ECLOF tsunami response

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        THE NEWSLETTER OF THE ECUMENICAL CHURCH LOAN FUND                                                                                     JUNE 2005 ISSUE 33

ECLOF tsunami response
Following last December’s tsunami that hit
the east coast of Sri Lanka with such dev-
astating force, ECLOF Sri Lanka has geared
up its operations to help those affected by
the disaster.

ECLOF Sri Lanka is now examining the
possibility of making loans available for
reconstruction-related activities, as well as
for working capital to allow people who
lost premises and tools to restart their busi-
nesses or begin new ones.

Following a visit to Sri Lanka after the tsuna-
mi for discussions with the ECLOF Sri Lanka
board, ECLOF International director                             Shanthi Siriyalatha shows Muhungi Kanyoro (centre), director of ECLOF International, and ECLOF Sri Lanka programme
Muhungi Kanyoro announced that ECLOF                            manager Gamini Samarasinghe, her ruined sawing machine, the only thing left of her workshop and its contents after the
Sri Lanka would be expanding its opera-
tions in order to help those in need. “We                       added, “We also plan to provide microcredit                    have lost their means of livelihood and need
will be targeting people and activities relat-                  to enable people to get back to work. Many,                    new working capital to replace destroyed
ed to reconstruction”, said Mr Kanyoro. He                      such as Shanthi Siriyalatha, whom I met,                       workshops and tools.”              contd p. 4

Banks urged to invest in people
                                                                                                                               Prof. Stückelberger reminded the Swiss
                                                                                                                               commission that 2005 is the United
                                                                                                                               Nations International Year of Microcredit.
                                                                                                                               He said that the year reflected the increas-
ECLOF International chairman Rev. Prof.                         In a powerful presentation on microfi-                         ing importance and rapid development of
Christoph Stückelberger has called on                           nance to a Commission for International                        microfinance, which in turn called for a
financial institutions to integrate microcre-                   Development and Co-operation set up by                         thorough assessment of the tools and
dit into mainstream banking, and to devote                      the Swiss government, Prof. Stückelberger                      forms adopted by the institutions involved
a proportion of their profits to microcredit                    called on northern banks to invest up to                       in delivering microcredit.        contd p. 3
schemes.                                                        10% of their profits and 1% of their pen-
                                                                sion funds in microcredit funds.                                In this issue
                                                                                                                                Director’s Message                                  2
                                                                Turning to microcredit organizations them-
                                                                                                                                Tsunami hits ECLOF clients                          2
                                                                selves, the ECLOF chairman said they
                                                                stood or fell by the confidence they                            Scaling Social Impact                               4
                                                                showed in the poor, and in their credibility                    Food security and HIV/AIDS                          6
                                                                and credit-worthiness.                                          ECLOF holds talks with
                                                                                                                                ecumenical partners                                 8
                                                                In his submission to the Swiss commission,                      Much more than loans:
                                                                Prof. Stückelberger drew upon the experi-                       people sharing bread                              10
Rev. Prof. Christoph Stückelberger (left), chairman of ECLOF
                                                                ence of ECLOF and its ecumenical partner,                       God’s strategy for life                           11
International, and Tor Gull, director of Oikocredit, at the     Oikocredit, to illustrate some of the chal-
opening of the International Year of Microcredit in the New                                                                     News from NECs                                    13
                                                                lenges and opportunities in today’s micro-
York headquarters of the United Nations. ECLOF and                                                                              Meet ECLOF clients                                17
Oikocredit are working closely together in this special year.   finance world.

JUNE 2005       ISSUE 33

 Director’s                                        that poverty is more than a lack of materi-
                                                   al resources. She said it is also a lack of
                                                                                                  ticular case and others have pushed us to
                                                                                                  share the CGAP’s (Consultative Group to

 message                                           power and ability to influence decisions,
                                                   vulnerability to shocks, be they conflicts
                                                                                                  Assist the Poor) Guidelines on how
                                                                                                  microfinance      organisations     should
                                                   or natural disasters, and lack of education    respond to disasters. We are reminded
 This being the UN International Year of           and training among others. Therefore, for      that a credit organisation must distinguish
 Microcredit, several events have taken            microcredit to be effective all these fac-     between credit activities, which is its
 place and others are planned to focus on          tors need to be addressed.                     realm, from relief activities.
 the potential and challenges of microcre-
 dit as a tool for development and the             In this issue of New Horizons, we share        In a thought provoking reflection on
 eradication of poverty. It is also a time to      experiences of how ECLOF has worked            MDGs, God’s strategy for life, Rev. Prof.
 assess to what extent microcredit is con-         with different communities and families        Christoph Stückelberger reminds us that
 tributing to the achievement of the               in realising their entrepreneurial spirit,     God’s `basic needs strategy` is more radi-
 Millennium Development Goals (MDGs).              not only in business activities but also in    cal than that of the MDGs. God’s basic
 ECLOF International and its national              meeting their educational needs. We also       needs include community, liberation and
 ECLOF committees are participating in             share challenges faced by communities.         spiritual goods. Prof. Stückelberger chal-
 these events, as well as taking stock, all        We include the story of Shanthi                lenges ECLOF to perform actions found-
 the more so given that 2005 also marks            Siriyalatha, a client of ECLOF Sri Lanka,      ed on God’s basic needs strategy. As we
 the beginning of ECLOF’s new five-year            who saw her hopes and those of her fam-        continue focusing on growth and per-
 strategic plan.                                   ily dashed by the destruction brought by       formance, we are reminded to keep in
                                                   the recent tsunami. Mrs Siriyalatha’s deter-   focus our roots and founding principles
 While reflecting on the role of microcred-        mination and that of the members of the        which are inspired by the message of the
 it in attaining the MDGs during a recent          Molpe Society, to which she belongs, is a      Gospel and motivated by the experiences
 meeting that reunited ECLOF and its ecu-          testimony to their will to stand on their      of the poor and excluded.
 menical partners, Carin Gardbring of the          own again, with a little outside help, and
 Church of Sweden reminded participants            to avoid becoming dependants. This par-                               Muhungi Kanyoro

Tsunami hits ECLOF clients
                                                                                                  This was all successfully done and produc-
                                                                                                  tion increased but Siriyalatha and Premasiri
                                                                                                  still faced a shortage of raw timber.
Last December in Sri Lanka, Shanthi Siriyalatha proudly paid off the first instal-                Moving on
ment of an ECLOF loan that she was using to help her family earn their living. She                At this point, Siriyalatha approached the
obtained a second loan and bought further supplies for her timber business. Then                  Molpe Society of Moratuwa for help. She
the Indian Ocean tsunami hit and the woman’s hopes and materials were all swept                   joined the group, which then applied to
away in a tidal wave of destruction.                                                              ECLOF for a loan on behalf of Siriyalatha
In Sri Lanka, the tsunami directly affected        ing small quantities of timber that they cut   and about 75 other members. Siriyalatha
at least eight ECLOF clients and ECLOF Sri         up into various sizes suitable for house       received a loan of LKR5,000 (US$50) in
Lanka has had to make special arrange-             construction.                                  October 2003 and repaid it on time. In fact,
ments to help the people cope with their                                                          she was one of the first to arrive with her
situation by giving them more time to              Finance                                        repayment each time it was due.
repay old loans, and new loans to restart          There was a high demand from house
their businesses.                                  builders for prepared timber but Siriyalatha   Siriyalatha used her first ECLOF loan to buy
                                                   and Premasiri had no spare cash to buy         a chainsaw that her husband used to cut up
Shanthi Siriyalatha lives in Moratuwa, a           more raw materials so they were forced to      logs in readiness for machine sawing. The
town on the west coast of Sri Lanka, and is        borrow from moneylenders at a rate of 6%       chainsaw helped improve the business’s
a member of a women’s group called the             per month. As Siriyalatha and Premasiri’s      turnover. While Premasiri attended to the
Molpe Society of Moratuwa.                         business grew, they decided they needed        day-to-day operation of sawing timber,
                                                   an electric sawing machine to increase         Siriyalatha handled the buying of raw
Siriyalatha is in her early thirties and married   production. However, an electric sawing        materials, measuring the timber, payments
to Premasiri. They have two sons; one is 13-       machine is no good without electricity so      and all other cash dealings.
years-old and the other is seven. Both chil-       the enterprising couple had to contact
dren attend school. Siriyalatha and Premasiri      local government officials, who agreed to      After paying off their first ECLOF loan, the
have lived all their lives in Moratuwa; it is a    provide a suitable electricity supply for a    couple still faced the problem of not hav-
town famous for its timber-related products.       payment of LKR25,000 (US$251).                 ing enough timber. Therefore, last
In almost every household someone is                                                              November Siriyalatha applied for a second
involved in manufacturing furniture. The           Set back                                       ECLOF loan of LKR25,000 (US$253). The
items are sold on to merchants who put a           Siriyalatha and Premasiri did not have the     loan was granted and Siriyalatha bought
few final touches and then sell the products       money to pay either for the machine or the     more wood.
at high prices. Premasiri’s parents and other      electricity supply so Premasiri went abroad
family members were all in the timber trade        to work. However, his wages were not           Disaster
and Premasiri learnt his skills from them as       paid and after three months he returned        It was just after making her first repayment
he grew up.                                        home with nothing. The couple decided to       on the second loan that the tsunami struck.
                                                   pawn all their jewellery and borrow            Siriyalatha and Premasiri’s small home and
After Premasiri and Siriyalatha married,           LKR200,000 (US$2008) in order to buy the       workshop were right in the path of the
they began their own business by purchas-          machine and get the electricity supply.        waves, which destroyed everything. The

