RAINBOW MODEL OF CARE


                                      Alessandro Tedesco

Introduction                                    p. 1

The group selection criteria                    p. 4

Statistical on the status of the participants   p. 9

The micro-business training course              p. 12

The loan repayment period                       p. 21

Statistic records on the repayment trend        p. 30

Prospects for the IGA model
       p. 33


The current I.G.A. (Income Generating Activities) microcredit model within the
Rainbow project is the outcome of four years of endeavours, which have lead to a
microfinancing organisation able to match the main goal of the project: supporting
the families hosting orphans. The model is still dynamic and opened to
After having spent five months in Zambia working together with the organisations
involved in the Rainbow microcredit scheme, I am presenting the results of my
research in this survey. The research had a double target: on one hand to describe the
Rainbow microcredit model, on the other to evaluate the impact of the programme on
the families involved through some statistic data.
The research aims to find out the practical guidelines followed by the microcredit
operators, and to explain the reasons why the current methods are preferred to the
many possible others. The survey may therefore be useful to whoever is willing to
implement this microcredit model outside the Rainbow operative area, without the
chance to spend some months in Zambia.
It is also interesting to know the real impact of IGA on the livelihood of the people
financed. By collecting some data through a field research, it was possible to draw a
statistic profile of the participants to the programme, and to compare it to the
situation of the clients who completed the programme. The comparison gives an
evaluation of the benefits that IGA are taking into the families involved.
The limited length of time spent in Zambia did not allow me to follow the same
group through all the programme steps, from the selection to the completed
repayment of the loans. Hence data are referred to several groups at different stages
of the programme. If this could be an obstacle to the linearity of the research, it also
enriches the statistic sample by extending it to a wider number of people.
An introduction to the Rainbow model is needful to a better comprehension of this
microcredit scheme. Microcredit within the Rainbow model is just a part of a more
complex structure, which is assisting the orphans using different tools. It is therefore
necessary to set the IGA model into its operative framework.


The implementation of an I.G.A. (Income Generating Activity) is usually preceded
by other Rainbow activities: in the compounds in which IGAs are scheduled to
begin, there are usually active initiatives such as listening centres, nutritional centres,
community schools or awareness groups often already present. Awareness groups
(A.G.) are the core cells on which IGA groups are organised. They are formed by
the so called "children guardians", the formal definition for the people committed to
look after the O.V.C. (Orphans and Vulnerable Children) in their compounds, on the
behalf of the Rainbow project. The members of the A.G. are mainly women to whom
OVC are entrusted, according to the extended family social system commonly in use
in Zambia. The A.G. meet weekly, with the aim of identifying the problems of the
O.V.C. in their adoptive families, supplying the basic needs of these families, and
pointing out OVC unsolved situations in the compound. Awareness groups, in which
a Rainbow operator must always be present, provide the Rainbow programme with
a precise idea over the OVC conditions in the compounds.
As already mentioned, IGA groups are formed on the basis of the awareness groups,
of which only one is present per compound, thus furnishing a first selection criterion
in that the people who belong to an IGA group must come from the same compound.
This facilitates the monitoring activity by the Rainbow operator; since the operator
in charge of following the group usually dwells in the same area as the women
Another feature is the presence of orphans living in the families of the IGA
participants which becomes an indirect way of helping the children, and in fact the
Rainbow project represents a model for OVC care. The profits deriving from an
IGA transaction is then used to assure the families a sufficient income to provide
for their basic needs.
The wide majority of the IGA participants are women.
There are several reasons which justify this choice:
 reliability: women are the people who are most involved in managing the home
    economy of the families. They know the necessary requirements for their

       families and usually decide independently how to spend the family income.
       Women, more than men, are willing to allocate economic resources for the
       maintenance of children, both for fostered orphans and their own children .
       This sort of attitude is held in high consideration in a project like that of
       Rainbow, deals with assistance to orphans.
 dynamism: Zambian involvement in microbusiness and informal activities is
      recent. Zambians have always been used to subordinate employment first in
      companies run by English settlers, and then by a socialist government after
      national independence. The introduction of capitalism and the difficult economic
      crisis are affecting Zambian men much more than women. Nowadays many
      women are running informal activities which often turn out to be the only family
      revenue. Several possible clients in the IGA pro gramme already have a
      microbusiness which financed by a soft loan. 1
 female emancipation: informal activities have not yet been recognised in the
      Zambian society as a real economic activity. When married women were asked
      about the job of their husband , they qualified the partner as unemployed, even
      if he was working informally. Microactivities, which are usually done by
      women, have no social official acknowledgement. The women themselves do
      not show any particular interest for their businesses which are carried out only
      from necessity. Microcredit aims to make these women more self confident and
      improve the skills already achieved through the management of their activities.
The selection of the participants for an IGA group is guided by two principles
apparently in contrast with one another:
 IGA is a business, not just a handout. People who are selected should be able to
      complete the programme, younger women are therefore preferred to older ones.
      Health status is also important and those who are already running a business
      receive higher loans compared to those with no previous business experience.
 IGA is a form of social dignity restitution. Loans may be granted to those who
      do not completely fulfil the normal standard requirements for a micro-credit
      programme (good health, previous business experiences, etc.), but is wholly
      committed in participating to the programme. The aim of IGA does not only

    Reference to the data presented at p. 7.

   consist in the economic rehabilitation of the participant, but also and more
   especially, in building up self confidence in people, by giving them
   responsibility. By becoming the protagonists of project of a project of their own,
   the prospective clients face the psychological challenge of a more active
   approach to life.
How can the two principles be made to agree, or in other words how can IGA
efficiency be ensured to without excluding the weaker elements? The operator in
charge of selecting the group must consider the two requirements, creating
heterogeneous groups capable of supporting members in dire straits. This will lead to
an easier process of aggregation and consolidation of the group; problems affecting
single participants are tackled through solidarity and mutual assistance, these devices
being fostered by the operators.
Thus the positive outcome of a project will depend on the correct mixing of the
group which should include people from different social extractions, personal
situations and types of occupations. All this however, belongs to the phase which
follows the selection and does not explain how the groups can be formed and still
respect the two principles stated above. The most important criterion used in IGA
programmes to obtain an efficient selection is the process of autoselection.

