Micro-credit

One of the problems consistently faced by our groups is lack of income to buy necessities such as food, soap and school uniforms, or to take a sick child to the clinic. Where groups identify this need, Sadiki often supports them to run a micro-credit programme.

Micro-credit is frequently cited as one of the most powerful weapons in alleviating global poverty. Many people throughout the world lack access to formal banking or other credit facilities, other than unscrupulous loan sharks. Micro-credit provides such people with the capital to set up a business, or expand an existing business. Suddenly, they can meet their families' needs, and save something for the future.

Sadiki trains the groups in business planning, and how to apply for and service a loan. The group elects several of its members to a Credit Management Committee, which vets the loan applications, collects monthly repayments, and gives business advice to defaulters.

The group members invest their loans in a small business, such as running a kiosk or selling second hand clothes, or use it to expand and diversify their subsistence agriculture. The loans are repayable in regular instalments with interest. Sadiki makes the initial investment of funds for the loans, which then rotate around the group. There are always a few group members waiting for loans to apply pressure on other members to repay.

One of Sadiki's youth group members, Violet Akinyi, used her loan to buy and sell dress materials. With her profit, she was able to pay the balance owing on her sister's school fees. Were it not for Violet's assistance, her sister would have dropped out of secondary school.

In 2007, the Nobel Prize was awarded to Professor Muhammed Yunus, the father of micro-credit, and the Grameen Bank in Bangladesh which he founded. Read more about micro-credit and its benefit in alleviating poverty at www.developments.org.uk