                                                                                                                                                 JUNE 2005            ISSUE 33

                                                                                         Shanthi Siriyalatha (left), accompanied by her son, gives ECLOF loan officer Kinkini
The wreckage of one family’s home and business premises after the tsunami had done its   Manjula details of the destruction caused to her home and livelihood by last December’s
worst.                                                                                   tsunami.

sea swept away the logs that Siriyalatha                       cuss her future plans, the young mother                   moment. However, she was firm in saying
had recently bought for LKR40,000, and                         gazed at her for a while. Then, with tears                that she would never let down either
the sawing machine and other equipment                         rolling down her cheek but with a deter-                  ECLOF or the women’s society through
were damaged beyond repair as they were                        mined voice, Siriyalatha told Kinkini that                whom the loan was obtained and whose
dashed against rocks and water got in and                      she and her husband were going to work                    president, Ms Violet de Mel, had always
ruined everything.                                             hard to get their business back on its feet,              encouraged her and introduced ECLOF to
                                                               and to settle down to a normal life. They                 her in the first place.
Escape                                                         were, she said, tired of living in a camp for
When the first tsunami wave hit,                               displaced people. However, Siriyalatha                    The eight members of the Molpe Society
Siriyalatha, Premasiri and their two boys                      and Premasiri may not be able to rebuild                  of Moratuwa who now cannot repay their
ran inland and escaped but they were also                      their home and workshop in their original                 loans because of the tsunami have asked
left without anything. Since then, the fami-                   place as this is within 100 metres of the sea             the society for extra time; the society in
ly has been living in a camp and the chil-                     and the local government has suggested                    turn has appealed to ECLOF to give them
dren attend school from this camp.                             that it may ban people from living so close               the time necessary to deal with this diffi-
Premasiri is now doing labouring work to                       to the ocean in case another tsunami                      cult situation. The clients’ faith in ECLOF
supplement the small amount of money                           occurs.                                                   remains: “We are sure ECLOF will under-
the family receives from the government.                                                                                 stand our fate and bear with us and give
                                                               As she spoke to Kinkini Manjula from                      us some sort of relief in our repayment
When Kinkini Manjula, the ECLOF Sri                            ECLOF, Siriyalatha was very apologetic                    schedule until things are sorted out and
Lanka loans officer, met Siriyalatha to dis-                   about her inability to repay her loan at the              we are able to earn a livelihood.”

 ECLOF Brazil visitor                                                                                                   of being ecumenical and serving the
                                                                                                                        poorest in society, CEADe had to
                                                                                                                        become a sustainable institution.
 Bishop Adriel de Souza Maia, the                              Reflecting on the next assembly of the
 President of ECLOF Brazil (CEADe) and                         World Council of Churches, which will
 Presiding Bishop of the Methodist Church                      take place in Porto Alegre early next
 in Brazil, held talks with ECLOF                              year, the bishop said he hoped that
 International director Muhungi Kanyoro                        CEADe and other regional national
 and his executive colleague, George                           ECLOF committees would play a
 Petty, during an April visit to Geneva.                       prominent role in the life of the assembly.

 Bishop Souza mentioned his interest in                        Muhungi Kanyoro asked the bishop
 issues regarding access to clean water                        to pass on greetings from ECLOF
 and explained that he is part of a group                      International to the forthcoming CEADe
 that has written a policy paper on the                        general assembly. Muhungi and the
 right to unprivatised water.                                  bishop agreed that among its other aims                   (l to r): George Petty, Bishop Souza, Muhungi Kanyoro

Banks urged to invest in people                                                                                                                                 contd from p. 1

He acknowledged that commercial micro-                         The challenge for microfinance institutions               lenges. They needed to create appropriate
credit institutions could achieve higher                       (MFIs), the ECLOF chairman explained, was                 regulatory and operational environments
profits if they concentrated on clients who                    to increase volumes, lower costs, and                     within which MFIs could work.
posed little risk. However, such an                            increase the clear separation between credit              Governments also had to promote proper-
approach would not achieve the goal of                         for the poorest of the poor, who needed a                 ty titles and other ownership rights for the
poverty eradication. Those in the commer-                      donor-based approach, and credit for those                poor so that they had acceptable credit
cial sphere, argued Prof. Stückelberger,                       on lower middle incomes for whom a busi-                  collateral. In addition, governments should
must be prepared to take risks and make                        ness-oriented approach was appropriate.                   grant fiscal privileges or exemptions to
loans in rural areas and in risky countries.                                                                             MFIs. He also believed that southern banks
That would mean accepting a decrease in                        Prof. Stückelberger said that governments                 should be obliged to invest more in micro-
profits.                                                       in the South also faced a number of chal-                 credit funds.

JUNE 2005      ISSUE 33

 Scaling Social Impact
 Adopting practices from the corporate business world is not the         achieve scale in more ways than just through organizational
 simple path to growth and success that many not-for-profit              growth.”
 organizations assume it to be, according to a specialist in
 helping foundations and corporations create greater value for           Kramer cites the world of microfinance as an example of this
 society.                                                                latter point. He explains that originally two agencies introduced
                                                                         this radically different way of lending to the poor, and achieved
 Writing in the 3 February 2005 issue of the Washington-based            great success. However, Kramer continues, “The scale of their
 The Chronicle of Philanthropy, Mark Kramer claims that, “The            idea has far eclipsed both of its originators, with several
 business metaphor has imprisoned much new thinking in the               thousand microfinance lending institutions around the world
 social sector.”                                                         serving 41.6 million households and supporting over 200
                                                                         million individual family members. Nearly all of these lending
 In his article, “Scaling Social Impact”, Mr Kramer, who is the          institutions are unrelated to the originators, but all employ the
 founder and managing director of the Foundation Strategy                approach that they invented.”
 Group, says, “Over the past decade, many principles borrowed
 from corporate management, venture capital, entrepreneurship,           He continues, “Achieving social impact by spreading an idea
 and investment portfolios have been grafted on to the work of           hardly seems like an original concept. Replication has been the
 foundations and non-profits. These new ideas have stimulated a          Holy Grail of philanthropy for decades. Foundations often fund
 considerable amount of innovation, bringing to the field venture        a small pilot project in the hopes of demonstrating its efficacy so
 philanthropy funds, social entrepreneurs, capacity building             that others will replicate it around the world, infinitely leveraging
 grants and the increasingly common goal of taking small non-            the impact of the initial grant. Of course this almost never
 profit organizations to scale.”                                         happens. Ideas don’t spread themselves and people often resist
                                                                         change even when it would be beneficial. Most foundations
 Mark Kramer continues, “It is true that certain basic principles of     tend to move on to the next new project after funding the pilot
 strategy, expertise and efficiency apply to the non-profit sector,      and its evaluation, leaving the idea to wither. Those few
 just as they do to every other kind of enterprise. But these broad      foundations that have successfully replicated a programme have
 principles need to be thought through carefully in the specialised      often had to launch a major campaign, dedicating large
 context of the non-profit sector if they are to be usefully             amounts of money, personal leadership and years of effort to
 applied… the limitations are most apparent in this widespread           spreading its adoption.”
 ambition, shared by many funders and non-profit leaders alike,
 of ‘going to scale’ through rapid organizational growth.”               Although it is not easy for non-profits to increase the social
                                                                         impact of their work, Kramer argues that it is possible but needs
 The FSG founder is clear that good business practice and                long term work: “Given persistent and substantial funding, well
 proper long-term funding are necessary if non-profits are to            researched strategies, and bold leadership toward clearly-
 produce good results. However, Kramer believes that it is               defined goals, there are many paths to broad impact. Targeted
 important to realise that the goal within the for-profit world is to    communications campaigns, educational programmes,
 make money, and businesses do this by retaining ownership and           conferences, advocacy, publications, websites, even advertising
 legal rights over any use of their concepts or brands by others.        can scale social impact without scaling non-profit organizations
 Elsewhere, according to Kramer, it is a different story: “In the        themselves.”
 non-profit sector… the goal is social impact – not profit – and no
 one owns social impact. If others use the social entrepreneur’s         Kramer concludes, “Perhaps the real lesson is not that the non-
 idea, then they are scaling the social impact, even if the              profit sector should imitate business, but that a certain set of
 entrepreneur has no control or legal relationship to them. That         practices will yield social change – and those practices have yet
 means non-profits have an advantage over businesses: they can           to be adequately understood and adopted.”