The group auto-selection process

An IGA programme begins long before the ten days training course attended by the
group who is to receive the loans: the two groups analysed in this research (the rule
is true for every IGA initiative) started the programme at least six months before the
course. This stage is indispensable for the positive outcome of the project, even if it
is not usually considered as an integrating part of the IGA scheme.
The final aim of IGA is to assist extended families by providing the necessary
means for the maintenance of their orphan dependants. Operators cannot leave out
families with a loan necessity, even if these cannot ensure the required guaranties for
the repayment of the loan. At the same time the IGA must distinguish themselves
from a merely charitable initiative and expect the return of capitals granted to the

families which would imply an exclusion of those families not considered
trustworthy enough.
Bearing in mind both these requirements, a Rainbow operator willing to start an
IGA programme in his compound will first begin to monitor the targeted families in
his catchment area. During the weekly meetings of the awareness group, the operator
introduces the possibility of implementing a micro-credit initiative in the compound,
without giving a precise starting date for the programme and forecasting the
probability of long term waiting times.
At this stage the operators hold weekly meetings focused on micro-credit issues and
encourage the women to attend them. This part of the programme is entirely carried
out by the Rainbow operator, without any interference from Savoir Faire, the
organisation in charge of the training course of the group which then follows.
Operators must therefore be prepared for this kind of work, which often deals with
some aspects quite distant from micro-credit topics. The operators can for example
be heading community schools or nutritional centres, with a teaching or religious
background, and without any specific knowledge in micro-credit. A complete
training in IGA conduction for all the Rainbow staff involved in the micro-business
scheme is a basic requirement for the success of a programme.
The weekly IGA preparation meetings can be attended by anyone interested in the
programme, and at first the number of participants maybe up to one hundred.
The main interest in the majority of the people attending the meetings, is to be
granted the loan in the shortest time possible. After having been made aware of the
complexity and difficulty of the programme, the number of participants generally
shrinks after a few meetings , finally settling to between 40 to 50 units. In other
words, those who are not sufficiently motivated to join the programme leave the
group spontaneously before the training course begins. The auto-selection process
enables the establishment of a successful IGA group, without obliging the operator to
exclude anyone beforehand.
If the starting core of an IGA group is the awareness group (i.e. the working group
of the operator in his catchment area), the final composition of the IGA may differ
significantly from the initial A.G. This is due both to the possibility of extending

IGA programmes beyond the usual Rainbow activities in the compound and to the
aut-selection process.
Although the Rainbow project is a model of care for the OVC, a percentage of the
women in the IGA classes do not foster any orphans in their families. These women
usually come from large family units, already facing situations of hardship. Loans
are usually even more necessary to them than to a family taking care of some
orphans but able to maintain them. These people are therefore willing to bear the
long terms of the selection stage.
The selection stage is also helpful to the operator in getting to know in detail the IGA
participants. By visiting them periodically at their homes, it is possible to assess the
life standards of the children, the possible existence of an already started
micro-activity, and the specific needs of the family. An important example
concerning this aspect of the selection stage is given by the records collected over the
health status of the future clients. It is difficult to find out any definite information
about seropositive family members 2 through direct questions, both for the delicacy
of the matter and for an understandable reticence by the people concerned. Operators
can overcome this problem by entertaining personal and friendly relationships with
the families during the selection phase.
In the week preceding the beginning of the course, the Rainbow operator contacts the
Savoir Faire organisation. During this period each participant is visited by the
Rainbow operator and the SAF training staff. A further selection is made according
to the impressions made on the operator in these last visits since classes cannot
exceed 25 units. The clients excluded in the final selection are generally those who
joined the group close to the end of the selection stage, or those who present better
economic backgrounds compared to the group average. Those who are excluded at
this stage are given a second chance to enter in the next IGA programme when the
final list of participants is compiled a few days before the beginning of the course
by the training staff, together with local Rainbow operator.

  HIV positive Zamb ians are estimated to be 30 percent of the population, mostly living in townships
and compounds, targeted areas for IGA in itiat ives.


The research made to collect the data among the women of IGA groups helps to get
an idea of the targeted clients in the Rainbow micro-credit scheme. The data, and in
particular the economic ones, can be compared to those referring to the situation of
the participants during the various stages of the programme, in order to follow the
real impact and the results of the initiative.
The data here presented refer to two IGA groups; surveys were gathered through
personal interviews a week before the training started.
The average age of the clients is 34.9 years, with a maximum of 54 and a minimum
of 19. All the women have children, an average of 5.8 each. Orphans fostered by
the families are 1.5, but 22% of the families do not have any orphans with them. The
contradiction (Rainbow micro-credit is exclusively addressed to families fostering
orphans) can be explained by the interpretation of the definition of OVC made by the
operators: children who are considered orphans are not only those who have lost
both their parents, and live in a family different from their original one, but also
those who have lost only one parent, and are currently living with the remaining one.
This is particularly true for the families headed by widows, a common condition
among the Rainbow IGA clients. This interpretation is confirmed by statistical data:
all of the considered family units with both the parents alive foster orphans, while
only half of the families headed just by the mother (widow, divorced or unmarried)
have fostered children living with them. It must also be remembered that the
general definition of OVC refers to every child living in a poor social and economic
environment. Some of these cases are pointed out to the Rainbow operator in the
compound, who can then decide whether or not to include them in the group.
79 percent of school age children attend school, but only half of their families
actually paid the school fees and often only for the first half of the year. Children,
therefore, risk being banned from attending the lessons at anytime, especially from
the beginning of the second term onwards. Almost none of the children attend the
academic year which corresponds to their age because their parents have not always
been able to afford the school fees which are compulsory for everyone.

