining MicroLoan as planned soon.



Photo: Susan Kondowe (on the right) speaks to a client about her reasons for leaving MicroLoan Foundation

Recruiting my replacement
It’s amazing how the time flies! One minute I’m wandering around Kasungu not really knowing where I’m going or what I’m doing, and now we’re immersed in piloting the social performance management activity and it’s time to recruit my replacement. We’ve had over 50 applications for the role and interviews take place this week. I’m sure we have a gem in there!