ECLOF tsunami                                    each case and, where appropriate, agree          During his visit to the island, Muhungi
response                     contd from p. 1     to a delay in repayments as well as the          Kanyoro, accompanied by the chairperson
                                                 granting of a new loan. “People must have        of ECLOF Sri Lanka, Ms Shanika de Mel,
For other people, their traditional way of       the means to start again”, said Mr Kanyoro.      also held talks with Rev. Dr Jayasiri.T.
earning a living has disappeared. Some,                                                           Peiris, who is the general secretary of the
for example, have had to move away from          The ECLOF International director also            National Christian Council of Sri Lanka. Dr
the coast and have lost their land. ECLOF        explained that with the psychological            Peiris explained the council’s co-ordina-
plans to introduce to this group of people       damage that people had suffered, it might        tion role among the churches. He added
new employment opportunities, such as            take them a little time to settle down and       that he felt ECLOF had an important role
brick making for the new homes that are          be emotionally able to return to work. “It       to play in post-tsunami reconstruction
now required after the tsunami.                  is important to realise this”, the director      efforts, and also offered to link ECLOF
                                                 explained, “because ECLOF will remain a          clients to the trauma counselling work of
“Some of the people involved will be exist-      lending organization and not one that            the churches in order to aid people’s
ing ECLOF clients; others will be new con-       gives grants. Therefore, ECLOF Sri Lanka         return to normal life. He said it was impor-
tacts”, Muhungi Kanyoro explained. He            will have to evaluate a person’s capacity to     tant to avoid creating dependence among
added that for clients like Shanthi              begin work again before making a new             those affected by the tsunami.
Siriyalatha, ECLOF Sri Lanka would review        loan.”

                                                                                                                                         JUNE 2005        ISSUE 33

                                                                                                                     receiving any resettlement payments from

All in a day’s work                                                                                                  the government is delaying things.

                                                                                                                     Our clients are confident that if ECLOF were
Many frontline ECLOF staff are relatively young but take on huge responsibilities                                    able to consider granting loans for a longer
and not insignificant risks as they deliver loans to those with no other access to                                   than normal period they would be able to
credit. Kinkini Manjula, a loan officer with ECLOF Sri Lanka, has also had to deal                                   repay not only these loans but also the out-
with the added consequences of the tsunami that hit her country last December.                                       standing ones they had before the tsunami.
New Horizons invited Kinkini to introduce herself to readers.
                                                                                                                     Daily credit
                                                                                                                     The Molpe Society of Moratuwa has a mix
                                                                                                                     of members at various economic levels,
                                                                                                                     including people who can only live from
                                                                                                                     day to day. These people borrow small
                                                                                                                     amounts of money through a special Day-
                                                                                                                     to-Day Loan Scheme, and buy other mem-
                                                                                                                     bers’ produce: fruit, vegetables, fish, etc., to
                                                                                                                     sell. The Day-to-Day Loan Scheme began as
                                                                                                                     a way of enabling the very poor to escape
                                                                                                                     the clutches of exploitative moneylenders.

                                                                                                                     Taking care
                                                                                                                     As I set off early each day to travel to my
                                                                                                                     clients, many challenges lie ahead. Often I
                                                                                                                     have to go to very lonely areas, where I
                                                                                                                     must trek through villages and fields to
                                                                                                                     reach my destination. Some of the men I
                                                                                                                     meet on the way can be drunk, even
Kinkini Manjula receives the keys to her new motorcycle from ECLOF Sri Lanka board member, Mr V Vijayakulasingham.
                                                                                                                     though it is early in the day, but I have
                                                                                                                     confidence and I am not afraid; I have
I am 24-years-old and I live with my moth-                   Molpe Society                                           taken a course in karate. One morning, as
er and 14-year-old brother, who is in grade                  After my training, I was put in charge of               I stood and waited for a bus, two men
nine at school. I come from the Western                      the Western Region. The Molpe Society of                came along and grabbed my necklace. I
Region of Sri Lanka and completed my                         Moratuwa, is within my region. Shanthi                  put the two men down on the ground,
school education in 2000.                                    Siriyalatha (see p.2) is one of my clients in           recovered my necklace, and then went
                                                             the society, which has 100 members.                     and reported the incident to the police.
I then went to the School of Agriculture in                  When I came on the scene, the society had
Kuliyapitiya and obtained a National                         already repaid its first ECLOF loan and was             I enjoy my work, particularly evaluating
Diploma in Agriculture. I was on a resi-                     seeking a second one.                                   projects and giving advice on agriculture
dential course that lasted for two and a                                                                             and animal husbandry to my clients. It is
half years. I took a range of subjects                       The society has a strong leadership and is              satisfying to know that the knowledge I
including animal husbandry, horticulture,                    very strict and disciplined on financial mat-           learnt at college is now helping others to
agriculture and computer literacy.                           ters and repayments. The membership is                  improve their standard of living.
                                                             very much satisfied with the way their group
In 2002, having finished my course, I                        is run. I visit the society twice a year and it is      New transport
joined the Food Crop Research Centre as a                    doing well. This is mainly due to the dedica-           Until now, I have had to travel to clients
research assistant. From there, I moved to                   tion of the president and the other leaders.            by bus and train, and on foot. I have often
an export company dealing in fruits, veg-                                                                            had to walk for long distances. This is time
etables and fish.                                            Tsunami                                                 consuming, especially as some of my
                                                             The tsunami badly affected some of the                  clients live far away from each other.
I started work with ECLOF as a loan officer                  members of the Molpe Society; these peo-
last September. I had seen an advertise-                     ple lost their means of making a living and             ECLOF Sri Lanka recently provided me with
ment for the job in our national newspaper.                  cannot repay existing loans. It is unfortu-             a motorcycle and this is now helping me to
One of my relations knew about ECLOF                         nate that it is taking the authorities some             cover more ground, visit clients more often
because he works for another microcredit                     time to make settlements to those adverse-              and increase the size of the overall loan
organization that provides loans to women.                   ly affected and unable to restart their                 portfolio. There are many in my country
                                                             micro-enterprises. Other Molpe Society                  who need access to microfinance so it is
I was appointed to the ECLOF Sri Lanka                       members rallied round and met their col-                important that ECLOF maximizes its impact.
staff after an interview and an introduction                 leagues’ immediate needs by providing
to the organization. This was followed by                    clothes, food and other household items.                The work that I do makes me proud that
field visits during which I observed how                                                                             ECLOF is able to help people make ends
the programme manager introduced                             This situation was a difficult one for the              meet and see some improvement in the
ECLOF products to new clients, and evalu-                    programme manager and me but we have                    quality of their lives. When my clients
ated projects. Then the manager accompa-                     been able to assure our borrowers that                  proudly show me what they have gained
nied me as I did the same thing and                          ECLOF will continue to support them. The                through an ECLOF loan and say, “Thank
watched to make sure I was doing the job                     people are extremely keen to begin                      you”, it gives me the courage to reach out
properly.                                                    rebuilding their lives but the delay in                 to the many other people who need us.