Paradoxically, none of the clients considered in the research had children enrolled in
a Rainbow community school where admission is free of charge or anyway less
expensive than in public schools. This is due to the limited extension of Rainbow
community schools, which do not yet operate in all the compounds where IGA
groups are present. The quality of teaching is another reason for preferring public
schools to community schools where the teachers are volunteers and do not always
apply standard methods and programme. Thus, since community schools cannot
provide educational standards comparable to those of public schools, parents prefer
to enrol their children in public schools even when they do not have sufficient means
for the school fees.
The only income source which widows have is usually always from some informal
work and when a husband is present he is either unemployed or in any case provides
for less than half of the family revenue.
87 percent of the clients are already running some kind of business before they have
access to the IGA soft loans. The businesses are on average five years old , a period
considered necessary to guarantee the good commercial skills of the entrepreneur,
and they mostly concern the retail trade. Trade is the main economic activity in the
compounds surrounding the town, where there is little space available for agriculture.
Furthermore agriculture has been neglected in the Copperbelt region, in which, until
recently the first source of revenue used to come from mining and industrial
The average income per family is 455.000 kwacha 3 per month. Deducting the
monthly investment for the business, such as the purchasing of goods to resell, the
amount of money available for general expenditures , such as nourishment, school
fees, medical costs, house rent and savings, does not exceed 270.000 kw. Assuming
that an average family unit is composed of six persons, the daily expenditure per
person comes to 1500 kw which corresponds to less than half one U.S. dollar per
day. Malnutrition is therefore not uncommon among the children, which is why
IGA families are supported with extracredit handouts for the three months of the
repayment period. 4
The average request for a loan is around 610.000 kw and 50 per cent of the women

    Exchange rate between U.S. dollar and Zambian kwacha is 3800 (October 2001).

intend investing the capital to start a new business instead of continuing their
current activity. There are two possible ways of explaining this data: either the
women consider their present business not sufficiently profitable, or they believe that
the programme will provide them with the necessary skill to enable them to run a
new activity.

    Details at p. 16.


After the group has been established, the class proceeds with the microbusiness
course organised by Savoir Faire, a Zambian Non Governmental Organisation within
Rainbow in charge of IGA training as well as the monitoring and evaluation of
the micro-credit programmes.
The training course which is propaedeutic to the loan delivery; lasts ten days and
is based on seven daily hourly lessons. The class teachers are the Rainbow
operators themselves who collaborate with the staff of Savoir Faire and must have
previous personal micro-business experience. The trainers are people who have
already put into practice the micro-business management theories they have learnt
by attending specific seminars on micro-credit issues. Moreover some of them have
in the past taken advantage themselves of            Rainbow micro-credit soft loans in
order to start their own micro-business. This initiative achieves a twofold goal: on
one hand it enables the trainers to experience personally problems related to
micro-business and so making them more aware of these issues when teaching
during the training, and on the other it ensures the trainers a personal revenue,
seeing that Rainbow operators are not paid for their activity.

The course topics

The training course is divided into two teaching phases: the first one deals with some
economic and management subjects and is based on I.L.O. 5 publications, while the
second is derived from the Savoir Faire experience in micro-business training. The
course contents are organised in an initial three day stage entitled GYBI (Generate
Your Business Idea), and followed by one lasting seven days, named SYB (Start
Your Business).

  The International Labour Organisation is an United Nat ion agency dealing with working and self
development issues. It collaborates with the Rainbow pro ject, financing some IGA groups and
supporting microbusiness training through specific courses, addressed both to the clients and to the

      GYBI. During the first three days of the training course, participants are
helped in choosing a possible business project, through guided market analysis.
Before the start of the course only a few students already have a clear idea on the
type of business to implement, in fact not all the students are currently running a
micro-business, and many of those who do intend to change it.
An idea for starting a micro-business idea originates in a way similar to any other
economical business project. Before beginning to invest time and resources in a
business the women are advised to take into consideration the profitability of the
product and service they are willing to offer, the presence of the targeted customers,
the best way to put their product on the market (wholesale, retail, door-to-door
selling) as well as all the various aspects involved in a business planning activity.
IGAs are based on the personal skills and aptitudes of the women: each student is
therefore asked to underline her personal interests and needs, and to choo se her
business according to her previous working experience.
The choice of the activity is guided by the trainers by gradually reducing the range
of possibilities. At first four macro areas are proposed - retail sale, wholesale,
manufacture and services. So that, for example, a hairdressing salon will belong to
the service macro area, while a foodstuff counter will be part of the retail sale area.
According to the referred macro area, each student can analyse general benefits and
disadvantages of the chosen activity. At this stage the students are not meant to make
a precise choice but helped to formulate business ideas in order to then select the one
which is most fitting to their abilities. Active group work with an exchange of
information about the markets of their compound are useful elements to the
women in the selection of the best business idea. Before making the final choice, the
students visit one of the main markets of the town, collecting yet further data by
analysing the businesses in the market. All the market activities are assessed by the
students (in order to find out which ones are the most common and which the least
and why) as well as the number of clients and where they come from. The students
are then invited to meet and interview the women who have previously been
included in an IGA programme and are now working in the market.

In the final part of the GYBI course, each participant ends up with a list of various
possibilities from which she must chose which business to start off.        Each idea is
evaluated by the student by considering both the information acquired during the
classes and the visit to the market. Women discuss their choice individually with a
Savoir Faire operator who seldom interferes with their choice, his aim being to make
them explain the reasons for their choice and then focus on the expectations.
The GYBI part of the course ends with the class presentation of the various projects
by the students. Of the two groups studied in the research, the majority of the
businesses selected belong to the retail sale area (specially foodstuffs and second
hand clothes). Businesses are established mostly in small shops near the homes of
the women, on rented stalls at the markets or through door-to-door selling . Seventy
per cent of all the participants decided to continue their current business with suitable
modifications in the management, while the rest intend either to change it or to start a
new one.
      SYB. The second part of the course aims at putting into practice the projects
elaborated in the GYBI course. The first subject dealt with is witchcraft in the local
culture and the way it may affect micro-business. Witchcraft and magic beliefs have
a deep influence over Zambian society, particularly in suburban areas such as the
compounds outside big cities. People usually consult witchdoctors or traditional
doctors in order to get more profit out of their activities with the risk of ending too
much under their influence. Trainers have to explain to the class that the risks
involved in the physical and psychological dependence on the witchdoctors outweigh
the advantages. The women are therefore invited to resort to the operator, and not to
the witchdoctors, for advice in case of difficulties in the business.
The main goal of this part of the course is to enable the student draw up her own
business plan. A well formulated business plan plays a key role in the success of the
business. Another goal of the SYB package is to inform the women about technical
and legal aspects in trade activities: how and where to register their companies, how
to organise the accountancy, which tax laws are to be taken under consideration and
finally how to manage and recompense the employees.
The economical and social aspects of the country are brought to the attention of the
class and the trainers show which are the main difficulties for microactivies in