JUNE 2005      ISSUE 33

                       Food security and HIV/AIDS
                       HIV/AIDS has led to many deaths. A lack of food for those who are left is one of the other
                       serious consequences of the pandemic. However, as Jacinta Maingi, Eastern Region coor-
                       dinator of the Ecumenical HIV/AIDS Initiative in Africa (EHAIA) explains, there is much
                       that can be done to increase food security, and ECLOF must be right in the thick of the
Today, HIV/AIDS constitutes a global emer-      bilises communities, and puts into reverse       illness of productive members of the
gency and one of the most formidable chal-      the evolution of farming systems, rural          household, especially women;
lenges to human life and dignity. It is not     livelihoods and economies.
only a health issue but also a serious set                                                       death of an adult that leads to a sharp
back for the development hopes of millions.     It is estimated that in the 25 hardest-hit       decline in production and income;
                                                countries in Africa, AIDS has killed around      diversion of labour from production to
Because of HIV/AIDS, the average life           seven million agricultural workers since         funerals;
expectancy in many countries in sub-            1985 and could kill 16 million more before
Saharan Africa is less than 40 years. This      2020. The most-affected African countries        protracted nature of AIDS and the high
has enormous implications for the future        could lose up to 26 percent of their agri-       costs of care and treatment;
sustainability of the nations involved. As a    cultural labour force within two decades.        psychological impact of the illness and
result of HIV/AIDS, one of the most seri-                                                        death of an individual that commonly
ous problems today is an increase in what       Population change                                leads to depression and a lack of
is termed food insecurity. This is a situa-     Perhaps even more important than the total       motivation to work hard among other
tion that must be addressed.                    numbers of people sick or dying from             family members;
                                                HIV/AIDS is the emerging population struc-
Food crisis                                     ture in terms of age, gender and economic        declining health of other family
Food insecurity in Africa in recent years       activity. An AIDS-impacted society contains      members; children and adults in AIDS-
resulted from the complex interplay of          proportionally fewer mature adults (espe-        affected homes are less well nourished,
structural neglect, economic isolation,         cially women) and more teenagers and             more likely to be sick, and more likely
environmental issues, bad governance and        other young adults. The latter groups are        to die from a range of illnesses;
social breakdown. Most policy documents         likely to be less socially engaged and to        severe impact upon household viability
directing Africa’s agriculture today are        contribute less to the overall workforce.        because of the loss of skills and
pressing for the opening-up of the markets                                                       experience from a deceased adult;
and lifting of subsidies. At the farm level,    HIV/AIDS increases present and future            HIV/AIDS breaks the chain of
this translates into an inability to access     food insecurity through its impact on the:       knowledge transfer and labour sharing
information, seeds, tools, pesticides and                                                        between generations; survivors,
                                                   ability of households to produce food
fertilisers. When a meagre harvest is finally                                                    including children and the elderly, often
                                                   because of labour shortages and the
obtained, African farmers have to compete                                                        cannot manage the family farm due to
                                                   loss of knowledge about farming
in their local markets with cheaper, import-                                                     lack of knowledge and experience.
ed foreign goods. Farmers also find it very
difficult to get their goods on to the world       ability of communities to produce and      Gender issues
market because too few farmers have the            buy food because the epidemic              Women from 15 to 29 years old are at least
technical knowledge, or due to the exis-           reaches every home, and neighbours         six times more likely to be infected by
tence of protective tariffs and regulations.       become too over-burdened to help           HIV/AIDS than are men. The main reason
                                                   each other with food, loans or by          for this vulnerability is rooted in women’s
It must be repeated and stressed that well         lending a hand in the fields;              limited sexual power or autonomy. A host
before the serious effects of the AIDS pan-                                                   of economic, social and political disadvan-
                                                   ability of countries to import food
demic are taken into account, Africa is                                                       tages further limit women’s economic
                                                   because HIV/AIDS reduces growth by
already vulnerable to food insecurity. Sub-                                                   independence and other opportunities.
                                                   an estimated one percent annually in
Saharan Africa, in particular, experiences
chronic food shortages as production fails                                                    Yet, it is women who are crucial in the
to meet the consumption needs of its                                                          production sector and transfer of knowl-
                                                In addition, rural communities also bear a
growing population.                                                                           edge chain for nearly all smallholder farm
                                                higher burden of the cost of HIV/AIDS as
                                                many urban dwellers and migrant labour-       families across the African continent.
Given the low levels of earnings and the                                                      Moreover, most of the additional burdens
                                                ers return to their villages when they
rural nature of most of the population, food                                                  of responding to the impact of HIV/AIDS
                                                become sick. At the same time, household
production in Africa is mainly based on                                                       fall upon women. They are the main pro-
                                                expenditures rise to meet medical bills and
rain-fed agriculture. Unfortunately, this is                                                  ducers of food, and the main caregivers for
                                                funeral expenses, and while the number of
usually adversely affected by natural                                                         the sick and children. It is also clear that
                                                productive family members declines, the
calamities and human-made disasters, espe-                                                    the adjustments made by women to “cope”
                                                number of dependants grows.
cially armed conflicts and deforestation.                                                     with the impact of HIV/AIDS in the short
                                                The negative impact of AIDS on labour are     term have major implications in the longer
Consequences                                                                                  term, such as the withdrawing of girls from
                                                many and include the:
The numbers of people infected and dying                                                      school to help with domestic duties.
as a result of HIV/AIDS only reveal part of        inability of households to buy food
story. HIV/AIDS not only infects and kills         due to the loss of productive family       Many widows lose access to land, labour,
people; it also tears families apart, desta-       members and of assets;                     supplies, credit and support services.

                                                                                                                JUNE 2005       ISSUE 33

HIV/AIDS stigmatisation compounds the         Questionable coping                               increased food utilisation, such as
situation because assistance from the         Less effective ways of dealing with the           ensuring that vegetable production
extended family and the community is cut      impact of HIV/AIDS have been tried and            serves not only marketplace trading
off. As a result, elderly women become the    they include:                                     but also household nutritional needs,
economic and emotional safety net for                                                           and increased food equity to ensure
grandchildren orphaned by HIV/AIDS.              piecework strategies where some
                                                                                                equal access to adequate nutrition for
                                                 household members (adults and
                                                                                                all family members, particularly
The extended family structure where              children) sell their labour for short-
                                                                                                children, women and the sick.
women are at the centre has been the most        term access to food or cash;
                                                 households can become perpetual
effective community response to the AIDS                                                     Alternative medicines
crisis. Measures directed towards the alle-      labour providers and may experience
                                                                                             Many people infected by HIV/AIDS will be
viation of poverty, food insecurity and          food shortages even amidst bumper
                                                                                             cared for at home where access to health
HIV/AIDS management are less likely to           harvests in their communities;
                                                                                             institutions and the availability of modern
take into consideration the special needs        out-of-season farming activities, such      scientific treatment may not be guaranteed
and capacities of women who now carry            as late planting and late weeding,          or affordable. Hence, there may be the
added and heavy responsibilities.                though this leads to a reduction in         need to influence and encourage farmers
                                                 production and increases a crop’s           and people in the rural areas to consider
AIDS worsens existing gender-based               vulnerability to pests and disease;         growing plants and herbal remedies.
differences in the access to land and other
                                                 compromising critical land conservation
resources. Today, many widows are home-                                                      ECLOF in the mainstream
less and outcasts because their deceased         and soil protection activities, such as
                                                                                             ECLOF should ensure that there is an
husbands’ relatives claim the family homes       mulching, terracing and leaving land
                                                                                             HIV/AIDS component in all its projects.
and lands, and sometimes even the                fallow, and replacing them with bush
                                                                                             This “mainstreaming” of HIV/AIDS would
children.                                        burning and the abandonment of weed
                                                                                             ensure that all ECLOF staff and clients are
                                                 and pest control;
                                                                                             aware of HIV/AIDS and its possible effects.
The appalling impact that HIV/AIDS is            sale of household assets, including
having on Africa’s women is only now             land;                                       Making HIV/AIDS a “must have” compo-
becoming fully apparent. Today, women                                                        nent of all ECLOF products and training
constitute 58% of those infected in sub-         withdrawal from marketing activities in
                                                                                             will contribute to the fight against stigma,
Saharan Africa.                                  favour of subsistence farming; when
                                                                                             discrimination and denial, and thus enable
                                                 households reach this stage, mitigation
                                                                                             those infected and affected by the pan-
Coping with the situation                        measures, such as microcredit for off-
                                                                                             demic to benefit from local initiatives.
Households faced with HIV/AIDS-related           farm income-generating activities,
labour shortages and loss of skills tend to      become much more difficult or even
                                                                                             ECLOF beneficiaries could also be trained
adopt a variety of coping mechanisms.            impossible.
                                                                                             as community animators and pillars of a
These include:                                                                               community support system.
                                              Other options
   intra-household relocation of labour,      Among the ways to help rural people cope
   including the removal of children,                                                        ECLOF should make funds available to
                                              with AIDS-related labour stress, and arrest
   especially girls, from school and an                                                      those infected and affected by HIV/AIDS
                                              increased food insecurity there is a need to
   increased reliance on orphan labour;                                                      without discrimination, so long as they are
                                              consider the following:
                                                                                             able to fulfil normal ECLOF lending
   relying on the elderly, children and          non-labour intensive crops without          criteria. At times, giving a chance to some-
   extended family networks to cover for         compromising the need to address            one who has lost hope due to infection
   ill or deceased adult household               overall nutritional needs;                  might give him or her the energy to live
   members;                                                                                  positively.
                                                 agricultural diversification dependant
   changing from labour intensive to less        on expected rainfall and the natural
   labour intensive farming methods,                                                         ECLOF must identify and design main-
   from cash to subsistence crops, and                                                       streaming mechanisms, and ensure that
   from growing vegetables to producing          community water harvesting and              accurate and up-to-date information and
   survival foodstuffs;                          management systems to improve the           knowledge on HIV/AIDS is available to all
                                                 production/labour ratio;                    ECLOF stakeholders.
   reduction or complete loss of
   livestock, or switching from cattle to        community farming oriented to
                                                                                             Since the Ecumenical HIV/AIDS Initiative
   pigs, goats and chickens because there        support food security and nutrition
                                                                                             in Africa (EHAIA) operates in four regions
   is no one with the skills required to         among the most vulnerable
                                                                                             (Eastern, Western, Central and Southern)
   care for larger animals;                      households and people, including
                                                                                             ECLOF can tap into EHAIA’s experience.
                                                 female-headed households and
   relocation of household members,              community-based school feeding
   especially children and orphans, to                                                       Although AIDS kills, stigma and discrimi-
   wider social networks in order to                                                         nation are more lethal because they
   spread the burden, though the                 crops and farming systems that reduce       destroy even those who are not infected.
   capacity of the extended family to            vulnerability to ecological and social      In addition, even though AIDS destroys,
   cope is becoming highly questionable;         factors, such as drought-resistant          bad governance at all levels is more dev-
                                                 crops, and agricultural diversification     astating since its effects are felt for a long
   for those who can afford it, replacing        as a means to strengthen subsistence        time. Finally, even if timely rainfalls are
   lost family labour with hired labour          components and reduce one’s                 scarce in most parts of Africa, hard work at
   and increasing the use of fertilisers.        vulnerability to erratic market             community level continues to pour down
                                                 fluctuations;                               in spite of all the adversities that exist.

JUNE 2005       ISSUE 33

ECLOF holds talks with ecumenical partners
ECLOF has held its first meeting in a num-                  ucts, microfinance has an essential role to        developing on-the-farm research, training
ber of years with its ecumenical partner                    play in helping the poor to begin income-          and technical education. This focuses
agencies (EPAs). The timing was chosen to                   making activities, build assets and improve        more broadly on food security than just
fall within the United Nations International                the sustainability of their lives. Setting the     “passing the gift of a cow”, for which
Year of Microcredit.                                        example for all, Carin told the gathering          Heifer is popularly known. Enterprise
                                                            that the Church of Sweden has decided to           development, said Dr Colley, ensures sus-
The gathering discussed the growth and                      dedicate 15% of its total income to credit         tainability. He commented that the newly-
evolution of ECLOF in the recent past, as                   and credit-related activities. Using micro-        signed partnership of Heifer and ECLOF is
well as its 2005/09 strategic plan. The                     credit as a development tool, the church’s         recognition of the complementarity of the
meeting was also a forum for partners to                    strategy includes local resource mobilisa-         two organisations.
share their activities, best practices and                  tion, “help to self-help”, empowering
policies related to the promotion of credit                 women and, in as far as possible, develop-         Indeed, partnership, community organisa-
within the context of the Millennium                        ing new models for development and find-           tion and food production have become
Development Goals (MDGs) and the UN                         ing key areas for change and renewal.              important areas of action for ECLOF over
Year of Microcredit.                                                                                           the past three years. This was illustrated in
                                                            Carin challenged participants to share             the work done by
ECLOF International had the pleasure to                     ideas, expertise, experiences and goodwill         ECLOF         Ghana
welcome 25 old and new friends, who                         to develop these new models together,              (GECLOF).
came mainly from countries in Europe and                    and to promote microfinance as a devel-            Magnus        Amoa-
North America. They also had the pleasure                   opment tool worldwide.                             Bosompen gave a
to greet ECLOF colleagues from Sri Lanka                                                                       very     informative
and Ghana.                                                  Strategic plan                                     presentation on the
                                                            Muhungi Kanyoro, ECLOF International               development       of
Poverty multidimensional                                    director, introduced ECLOF’s strategic plan        GECLOF,        which
Introduced by the Rev. Prof. Christoph                      for 2005–2009. This gives a strong focus to        now serves 5000 clients, 95% of whom are
Stückelberger, President of ECLOF, the                      rural credit and the promotion of women’s          women. Activities are concentrated on agri-
opening session on Friday 13 May was                        micro-enterprise development. Muhungi              culture and the marketing of farm products
dedicated to presenting the work of                         also outlined details about new financing          such as yam and cassava. GECLOF has
ECLOF and microcredit against the back-                     instruments that ECLOF is developing to            developed a new product specifically for
ground of the UN Millennium Goals.                          meet increasing lending capital require-           fish processing by using improved tradi-
                                                            ments. He further spoke about lessons              tional technology, and hopes to double the
Carin Gardbring,                                            learned from recent evaluations of nation-         number of its clients this year.
from the Church of                                          al programmes. The director underlined
Sweden,        under-                                       the importance for EPAs and ECLOF con-             Partners present
lined the fact that                                         tinuously to find ways to sustain and              After lunch, EPAs presented their individ-
poverty is more                                             strengthen their partnership, given their          ual organisations and spoke on topical
than the lack of                                            mutually supportive and enhancing mis-             issues. Joy Cadangen Lumbag, newly
material resources:                                         sions and programmes.                              appointed finance manager for ECLOF
it is multidimen-                                                                                              International, considered the role that
sional. She detailed poverty’s four major                                          ECLOF                                             evaluation plays as
aspects: restricted human development                                              partnerships                                      an instrument for
(including education and training); depri-                                         Commenting      on                                improvement and
vation of material goods; lack of empower-                                         the role of enter-                                innovation. Sonja
ment and ability to influence decisions and                                        prise development                                 Van der Eijk from
vulnerability to shocks (conflicts, natural                                        within rural devel-                               ICCO believed in
disasters, etc.).                                                                  opment, Dr Barry                                  using grants, loans
                                                                                   Colley of Heifer                                  and investing in
Swedish pledge                                              International pointed out that as part of                                shares to promote
With its diverse range of financial prod-                   their agricultural programmes, Heifer is           microfinance, and Ms Tamara Appel-Cless
                                                                                                               from Bread for the World, in Germany,
                                                                                                               talked about EPA experiences at global
                                                                                                               and regional level.

                                                                                                               On the second day, discussions considered
                                                                                                               how best to support churches and the mis-
                                                                                                               sion of the church to the poor, as well as
                                                                                                               improving networking, engaging partners
                                                                                                               more deeply in the work of ECLOF and
                                                                                                               facing up to the unexpected.

                                                                                                               Shanika de Mel presented the work of
      When ECLOF and its ecumenical partner agencies met, they discussed a whole host of microcredit issues.   ECLOF Sri Lanka and how they faced the

                                                                                                                 JUNE 2005        ISSUE 33

impact of the recent tsunami. The work of       President, that showed the impact that
ECLOF is even more important now than           results from being known nationally and        Geneva groups mark
before, as the sooner people get a new          also having the support of people at the
income-generating activity going, the better.   local level. Alison Kelly from Christian Aid
                                                                                               UN year of microcredit
                                                in the U.K. stressed the importance of unit-
                                                                                               On 12 May, ECLOF, the International
Tamara Appel-Cless stressed the impor-          ing to promote microcredit as a develop-
                                                                                               Labour Organization (ILO) and the
tance of the sharing of experience              ment tool because “funders generally
                                                                                               University of Geneva held a meeting for
between partners, NECs and the ECLOF            prefer larger coalitions and larger net-
                                                                                               those in and around Geneva who are
family at large. It was proposed that EPA       works, which also
                                                                                               involved in microfinance. Over 40
representatives should be invited to            have the advantage
                                                                                               people attended from UN
regional workshops as one way to pro-           of having more vis-
                                                                                               organizations, non-governmental
mote the work and understanding of              ibility”.    Omega
                                                                                               organizations, banks, academia, local
ECLOF, and generally involve EPAs more          Bula of the United
                                                                                               microfinance efforts and independent
in its activities. The aim would be for EPAs    Church of Canada
                                                                                               consultants. The meeting was an
to see that ECLOF and microcredit is an         added that this
                                                                                               opportunity for people to meet each
integral part of their work agenda, and that    would help to
                                                                                               other and discuss the possibility of
their individual contribution is important      make organizations
                                                                                               establishing a Geneva microfinance
to the development of the organization, as      located in both hemispheres feel united in
                                                                                               forum where practitioners and interested
well as to that of the partnership at large.    their work and efforts and that the coordi-
                                                                                               people can meet to share ideas.
                                                nation of microcredit work would increase
The importance of developing advocacy,          efficiency and impact.
                                                                                               Opening the meeting, Bernd Balkenhol of
communication and fundraising was also
                                                                                               the ILO in whose offices the meeting was
discussed. Matthias Elsermann from the          Future
                                                                                               held, referred to the Protestant Reformer,
Evangelical Lutheran Church of Westfalia,       The response to the meeting was extreme-
                                                                                               John Calvin, and his writings on lending
                      gave examples of          ly positive. All participants asked for such
                                                                                               and his call for “equitable” interest rates.
                      public    relations       a gathering to be held on a more regular
                                                                                               Mr. Balkenhol commented, “Genève, le
                      work     done    in       basis. Work will continue on finding ways
                                                                                               Calvinisme et la micro-finance: ce n’est
                      Germany. He cited         to develop the network and the sharing of
                                                                                               pas une association quelconque; il y a une
                      the example of an         information, and to promote microcredit as
                                                                                               certaine logique; c’est presque… un
                      OikoCredit Support        a development tool within a common,
                                                                                               mandat.” (Geneva, Calvinism and
                      Association,     of       mutually supportive and enhancing frame-
                                                                                               microfinance: this is not just another
                      which he is the           work.
                                                                                               association, there is a certain logic here.
                                                                                               It’s almost… a mandate.”).

 Ecumenical expectations                                                                       The Mayor of Geneva, Pierre Muller,
                                                                                               who participants at ECLOF’s 50th
 George Petty, executive staff member of ECLOF International, reports on a seminar             anniversary in 1996 will remember for
 designed to give people a better understanding of the ecumenical movement and what is         welcoming them to Geneva, told the
 expected of those within it.                                                                  meeting what the Canton of Geneva
                                                                                               was doing in the field of microfinance.
 We gathered first at the Ecumenical            itself, we were all asked, “What do we         He noted that recently a local
 Institute in Bossey, about half an hour from   each expect of our partner                     newspaper had published a full-page
 Geneva, Switzerland under the aegis of         organizations?” The answers given are          article on microfinance activities and
 the World Council of Churches (WCC).           instructive for the entire ECLOF family,       actors in his canton that included a
 There were 27 of us from specialised           and we should keep them in the front of        quotation from ECLOF.
 ministries and agencies that have a close      our minds as we work. They are:
 relationship with the WCC in the area of                                                      The meeting generated a lot of interest
                                                   common goals;
 emergency relief and development work.                                                        from participants, particularly from the
                                                   dedication and commitment to the            banking sector, and lively discussions
 During the ecumenical formation                   cause;                                      were held. One of the topics of interest
 seminar, as it was called, we heard               mutual understanding and respect;           related to what investment returns should
 presentations on ecumenism and the                                                            be expected. On the one hand, it was
 ecumenical movement, as well as the               transparency;                               noted that the financial investments in
 role of religion in development. The              competence;                                 developing markets have higher returns
 organisers’ aim was to enable us to                                                           than in mature markets. On the other
 reflect together on matters of                    reliability;                                hand, some investors (in organizations
 professional concern and build good               timely reports;                             such as resonsAbility and Oikocredit)
 working relationships with one another.                                                       accept having lower than market rate
                                                   timely applications;                        returns. There was also recognition that
 I found the seminar very helpful in that it       accountability;                             all the commercial sources of lending
 provided a history of the ecumenical                                                          capital (Citibank, Oikocredit, Blue
 movement and an overview of the                   reflection;                                 Orchard) to microfinance organizations
 WCC’s current work.                               support;                                    go to only a handful of such groups.
                                                                                               Discussions about developing a local
                                                   innovative ideas;                           Geneva and national Swiss platform for
 As those taking part came from WCC
 partner agencies, as well as the WCC              networking and coordination.                microfinance are under discussion.