Zambia. Official administration , slow and costly is, often a major obstacle to
micro-business implementation, this in turn may lead to many illegal practices such
as: non officially registering the company or the lack of a trade and sales license,
tax evasion or the production and sale of illegal items (marjiuana or kachasu, an
illegally distilled spirit made from sugar cane). Profits derived from illegal activities
are obviously much higher but their management is equally at a higher risk.
Women are therefore asked to obtain the necessary licenses for trading activity and
to register their business. They are then told about some of the legal consequences
they may face while running their business (for example door-to-door selling has in
the past brought charges of trespassing and violation of private property , running
a bar they might be fined for having music which is too loud etc.). In case of trials
or legal proceedings all the students are provided with legal assistance. 6
Another cause of possible failure for the micro-businesses is traditional culture and
local social context. Some types of businesses are still precluded to women,
husbands for example, do not allow their wives to stay away from home for more
than a day, and, within the family, it is the husband who decides the destination of
the revenue of his wife. Trainers advise the women to address themselves to the
local Rainbow operator or to the V.S.U. 7 in case of family disputes, but this remains
one of the main unsolved problems for IGA development. It has also been suggested
to the women to keep social expenses (like the organisation of the costly traditional
funerals) under control and in any case not to spend the loaned capita l for non
business related purposes.
The students then have to analyse, in detail, the market research begun in the first
part of the course. It is important to carry on this task even after the end of the
training and is the reason why participants are given two months from the
empowerment date before they start to pay back the loan.
The first step towards formulating the business plan is to draw up the marketing plan,
or in other words, the students are guided in choosing of the best way to sell their
products or services. The price of the goods in question may be reached through

  Solicitor’s offices and single lawyers offers free legal assistance to IGA participants.
  Victim Support Unit ies, a police corp created to help children and wo men facing domestic vio lence

demand and offer analysis and are then revised when business costs are taken into
At this point the students decide which kind of company to set up. .Among the
different possibilities which the Zambian company acts offer, small sole ownership
enterprises is the legal type most used by IGA clients. This kind of company has
several advantages: it requires a small starting capital and it ensures many fiscal
benefits for the first three years of activity. The maximum limits established by
Zambian authorities for a small enterprise budget can be easily respected by IGA
clients throughout the length of the programme.
Most of IGA enterprises are run individually and it is rare to find two or more clients
who put their capital together to create joint micro-companies. Local attitude in
micro-business management supports individual or family enterprises (and it is
unlikely to find relatives within the same IGA group), and trainers do not encourage
any co-operative initiatives. Empowerment in the IGA model is of an individual
nature, and the women who benefit from the programme should run a personal
project and be solely responsible for it. This approach increases the self confidence
in the skills of the women and avoids those conflicts which could arise in a
co-operative environment, especially when the entrepreneurs are not used to team
work. 8
Clients are invited to insure their businesses, the insurance not being expensive
and it is a good investment both for the client and for the Rainbow project, in case of
failure. Unfortunately, since business insurance is not compulsory in the IGA model,
it is contracted by only a few clients.
Accountancy principles are an important topic in the SYB package, as they enable
the women to evaluate the business trends correctly. Accountancy is also necessary
to estimate the V.A.T. income percentage, an important issue seeing that several
micro-businesses in Zambia have been closed or charged of V.A.T. evasion due to
incapacity of demonstrating the tax payments in the record books. Accountancy ii
useful for expressing an accurate business plan, because it helps to quantify the

    The IGA model includes some devices supporting team work: SW EGs (references at p. 20).

required starting capital or, in other words, the amount of the loan requested to the
Rainbow project.
Accountancy introduces the conception of the financial plan, which is a sort of
timetable of costs and incomes to be followed by the client during the loan
repayment period. Clients must produce a detailed list of forecasted costs, in order to
avoid unexpected drawbacks.
A key concept, underlined by the trainers, is the complete separation between
business and domestic accountancy. Confusion between business requirements and
the family needs is the first cause of failure in local micro-companies. For example,
the selling of items on credit without time limits to relatives, using the capital of the
company for domestic expenditures or employing the granted amount for other debt
repayments incurred from past failed IGA initiatives. Trainers demonstrate to the
women the advantages of keeping business and family accounts separately,
calculating in the financial plan the profits deriving from the business, which will
become future benefits for the family.
The last part of the SYB package is dedicated to the duties which the clients have
towards the Rainbow project, and to the modalities of the group evaluation during
the repayment period.

Teaching methods

The trainers use various teaching methods to improve course efficiency. With one
quarter of the students being illiterate, the standard of education in the classes is
low and consequently the students are not able to maintain their concentration for
long periods, especially on micro-economy notions which are not always easy for
them to understand . Is therefore necessary to stimulate active participation to the
lessons and to set them at a slowed pace, with frequent breaks.
A daily progress report is organised for every student starting from the first day of
the course, and exposed publicly. The report is divided into four parts- participation,
initiative, presence and marketing - each being worth a maximum of 25 points per

The participation mark takes into the consideration positive interventions during the
lessons, correct answers to the questions asked by the trainers or good questions
made by the student to the teachers .
Initiative is based on any active behaviour on behalf of the student, for example
facilitating the lessons as in helping arranging and cleaning the classroom after
lessons, is judged positively by the trainers.
Presence is very important, unjustified late arrivals are not tolerated, and missing out
one day of lessons brings to the exclusion of the student: concentrated training such
as this needs full attendance to all the lessons.
Marketing introduces a dynamic element in the course: women are asked to bring in
the class a sample of the items they intend selling in their business, and the last part
of every lesson is devoted to bargaining and trading among the women. Marketing
activity allows the operators to evaluate the trading skills of the students and their
chances of business success. The points for marketing depend on the sales made
by the students.
At the end of each day the class is asked to estimate the positive and negative
aspects of the lesson, in order to improve the course and meet the requirements of
the students.
Team work, role games and spontaneous discussions involving new ideas take up
about 40 per cent of the lessons, in order to maintain the attention of the students and
to enable the teachers to evaluate how much the students have understood and which
points need more elucidation . The lessons are held in the local language ichibemba -
since most of the women do not have a good knowledge of English, although the
notes on the blackboard are written in English. By copying them in their note-book,
the students practice and improve their knowledge of English, and learn new
economic terms.
The rate at which the lessons proceed is voluntarily kept down by the trainers,
frequently interrupting teaching time with songs and dances and contributing to
create an informal atmosphere in the class. Most of the participants have never
attended school or left studies in early age, and would not be able to not stand a
conceptual and intensive teaching method. Three main breaks are scheduled on

lesson days , mid morning, lunch time and afternoon, during which the students are
offered a refreshment, usually voted the highlight of the day!


At the end of the training course the women are granted a loan normally in the range
of 300,000 kw and 600,000 kw. The actual amount is determined by the Savoir
Faire staff according to several criteria such as the type of business involved and the
trading skills demonstrated by the students during the course. There is a strict
relationship between the final evaluation of the students and the loan amount
granted: in both the groups analysed the five highest loans were granted to the
women who achieved the best results during the training. Confidence in the skill of
the women is therefore the foremost contributing factor in deciding the loan
amounts, it being the best guarantee for the capital repayment.
There is not much difference between the loans, however, when only the different
types of activity to be undertaken are considered. For example the costs of the two
commonest businesses (foodstuff and second hand clothes sales) require similar
starting capitals, but loans to the women running their business at the market are
slightly higher compared to those willing to work at home: the rents for the stalls in
public market in part help to explain the difference.
The participants receive the loans in cash, at the Savoir Faire offices rather than in
the compounds both for security reasons and also so that the operator can control the
allocation of money. After receiving the credit, the women are taken to a private
bank to deposit the money and open a personal bank account. Benefits deriving from
the opening of a personal bank account are several: money is safely kept, and cannot
be withdrawn easily. To accede to the capital the women have come to town from the
compounds, and fill in the forms required by the bank for the withdrawal. These
difficulties render the access to the accounts less frequent, and reduce the
possibility of misusing the money . Bank books also allow the operators to monitor
the use of the capital, and consequently to keep a clear overview on the business

No warrant is demanded on the loans although the women are asked to sign a
document stating they are aware of possible intervention by the police in case of
missed repayments. The clause has never been applied by the operators and is really
only a warning in case of loan misuse. In those cases when the police has been
called, the authorities limited themselves to explaining to the borrowers the impeding
legal charges they might be facing, which has nearly always been enough to bring
them to respect the payments. In any case no legal action has ever been taken against
non paying clients.
The group is given a three month period before starting paying back the loan, the
grace period enables the women to implement their business without financial
problems. Before the introduction of the grace period several failures occurred
among IGA micro-companies with a very low percentage of repayments in the first
months. Starting the business requires a substantial investment, and during the first
weeks clients often register losses. The length of the grace period is fixed by Savoir
Faire, and depends on the general evaluation of the group. When a class is not
considered entirely reliable, the interval between empowerment and repayments can
be decreased in order to reduce the non monitoring period of the business.
Extra credit handouts is another device employed in the IGA model to facilitate
business implementation. During the first IGA attempts, many women spent part of
their loan to buy food or to pay school fees. To avoid incorrect use of the loan and
to decrease hardships, women now have access to food help for the first three
months of the programme. The Rainbow project does not completely provide for the
food requirements of the families and the handouts are only meant to improve the
current resources of the families. According to available funds in the Rainbow
budget, the project also provides for school fee payments whenever possible.


The role of the client

After having deposited the loan in their own bank account, clie nts start their
businesses following the guidelines outlined during the training. In the early months
the clients invest a large amount of the capital for the buying of materials and
payment of licenses. Many women buy the items they need in the capital city, Ndola,
where they will later resell them, so one of the most recurrent costs in the initial
expenditures is transport.
The businesses at the moment in the Rainbow IGA mainly concern the retail trade.
More than half of the IGA entrepreneurs sells foodstuffs or second hand clothes.
These two activities are relatively easy to implement, the items being readily
available, and begin generating profits within a short time. On the other hand,
exaggerated competition represents their main disadvantage and these businesses are
nowadays overloading the markets of the town. Supply for these goods, therefore,
exceed effective demand and since profits, even when assured, are extremely small,
these businesses have little chance of expanding.
    Among the other commonest implemented activities are the selling of coal which is
bought in from the rural areas surrounding the city and is sold as combustible for
cooking, handicraft production, like pottering and needlework, and ice blocks sales
(profitable only in the hot season for obvious reasons).
Flower selling represents a significant new example of profitable IGA. This business
needs a small starting capital 9 and satisfies an increasing demand for public
institutions such as schools, town-halls etc., and for private occasions such marriages

    The wo men usually grow the flo wers in the backcourt of their houses.

or funerals. Most of the women who have invested the loan in this type of business
have been able to pay it back before the end of the repayment period.
It is unusual to find IGAs involved in the production of items because of the higher
implementation costs. Production would also imply a partnership company, whereas
the IGA micro-credit scheme is individually orientated. There are, however, plans for
starting some IGA projects in the production line which would be a new challenge
for the Rainbow micro-credit model.
Such an example, is an IGA programme started in the rural areas which finances
agricultural activities with an approach which is different from the urban
micro-credit scheme. The loans granted are made up in part of money but also of
seeds and manure needed to be used on areas which cover about one hectare per
family. The reasons for this initiative are because it would not be possible to
implement trading activities in the rural areas, where there is no main market, and
also to wilfully help support small family sized farms.

Modalities of repayments

The repayment period lasts twelve months during which time clients are expected to
repay the loan in monthly instalments to the local Rainbow operator. There is no
fixed aliquot but the entrepreneur is free to deposit amounts higher or lower than the
twelfth part of the loan according to her business trend. Repayments are checked
both by the Rainbow operator and by Savoir Faire staff during the monthly
monitoring visit.
The payments are not made on any specific day of the month : the Rainbow operator
is available for instalment collecting throughout the month and the payments are
often deposited during the weekly meetings.
The repayment registered in several groups show a regular trend for the first four or
five months and then become more irregular in the final part of the programme. No
IGA group has ever completed its payments within the expected expiry date, even if
approximately 15 per cent of the clients individually managed to finish paying off
their instalments before the end of the period.