JUNE 2005          ISSUE 33

Much more than loans: people sharing bread
In the last issue of New Horizons (p. 21), we reported on how Armenian ECLOF welcomed visitors from the Church of
Sweden. Roger Marklund, from the church’s international department, tells the story from his point of view.

We had not heard much about Echmiadzin                         were still very small. One of these children               how to complete a project proposal to see
before our trip. Now, the former capital of                    is Arshak Srapyan. Today, he is a member                   if their ideas were realistic and sustainable.
Armenia is a familiar place to us as a result                  of the Luys Solidarity Group, which is a
of our visit to Armenian ECLOF and the                         client of Armenian ECLOF in Ardjut. The                    The Arghasar-1 group has now been grant-
work they are doing from their base in the                     group consists of 13 members, who, all                     ed a second ECLOF loan. When we met
city.                                                          together, received a loan for the equivalent               the men on the outskirts of Stepanavan, it
                                                               of US$3,400. With this sum, they were able                 was a sunny afternoon and they had just
Most members of our five-person delega-                        to develop cattle-breeding activities and                  filled their barn with fodder for the winter
tion came from local parishes in Sweden,                       see their farms grow. The Luys Solidarity                  season. The group owns five cows, 14
where they play a crucial role in promot-                      Group says that ECLOF was the first organ-                 calves and four pigs. The group’s main
ing development education and raising                          ization to help them to improve their liv-                 activity is meat production but they have
money for development projects. The idea                       ing conditions by giving them the loans                    recently begun bee keeping and now have
to make this visit came out of a Church of                     necessary to keep and develop their farms.                 around 20 hives. The sale of honey will
Sweden national training course on the                         They have now regained hope for a much                     add substantially to their overall income.
theme of “Everyone’s right to good food”,                      brighter future.
during which special attention was given                                                                                  In the same area, we met the Katnarat-1
to microfinance as a means by which peo-                       The Arghasar-1 solidarity group in the                     solidarity group. Thirteen young men, two
ple can make this right become a reality.                      town of Stepanavan told us that its mem-                   of them Russians, belong to Katnarat-1.
We wanted to see what effect microcredit                       bers are collectively responsible for their                Their re-built farmhouse is in an area that
schemes were having in various countries,                      loans and repayment. They explained that                   was seriously damaged by the 1988 earth-
and so we arranged study visits to                             this is a good system because it is almost                 quake. There is still a lot of rubble around
Cambodia, Peru and Armenia.                                    impossible for individuals who are poor to                 from the remains of destroyed houses.
                                                               manage these things on their own.
Solidarity groups                                                                                                         As with Arghasar-1, this group is also into a
Armenian ECLOF’s director, Tigran                              Eight young men make up the Arghasar-1                     second ECLOF loan, which it is using to
Hovhannisyan, and his staff took us to                         group. Previously, they were all unem-                     expand its meat and milk production busi-
some very poor areas of Armenia in the                         ployed, could not see any future in                        ness. The group has 25 cows and 40 calves,
Lory Region. There, we met “solidarity                         Armenia, and were considering emigrating.                  and its members also plan to expand into
groups” that had received ECLOF loans.                         They approached several Armenian micro-                    cheese making. The area used to be famous
                                                               finance institutes but their interest rates                for its cheese, and exported much of it.
When Aida Movsisyan and her family                             were too high. In any case, the men were
came to live in the village of Ardjut in                       told that they were not eligible for loans.                In Armenia, unemployment is high and
1992, the village helped her family to build                   This is when they turned to ECLOF. With                    many young men remain idle after their
a house, acquire land and begin agricultur-                    ECLOF, they found a different approach                     military service. However, the members of
al activities. Many years ago, Mrs                             and felt treated with respect and dignity.                 both the solidarity groups that we met
Movsisyan adopted and raised two chil-                         ECLOF showed the men how to form a sol-                    have found that with hard work, and
dren whose mother had died when they                           idarity group, what to use as collateral, and              backed up by an ECLOF loan, it is possi-
                                                                                                                          ble to make a decent living.

                                                                                                                          We also visited some remote villages in the
                                                                                                                          area around the town of Tashir. Many of
                                                                                                                          the villagers are refugees, who fled from
                                                                                                                          Azerbaijan to Armenia in 1988 and 1989 as
                                                                                                                          a result of the war between the two coun-
                                                                                                                          tries. Times are tough for everyone in
                                                                                                                          Armenia as a result of the war, the earth-
                                                                                                                          quake, the collapse of the Soviet Union
                                                                                                                          and the subsequent collapse of the coun-
                                                                                                                          try’s industries and infrastructure.
                                                                                                                          However, the situation is even worse for
                                                                                                                          refugees. Therefore, ECLOF has focused
                                                                                                                          on some of the areas where many of the
                                                                                                                          refugees live.

                                                                                                                          We met several refugees who are now
                                                                                                                          ECLOF clients. Many had recently begun
Mrs Aida Movsisyan (centre) is the adoptive mother of Arshak Srapyan, a member of the Luys Solidarity Group located in
                                                                                                                          small-scale farming and cattle breeding
Ardjut, a village in the Lory Region of Armenia. She welcomes Andrea Scleeh (left), a Church of Sweden pastor, and        enterprises. They told us that one of their
Armine Baghramyan, an Armenian ECLOF administrative assistant (right), with some home-made, mouth-watering bread          problems had been the high cost of trans-
and cheese. When Christians say the Lord’s Prayer, they ask, “Give us today our daily bread”. Much of the work of ECLOF
is centred on helping that prayer become a reality for those who have too little to eat.                                  porting the milk produced by individual

                                                                                                                     JUNE 2005       ISSUE 33

farms. The farmers began discussions with        Lives enriched                                   small loan portfolio. However, Armenian
ECLOF to see what could be done. They            The ECLOF clients we met told us how             ECLOF is a learning organization, and it is
found that the cost of fuel for the truck        microcredit had changed their lives. By co-      continually strengthening its ability to
used to transport the milk could be drasti-      operating with their neighbours and work-        serve the Armenian people. ECLOF defi-
cally lowered if the truck were to use gas       ing together, people can now pay for their       nitely has a role to play in shaping the
instead of diesel. The technology is well        children’s education, enjoy a better standard    country’s future at national, regional and
known and commonly used in Armenia.              of living and contribute to the development      local levels.
Filling stations for gas are as common as        of their communities. They have also learnt
those that sell other fuels. ECLOF provided      project management and economic plan-            Those of us from the Church of Sweden
a loan to pay for the conversion of the          ning skills, and now that they are taxpayers     who visited Armenia are proud to be part
truck’s engine, and, today, farmers are          feel much more part of their society and         of the ECLOF family. We are now spread-
making a profit from their milk production       able to contribute to its development.           ing news of ECLOF and its activities in
businesses. We felt that ECLOF’s openness                                                         Armenia throughout our parishes in order
to all aspects of production and consumer        Armenian ECLOF is still a small agency           that more people will support this vital
chains is benefiting all its partners.           with less than 3,000 clients and a relatively    work.

                                                                         security and community. God wants us to care first of all for the
 God’s strategy for life                                                 basics!

 In 2000, the United Nations declared eight Millennium                   UN basic needs strategy
 Development Goals (MDGs) to guarantee basic needs for                   The UN General Assembly will evaluate the progress being
 everybody. These secular goals reflect biblical ones, though God’s      made to achieve the Millennium Development Goals in
 ‘basic needs strategy’ is more radical, as Rev. Prof. Christoph         September 2005, five years after their introduction. The MDGs
 Stückelberger, Director of the Institute for Theology and Ethics of     include eight fundamental goals:
 the Federation of Swiss Protestant Churches and Chairperson of
                                                                         1 Eradicate extreme poverty and hunger
 ECLOF International, explains.
                                                                         2 Achieve universal primary education
 The story that Jesus told of the Last Judgement is a tough one. It
                                                                         3 Promote gender equality
 is about a vision of how things will be at the end of time when
 good and evil people will be separated. The sheep – those who           4 Reduce child mortality
 have lived a good life – will be placed on the right with the
                                                                         5 Improve maternal health
 promise of being with God. The goats – those who have
 neglected God’s way – will find themselves on the left, and             6 Combat HIV/AIDS and other diseases
 bound for eternal punishment. However, this story is not
                                                                         7 Ensure environmental sustainability
 primarily about separation in some afterlife but about ethical
 behaviour and doing good here and now.                                  8 Develop a global partnership for development.

 Here is part of what Jesus said:                                        These goals include four of the six biblical goals leading to
 Then the King will say to those on his right hand, “You have my         actions of love: food, water, clothes (housing, protection),
 Father’s blessing; come, enter and possess the kingdom that has         health. However, two important biblical goals do not appear:
 been ready for you since the world was made. For when I was             the integration of strangers in the community, i.e., for the world
 hungry, you gave me food; when thirsty, you gave me drink;              to become an inclusive community; and caring for and
 when I was a stranger you took me into your home, when naked            liberating prisoners. The United Nations avoids mentioning
 you clothed me; when I was ill you came to my help, when in             sensitive issues such as migration, foreigners, political prisoners
 prison you visited me.” (Matthew 25: 34–36).                            and the violation of human rights. However, according to God,
                                                                         basic needs include not only material goods but also community,
 Elsewhere, in Luke’s gospel, Jesus is even more radical and talks       liberation and spiritual goods. The UN excludes sensitive and
 about not only visiting prisoners but also releasing them (Luke         politically controversial issues in order to unite humanity behind
 4:18b).                                                                 the eight other goals, which is understandable. However, God
                                                                         in Jesus openly calls for the liberation and inclusion of all people
 Six actions of love                                                     and, indeed, for the whole of creation.
 From these two passages, we can see that God’s basic needs
 strategy includes six concrete actions of love:                         It should be noted, however, that the UN goals also challenge
                                                                         the biblical list. For example, the MDGs contain the promotion
    hunger                 –   provide food
                                                                         of gender equality but Jesus does not explicitly mention this in
    thirst                 –   provide water                             his strategy. Implicitly, however, it is there and today it must be
                                                                         made explicit. God’s call for love for all by all, as well as the
    stranger (exclusion)   –   community (inclusion)
                                                                         call for justice, includes gender justice and gender equality.
    nakedness              –   give clothing (protection, dignity)
                                                                         God’s offer
    sickness               –   provide health care
                                                                         God’s basic needs strategy should also be the foundation of
    prison                 –   visit and release the prisoner            ECLOF’s work and the organization’s point of reference and
                                                                         orientation for its own vision and strategy. God promises us that
 This simple but profound list of basic human needs shows the            not only will we see God’s Kingdom if we follow God’s strategy
 things that we need to live in dignity. We do not require luxury        but that God is accompanying us on the way with his spirit. That
 or sophisticated life styles but food, clothes, a home, protection,     is a great promise and encouragement!

JUNE 2005         ISSUE 33

Foreign exchange                                                                                                       SIDI
ECLOF International Board member Mercedes Canalda reports from the
Dominican Republic, where she is a member of a government committee looking
at ways to increase the effect of money sent home by those who have gone abroad                          In November 2004, ECLOF
to work.                                                                                                 International staff attended a seminar
                                                                                                         organised by DanChurchAid, during
One of the most important items in many                   it can be used as microcredit to fund sav-     which representatives of the
Latin American economies is the income                    ings, house building, loan provision,          International Solidarity for Development
from remittances sent by emigrants, espe-                 health programmes, education and busi-         and Investment Company (SIDI)
cially those now living in places such as                 ness development.                              explained the aims of their
the United States and Spain.                                                                             organization.
                                                          However, those who send remittances
In many Latin American countries, remit-                  have to bear in mind a number of impor-        The French Committee against Hunger
tances have become an important means                     tant factors including the speedy and eco-     and for Development established SIDI
of support for poor households.                           nomic delivery of their cash, and the          in 1983. The company specialises in
                                                          possibility of making money available to       the financial and technical support of
The total sums involved are substantial.                  their families back home in local currency     microfinance institutions, promotes
The Dominican Republic is the fourth                      or US dollars, in order to minimise curren-    viable economic activities, and fosters
biggest remittance receiver in Latin                      cy exchange costs.                             the establishment of a social and
America after Mexico, Brazil and                                                                         economic environment capable of
Colombia. It received more than US$2.2                    In many countries, the delivery of remit-      promoting sustainable development.
billion in 2003.                                          tances is centralised in the hands of a lim-
                                                          ited number of distributors, who are           The DanChurchAid seminar and the
Because of the significance of this move-                 considered to have developed useful tools      SIDI briefing showed
ment of money, both multilateral and                      and provide a good service to customers.       once more how
national bodies have begun to develop                     It is interesting to note that banks are now   important it is for those
norms and policies on procedures and                      developing additional distribution meth-       involved in microfinance
costs, and to study the macro-economic                    ods to ensure that remittances can be used     to share their experiences
effects of the phenomenon.                                for other than immediate needs.                and knowledge.

Those who receive remittance money use                    If microfinance institutions are to become
it in a variety of ways. Often, as in the                 effective channelling agents for remit-
Dominican Republic, people pay for basic
items they could not otherwise afford.
                                                          tances they will have to design microcredit
                                                          products that regard remittances as collat-
Today, however, the idea is gaining
                                                          eral and that will appeal to those who
                                                          receive money sent home.                                      celebrates
ground that remittances could be better
used for investments and savings, thus giv-               In some countries, regulatory systems only                    30 years!
ing the poor a better long-term future.                   allow supervised institutions to receive
                                                          and deliver remittances. Therefore, it will
                                                                                                         Founded by the World Council of
One of the most widely discussed ques-                    be necessary for the microfinance world to
                                                                                                         Churches in 1975 as an ecumenical
tions today relates to whether remittances                develop strategic alliances between them-
                                                                                                         development bank, Oikocredit is this
should continue to be made through for-                   selves and these approved institutions in
                                                                                                         year marking three decades of
mal banking systems. Some now suggest it                  order to provide a better remittance serv-
                                                                                                         achievement. During its thirty years,
would be better to channel the money                      ice to underprivileged people.
                                                                                                         Oikocredit has mobilised €203.5 million
through development organizations so that
                                                                                                         of investment capital from 571 members.

                                                                                                         With a record €52 million in new
     How remittances are spent (%)                                Who sends remittances (%)
                                                                                                         project funding approvals in 2004,
80                                                                            No response
                                                                                                         Oikocredit has become both a leading
                                                                       Friends    1.6                    specialised development finance
      74.6                                                               4.8
70                                                                                                       institution, particularly for microfinance
                                                                                                         organizations, as well as a recognised
                                                                                                         “socially responsible investment”
50                                                                                    Wife/husband       instrument.
                                                                   Other relatives         19
                                                   Grandparents        13.9
                                                       1.6                                   Parents     ECLOF congratulates Oikocredit on its
30                                                                                            9.9
                                                                                                         30th birthday, its excellent performance
             26.2                                                    Brother/sister                      to date, its continued efforts to reach
20                             21.8                                     25.8           Children
                                                15.9                                    23.4             out to more people in need of financial
                                                                                                         resources, and its mobilising of
 0                                                                                                       investments from those who wish to
      Food   Clothes Education Housing Business Savings
                                                                                                         realise a social return on their capital.

                                                                                                                                JUNE 2005       ISSUE 33

Tell me by text
                                                                                                             branch know if clients were making their
                                                                                                             repayments on time? We had had some
                                                                                                             poor experiences with other cooperatives,
                                                                                                             and so we were naturally cautious this time.
The cell phone is becoming more and more part of everyday life.
Many have a love-hate relationship with their ‘mobile’. However, as                                          Faced with this dilemma, we contacted the
ECLOF Philippines reports, it has provided a solution to a prob-                                             bank in Bataraza where repayments were
lem that threatened to prevent microcredit reaching those who                                                to be made. To our astonishment and
could put it to good use.                                                                                    delight, the bank manager told us there was
                                                                                                             an easy answer to our problem, and one
Rev. Mario Abellera is a Methodist pastor        cooperative organized 19 groups and                         the bank had been using for over a year.
with a small congregation in the far-flung       ECLOF conducted the necessary loan eval-
town of Bataraza in the Palawan province of      uation. Those clients who passed the eval-                  In 2003, a telecommunications company
the Philippines. He is also chairman of the      uation were granted loans. The total due                    had installed a mobile phone network in
Tribal Christian Multi-Purpose Cooperative       to be received by members for their first                   Bataraza. It was like manna from heaven
(TRICAMCO). Bataraza is 250 kilometres           loans came to US$14,600.                                    for the bank because it meant it could
from the provincial capital, Puerto Princesa.                                                                send details of repayments by SMS, or text
It takes more than six hours to travel from      However, one problem prevented us from                      messaging to whomever needed them.
Bataraza to Puerto Princesa by bus because       releasing the loan. We had no office in                     With this technology available, our
of the unpaved and rough road. Worse,            Bataraza where TRICAMCO is based. For an                    Palawan branch was able to make the
public transport is only available until three   ECLOF staff member to travel to Bataraza to                 loans and now receives daily reports of
in the afternoon. Anyone missing this bus        monitor repayments of the loan would be                     amounts repaid at the bank. If any pay-
must wait until the next day to travel.          too costly and eat up all the income from                   ments have not been made, details are
                                                 the loan. Though there was a bank in                        included in the messages and we then
ECLOF Philippines has a branch in Puerto         Bataraza, it was not connected to the                       contact TRICAMCO so that Pastor Abellera
Princesa. Last year, we agreed to provide        Internet because there was no landline                      and his colleagues can deal with the prob-
microfinance for TRICAMCO so that it             available. Without any staff or office in the               lem before it gets out of hand.
could provide credit to its members. The         area, how could the ECLOF Palawan