The rainbow IGA model states that one third of the business profits goes toward s
loan repayment, another third should be deposited in the bank account, and the rest
used for domestic maintenance. Even if the model is not entirely respected
everywhere, the families involved in the IGA programmes show a significant
increase in the savings deposited in bank accounts. Savings are very important for
the self-development of the families, since they reduce the need for external help.
Bank records are weekly monitored by the operator, and they also represent an
important parameter in the weekly evaluation by Savoir Faire. Savings are also a
good indicator of the business trend: a sizeable deposited amount, frequent deposits
and withdrawals are all indicative of good business and good management.
The overall domestic spending corresponds to the profits brought in by the business
and is made immediately available for the needs of the family. Evaluation of the
general spending helps to determine the real impact of the programme on the living
standards of the family: the higher the business pro fits, the better the livelihood of
the family will be.

The solidarity devices of the group: the SWEGs

SWEGs (Small Women Entrepreneurs Groups) were introduced in the IGA model in
the year 2000. A SWEG consists of a group of five entrepreneurs, there is therefore
a maximum of five SWEGs in each IGA class. The SWEGs are constituted during
the training course, according to business similarity or personal relationships
between the clients. Operators have no influence in the constitution of the SWEGs,
even if the women are sometimes encouraged to form SWEG groups, they are left
entirely free whether or not to participate.
SWEGs should arise as a spontaneous initiative among the women, their aim being
to support team work and solidarity within the group. Each SWEG appoints a
chairman, a secretary and a treasurer; trainers discourage common long term deposits
which might lead to quarrels among the women. Cost cutting is one of the reasons
for creating a SWEG: for example, many businesses require frequent journeys to the

capital city for the purchase of items to resell, SWEGs enable the women to delegate
just one person to go to Lusaka, so sharing transport costs and saving capital.
Through SWEG meetings clients can obtain further information about their own as
well as the other businesses, in this sense SWEGs have also an auto- monitoring
SWEGs can work as a relief device in case difficulties for single members, some
groups, for example, started common businesses the profits of which were assigned
to an entrepreneur who had fallen sick or become pregnant.
Common businesses are the real target of SWEGs; even if IGA loans work on an
individual basis (capital granted cannot directly finance SWEG activities), women
encouraged to co-operate economically, and invited to meet as SWEGs at least once
a week.
Common businesses allow the women to try out small scale finances, moreover,
there are in fact several public funds available for micro co-operatives. The step
following the formation of a SWEG is the official registration as a co-operative
company, done through Savoir Faire and after having presented a proper business
plan. Once registered, the company is introduced to NGOs and government
institutions which finance this kind of enterprise. In other words, SWEG should
prepare the entrepreneurs to become used to team work, helping them to have access
to the many funds set aside for co-operatives.
Up until now, SWEGs have not yet reached the targeted level of development, only a
few co-operative companies have so far been registered, and even in the most recent
IGA groups the initiative is having difficulties in taking-off. As previously stated,
SWEG formation is left to the initiative of the women, If the groups were formed
by the operators, they would constantly require external monitoring and never
become self sufficient. On the other hand, operators must encourage women to meet
so they can form SWEGs as well as suggest ideas for possible common businesses.
The role of the SWEG in the IGA scheme has not yet been clearly understood by the
operators, this being the first stepping stone for their implementation.
WE (Women Entrepreneurs) is another model adopted in the IGA scheme to support
common businesses and was introduced together with the SWEG. WE group is
formed by all the SWEGs belonging to an IGA class, and it can be useful in case of

businesses requiring a wide number of workers. WE profits are to be shared among
SWEGs, and then delivered to each member.
In contrast with that which happens for SWEGs, women are encouraged to collect
funds in the WE which act as common deposits to be employed as a guarantee
for entrepreneurs in difficulties. The possibility of registering WE as official
co-operative companies also exists but has so far not been explo ited. The problems
related to WE are similar to those mentioned for SWEG, both the formulas still
need further endeavour to improve their impact in the IGA model.

The role of the operator

The local Rainbow operator in charge of following the IGA group is probably the
key person for the success of the programme. He organises and attends the group
meetings, registering the problems of the clients and collecting loan repayments.
The operator usually runs a Rainbow structure (for example a community school, or
a nutritional centre) in the same compound of the empowered women. He is
therefore able to ensure constant assistance to entrepreneurs and a frequent
monitoring activity.
The operator should meet the group once a week, within the Rainbow structure of
the compound. The meetings offer the possibility of discussion and comparison to
the women, who are asked to bring their account books to allow the operator to
check withdrawals and deposits. The introduction of bank deposits in the IGA model
is recent, and many groups do not yet have personal accounts. Women also often
pretend to forget the books at home, so one of the tasks of the operators is to
periodically visit the clients at home, especially when registering unjustified delays
in repayments.
The role of the operators is very important and extremely delicate, he must be at the
same time severe in controlling the group and also be able to avoid interfering too
much in the activities of the group so as not to lose the confidence of the women. In
some of the groups visited the women stopped attending the meetings because due to

loan misuse or delays in repayments, they were afraid of possible reproaches by the
If the relationship with the operator is not particularly good, the women will hardly
want to admit their economic difficulties to him and so worsening their situation until
it reaches a point of no return.
The success of an IGA programme depends mainly on the commitment of the
operator: it is easy to loose control over the group if the weekly meetings are not held
regularly or if poor attendance is tolerated. The operator should personally know
the situation for each family, and should be able to refer not only about single IGA
economical details, but even on eventual home domestic problems.
The local Rainbow operator must also verify that benefits deriving from IGA are
destined to OVCs fostered in the families. He should therefore check the school
attendance of the children, and their livelihood conditions.
In the case of prolonged periods of missed repayments, or the impossibility for a
client to continue the programme (caused for example by long term sickness) the
operator should immediately report the problem to Savoir Fa ire, in order co-ordinate
a solution. Operators should also organise and encourage the implementation of
SWEGs within the group.
Unfortunately, the local operators are not always able to effectively fill their role:
they are often running other projects on the behalf of the Rainbow model, with not
enough spare time to establish an IGA programme properly. Some operators do not
live in the same compound as the IGA group, an obstacle to a direct and constant
business monitoring. The substitution of an operator who started a programme
occurred in some groups, and it had a negative impact. The new operator does not
personally know the women; he has re-establish a mutual trust with the clients,
which is a necessary requirement in the micro-credit scheme.

Monthly collection of repayments

The local Rainbow operator is in charge of collecting the loan repayments within his
group; he takes care of the group repayment accountancy and gives out a receipt for

each amount paid back by a client. More recently groups have a personal record
book delivered to each woman; the operator reports on the books the single
repayments per month, facilitating the Savoir Faire monthly monitoring and
evaluation activity. In the past receipts were often lost and the Savoir Faire staff had
to contact the Rainbow operators to know the repayment position of the client. Now
monitoring can be carried out without having to visit the clients door to door and
does not even necessarily require operator attendance.
The operator must deposit the amounts collected monthly, either at the Rainbow head
office or in the project bank account. The depositing of the repayments is the only
part of the programme which does not involve Savoir Faire, involving directly
Rainbow operators and the Rainbow office. Thus, Savoir Faire monthly evaluation
takes place "blindly" with the staff not knowing the real value of the group
repayments. This allows the discovery of any discrepancies between the account
books of the operators (and the statements of the women) checked by Savoir Faire
staff and the amounts really deposited in the Rainbow bank account.

Savoir Faire role

In the IGA model Savoir Faire does not only organise the training course, but it also
fulfils other important tasks during the loan repayment period. In particular, Savoir
Faire staff is in charge of the monthly monitoring and evaluation activity of all the
IGA groups, and so serving as an external inspector for the groups.
Evaluation takes places in the compounds, where two operators from Savoir Faire
meet the women in the local Rainbow structure. They interview the clients
individually about loan repayment status and business trends. Records concerning the
repayments can easily compared with those in the Rainbow operator account books
and thus usually considered reliable, while information about business management
often needs further research by on the spot check of the micro-activity or visiting the
house of the client.
During the interviews Savoir Faire operators ask the women for financial records
partially already known by the Rainbow office: a double accountancy avoids errors

and allows comparisons. Women are asked about their loan amount, total repayment
rate and the percentage of repayment deposited for the current month. Records
concerning their personal bank accounts are confirmed by the bank account books,
which the clients are asked to bring with them at every evaluation meeting.
Other questions regard the kind of business implemented, and economic records
which refer to the current month such as: costs, profits, present capital available and
stocks. Stocks are particularly important in determining the business trend: many
entrepreneurs prefer investing profits in more stocks or give credit to customers,
rather than depositing them in the bank accounts.
Savoir Faire evaluate businesses using the same criteria taught to the clients in the
training course. The strong and weak points, and the apparent opportunities and
threats concerning the business during the month, are analysed both by the operators
and by the entrepreneur concerned, to which are added Savoir Faire comments.
A group evaluation usually lasts a whole day, the distances between the
organisation office and the various compounds being rather large. The monitoring
and evaluation activity require the employment of notable resources, considering that
the number IGA groups currently on the repayment roll are 17, and that for some
of them more than one day is needed to complete an evaluation.
Through group monitoring Savoir Faire has a precise overview on the programme
trend, and is able to handle in time any possible problems which may occur in the
groups. Savoir Faire evaluation also considers the local Rainbow output, since the
IGA model strictly depends on the work of the operator. Most of the difficulties in
IGA programmes can de found at this level: the slip ups or mistakes made by the
operator seriously affect the outcome of the project, which is why his mode of
operating is kept under strict observation by Savoir Faire.

IGA problem solving strategy

In case of non repayments by one or more women in the group, the Rainbow
operator addresses the problem to Savoir Faire, to agree on a common solution. The

results of the monthly evaluations may also lead the staff of Savoir Faire to
intervene in an IGA group.
The first step taken to tackle the problem is to meet the group, discuss the reasons of
the current difficulties and then illustrate the possible consequences - including legal
ones - of the situation. In groups where difficulties are found, women attend the IGA
meetings less frequently, and tend to avoid dealing with the operators. It then
becomes necessary to visit them personally, trying not to increase their
apprehensions but to convince them to take part in the programme again.
Giving up carrying on the implemented business too easily is among the commonest
reasons of IGA failure. Fresh entrepreneurs often abandon their activity when faced
with the first budget problems to then open a new business. The second attempt is
much more risky than the previous one, since it usually takes place after the
extra-credit handouts period, and with just the remains of the original starting
The new micro-activity is almost never analysed using the detailed business plan
prepared during the training course, and is strongly discouraged by operators.
However, the clients prefer risking the rest of their capital on these new initiatives,
often without asking for advice, with the result that nearly all these second
businesses end up in bankruptcy.
Among the solutions offered by Savoir Faire is the intervention of the police,
especially when loan amounts are misused intentionally, to cover expenditures
different from those agreed in the business plan. This does not lead to any legal
proceedings, since retrieving the amounts would not be possible in most cases.
Some clients have in the past used the Rainbow loans to repay debts previously
contracted with other micro-credit institutions or private banks. This has induced
the operators to ask the clients not to accede to other loans during the programme,
and to declare any debts they may have contracted before the beginning of the
programme .


17 groups are actually (October 2001) involved in the IGA programme. Each
group is on the average composed of 25 people, which means that up to date the
families taking part in the programme are over a 400. If the estimated number per
family is seven people, the IGA scheme is indirectly helping almost 3000 people.
The return on loans is slightly less than 70 percent, the groups that haven not yet
finished the repayments – even if empowered more than 12 months ago – will
continue to be under the Rainbow supervision until the repayments have been
Several differences may be noticed between individual groups, demonstrating the
relevant role played by the Rainbow operator in the programme. In the groups in
which the weekly meetings are effectively held, where accountancy and repayment
registration is carefully kept up to date and where, more in general, the women are
constantly supervised, the number of clients able to repay the loan within the
estimated time exceeds 80 percent. The best results have in any case been observed
among the most recent groups, a demonstration in the improvements of the model
during the last few years.
Repayment rates are higher in the first months after the extra credit assistance. In the
first four months of the repayment period 90 percent of the clients are able to give
back regular repayment rates, and the amount of money collected in this period
covers 45 percent of the repayments for the whole year. It is therefore necessary to
even out the repayment trend, trying to maintain the pace of the first months
throughout the repayment period.
48 percent of the analysed businesses deal with the retail sale of food stuff (e.g.:
flour, vegetables, dry fish etc.). 20 percent of the IGA clients run a second hand

clothes business, the other businesses financed by the programme include charcoal
sale, hair saloons, flower production and sale. It is not rare to find the same business
dealing with different items.
The livelihood of the clients clearly improved when compared to their situation at the
beginning of the programme, even if it is difficult to evaluate the precise impact of
the programme. The amount of savings put away is an example of the
improvements in the family budget management: at the end of the repayment period
clients had an average of 120.000 kwacha deposited. Over 70 percent of the clients
managed to put aside some savings compared with only 40 percent, which in any
case never exceeded 200.000 kw each, before the beginning of the programme.
Most of the savings are nowadays kept in bank accounts whereas previously the
money was kept at home.
Apart from the savings in cash, another important resource for the IGA clients are the
stock reserves. The value of stocks has reached an average of 100.000 kwacha per
client. Stocks represent an investment in the business, and show the self- confidence
of the women in their skills: it is not usual to stock up goods in normal businesses
and items are only bought again only after having sold all the goods.
It is more difficult to quantify the benefits to the orphans deriving from IGA, since
they are linked to a general improvement of the family living standards. An
important indication might be from the number of meals eaten per day, which rose
to three in the families at the end of the programme, from just one attested in the
earlier months. When clients are asked to evaluate the advantages of IGA, this is
often the first item on their list.
Clients are on the whole satisfied with their participation to the initiative, and this in
turn, leads to further considerations about non measurable results achieved by the
programme. The loan amounts on their own would not make any significant changes
in the lives of these women, hence we must also consider, as an added value which is
generated by the programme, all the skills learned by the women during the training
and the repayment period. These skills enable the women to continue their activity
even after the end of the programme.
The Rainbow IGA staff can still be consulted by the clients after the end of the
repayments, and clients have the possibility of participating in other IGA initiatives;

in other words, clients come to be part of a project, and at the same time they become
protagonists of the programmes. This must be considered the most important result
of the programme, in term of psychological and motivational rehabilitation of these
Ensuring the giving of constant handouts is impossible for any micro-credit
programme, the IGA main goal is, therefore, to enable the clients to run their
businesses on their own. This target is achievable only if the women gain eno ugh
skills and self confidence to be able to face difficulties without depending from
external handouts. In this sense the IGA programme can be also described as a
programme for micro-credit training, its non measurable benefits being even more
remarkable than those shown in the statistical evaluations.


There are two main parameters – strictly linked to one another - in evaluating a
micro-credit programme: economic auto-sustainability and benefits for the clients.
Benefits deriving from the IGA programme can be measured both from the facts and
figures presented in the previous chapter and by the generally positive comments
made by the women involved in the programme. Since micro-credit in Rainbow is
meant as an indirect help to orphans, the link between the profits generated by the
IGAs and the living standards of the children should also be improved. Some
headway has already been achieved in this direction by introducing specific
monitoring by a Rainbow co-ordinating group which checks school attendance,
health status and interviews the children. It should be possible to assign a percentage
of the IGA profits for the needs of the children.
The main indicator for economic auto-sustainability is the repayment rate on the total
amount of the loans. This indicator has already reached a good performance in the
IGA model, and it shows concrete possibilities of improvement. The intercourse
between loan repayments and the impact of the programme on the beneficiaries is
due to the reinvestment of the capital: IGA groups are financed according to the
budget of the programme, which in turn depends on the return of the loans. This
means that if loans are not paid back, the programme cannot empower new groups,
limiting the real impact on the population.
Returned capital is not the only financing resource for IGA groups: the most feasible
evolution of the model is the collection of internal deposits, turning the IGA into a
Bank for the Poor.

The IGA internal deposits

In the current IGA model the clients deposit part of their savings into private bank
accounts. The women should monthly place a third of their profits in their accounts,
and use this amount of money for loan repayment. At the end of the programme the
total amount in the deposits should equal the amount of the capital granted to the
group This amount, although generally less than expected, is any case a
considerable resource, which is generated by the IGAs but actually destined for other
 If the deposits were collected in within the IGA structure, the funds could finance
other IGA groups. This would bring the model to become a complete micro-credit
institute, providing both loans and savings opportunities.
The collection of internal deposits in the IGA organisation requires some necessary
conditions: since the collected funds would belong to the Rainbow IGA clients,
guarantees on the reliability of the investment must therefore be provided,
independently of the use which is to be made of the funds. Deposit owners would
have access to their savings at any time, hence it is absolutely necessary to improve
the return rate on the loans granted through this money –eventually reaching the
standard of commercial banks. The results achieved in this field by the IGA
programme proves that this goal is feasible over a medium length of time.
Another requirement for the IGA deposit scheme implementa tion is an organisation
able to run the programme: accurate accountancy is needed, together with counters
for the clients, and qualified staff. It would be advisable to start with a pilot attempt,
gathering savings from a single group and setting up an efficient savings scheme,
before transferring to the new structure all the amounts deposited by the Rainbow
clients in the private banks.
National banking laws must also be considered: it is usually compulsory to provide
a minimum interest rate on deposits. This would imply that an active interest rate
should be asked on the loans granted through the savings of the clients. The IGA
micro-credit scheme has never considered the possible change in its policy of
asking for interest rate on the loans, but evidence collected from the clients show that
there is a bearable level for interest rates on micro- loans.

Even if Rainbow soft loans are granted without interest rate, the clients were asked
their opinion on what amount they would consider a fair rate of interest per year in
addition to the loan requested: the average answer was 17.5 percent. Interest rate is a
common concept in the economy of compounds, while interest free loans represent
a rather uncommon event for these women. When asked if they would accept an
interest rate of 25 percent per year (corresponding to the rate of inflation in Zambia
for the year 2000), 76 percent of the clients answered affirmatively

The involvement of private banks would be another possible solution for the IGA
evolution. Private banks are now hosting a considerable amount of money from all
the IGA micro-deposits; the Rainbow project could ask for a reinvestment of these
funds into IGA financing groups. This solution would avoid problems deriving
from the organisation of the deposits inside the Rainbow project and still have the
accounts administrated by the banks.
Two conditions must be respected in order to implement this solution: firstly the
accounts must all be moved to a single banking institution: this will give a better
bargaining position when the agreement with the bank is stipulated. The other
condition is the same one quoted within the hypothesis of internal deposits in
Rainbow: funds granted by a commercial bank are linked to an interest rate.
These are the next challenges facing the IGA micro-credit scheme, which has already
achieved remarkable and unexpected results but is ready and willing to continue and
improve even more.


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