News from NECs
Cuba hosts microfinance talks
                                                                                                             Institutions – Latin America (INAFI-LA) held
                                                                                                             its assembly. The meeting appointed José
                                                                                                             Luis Pereira as secretary to the board of
                                                                                                             directors. INAFI-LA is made up of 17
Last December, José Luis Pereira Ossio, the      ered successful from a financial viewpoint                  microfinance institutions from various
director of ECLOF Bolivia (ANED), took           but that have weak social and economic                      Latin American countries.
part in the Seventh International                impact on groups with high poverty levels.
Conference on Micro and Small Businesses.        He added that the term “microfinance

The conference met in the Cuban capital
                                                 industry” refers to a global concept where
                                                 the unequal relationship that countries
                                                                                                              From ECLOF
of Havana under the theme, “The global-
ization of financial services for micro-busi-
                                                 have with each other has been repro-
                                                 duced. The same is true of the inefficiency
                                                                                                              Bolivia (ANED)
nesses and its impact on the fight against       of economic development models that are
                                                                                                              We are sad to report the death in a car
poverty”. More than 500 people attended          exclusively market oriented.
                                                                                                              accident of Javier Flores, the Chief of
and debate was intense. José Luis reports
                                                                                                              Office at our Tupiza-Potosí branch. Javier
that it was generally agreed that microfi-       Appointment
                                                                                                              died on 27 December last year. The loss
nance institutions need to increase the          Alongside the international conference in
                                                                                                              of our colleague and friend makes us
ways in which they integrate with and            Cuba, the Network of Alternative Financial
                                                                                                              reflect deeply on the commitment of all
complement other development factors,
                                                                                                              ECLOF staff and the risks they run in
particularly national governments.
                                                                                                              carrying out their work in rural areas.
                                                                                                              Javier believed in the building of a better
In a contribution to a panel on
                                                                                                              and fairer society. In sincere homage to
“Microfinance, globalization and poverty”,
                                                                                                              him, we renew our commitment to ANED
the ANED director spoke about the way in
                                                                                                              and the role it must play in the
which financial and political powers are
                                                                                                              development of the poor.
increasingly becoming involved in microfi-
nance for development. José Luis told his
                                                                                                              ECLOF International expresses its
audience that the current model shows a
                                                 José Luis Pereira Ossio (left) in discussion with ECLOF      sincere condolences to the family of
series of factors and processes that have        International Director Muhungi Kanyoro, on a recent visit    Javier Flores and his ANED colleagues.
led to the creation of institutions consid-      to Geneva.

JUNE 2005           ISSUE 33

 On your bike!
                                                                                               More people visited means more people can benefit from
                                                                                               ECLOF loans.

 New Horizons has regularly reported on the increased use of                                   If a credit officer travels to clients by public bus, then everyone
 motorbikes by national ECLOF committees. Colleagues in Kenya                                  knows when to expect him or her to arrive. Travelling by
 now reflect on how their work has benefited from the introduction                             motorbike gives more flexibility and makes possible ‘surprise’
 of two-wheeled travel.                                                                        visits, which we have found are vital in carrying out effective
                                                                                               monitoring of a client’s performance.
 Our clients are predominately in rural areas that can only be
 reached on unpaved roads. In bad weather, travelling by                                       We have also discovered that using a motorbike makes it much
 motorbike is almost the only option.                                                          easier to track down loan defaulters and help them sort out their
                                                                                               repayment problems. Sometimes we are able to trace people
 Motorbikes also bring other advantages, as a look at the figures                              right to their isolated homes. This would not be possible if we
 involved shows. Our branch in the town of Meru currently                                      had to rely only on public transport.
 handles 1,605 clients, who belong to a total of 118 groups.
 Using a motorbike, a credit officer can visit five groups a day,                                                                         If a group gets into repayment
 with each group having an average of 15 borrowers. This                                                                                  difficulties, it can sometimes be
 means a staff member can see at least 75 clients in a day and it                                                                         better for two officers to deal with
 makes the monitoring of groups much easier. Groups also know                                                                             the problem together. Motorbikes
 that the ECLOF person will turn up on time and not be subject to                                                                         make this much easier to achieve
 public transport delays.                                                                                                                 because a second staff member
                                                                                                                                          simply hops on to the pillion seat,
 The use of a motorbike also means more individual clients can                                                                            and no extra travelling costs are
 be visited. A credit officer on a bike can make up to 30                                                                                 incurred. In addition, when
 appraisal visits in a day.                                                                                                               making outreach and
                                             Peter Mutuma (by motorcycle), ECLOF Kenya
                                                                                                                                          promotional visits, two officers
                                             credit officer in Meru, about 300 kms from                                                   travelling to an area together can
                                                                                               Enoka Tunya (left), ECLOF credit officer
                                             Nairobi, with some of his clients from the                                                   increase the outreach
                                                                                               in the town of Eldoret, at the welding
                                             Kawira Solidarity Group at their shop. Peter
                                             comments, “One thing I really appreciate
                                                                                               shop of his client, Morris Onyango, who    considerably compared to what it
                                                                                               is a member of the Ua La Kondeni           would have been if one person
                                             about using the motorbike is my ability to
                                                                                               Solidarity Group.
                                             reach marginalized communities. Due to                                                       had gone by public transport.
                                             their inaccessibility, they would not otherwise
                                             receive microcredit services. A case in point
                                             is a group of small-scale wheat producers.        All of this sends signals to ECLOF clients that we are a serious
                                             Now they have received microcredit loans,         and efficient organization, and one with whom it is worth doing
                                             their incomes have significantly increased.”

COFEP president calls for strengthening
                                                                                                                               Ana Sofia Franky Silva has been a member
                                                                                                                               of the executive and finance committees of
                                                                                                                               Women’s World Banking Colombia since
of links with ECLOF family                                                                                                     2002. For the last five years, she has also
                                                                                                                               worked as an independent consultant with
                                                                                                                               small and medium-sized businesses, and is
                                                                number of difficulties, and reform was                         a consultant to a national guarantee fund
                                                                necessary. New board members and mem-                          institution that is part of Colombia’s
                                                                ber institutions were appointed, including                     Ministry of Development.
                                                                a new director, Maria Victoria Aguirre,
                                                                who took up her post in December 2004.
                                                                The new strategy has been implemented
                                                                                                                                                    The new director of
                                                                and additional support from ECLOF
                                                                                                                                                      ECLOF Columbia
                                                                International is being discussed.
                                                                                                                                                       (COFEP), Maria
                                                                                                                                                       Victoria Aguirre,
                                                                Against this background, Ana Sofia has
                                                                                                                                                      has numerous
                                                                called for a strengthening of COFEP’s links
On a visit to ECLOF Colombia (COFEP), George Petty                                                                                                   finance and
(back row, centre), executive staff member of ECLOF             with the rest of the ECLOF family. This,
International, met the new COFEP president, Ana Sofia           she believes, is necessary if COFEP is to
Franky Silva (back row, fourth from right) and the new                                                                                         qualifications, including
                                                                continue its work of assisting the develop-
COFEP director, Maria Victoria Aguirre, (back row, fourth                                                                       at post-graduate level. She has been
from left), together with the staff team. Also in the           ment of poor communities that have
photograph is COFEP board member, Enna Sofia Lemus
                                                                                                                                working in Colombia within the
                                                                placed their trust in ECLOF for more than
Cañon (back row, third from left).                                                                                              banking world since 1991.
                                                                20 years.
                                                                                                                                Immediately before joining COFEP,
As soon as Ana Sofia Franky Silva took
                                                                                                                                Maria Victoria provided consultancy
up her post as president of ECLOF                               The COFEP president holds a degree in
                                                                                                                                services to micro- and medium sized
Colombia (COFEP) in March 2003, she                             business administration and has spent a
                                                                                                                                companies. She was also a consultant
began the task of implementing a new                            long career mostly working in the field of
                                                                                                                                to the Colombian government’s
strategy designed to make the organization                      credit risk management with various finan-
                                                                                                                                Ministry of Economic Development.
financially sustainable. COFEP had faced a                      cial institutions in Colombia.

                                                                                                                                 JUNE 2005      ISSUE 33

Meet ECLOF staff
                                                                                                              Finance Network (RFR). What is
                                                                                                              that about?
                                                                                                              NA The RFR is a self-regulation committee
                                                                                                              and I represent ECLOF on it. The RFR is an
On a recent visit to ECLOF Ecuador, and for New Horizons, George Petty, execu-                                association of microfinance institutions
tive staff member of ECLOF International, interviewed Nelly Abara, who is based                               (MFIs) and co-operatives that are not regu-
in ECLOF’s Quito office. Nelly, like many women, has to combine a demanding job                               lated by the central bank. They work on
with being a mother but she still makes time to think big.                                                    issues of transparency, training, growth of
                                                                                                              member organisations, and the provision
                                                            the children. Now, they are happier and I         to members of financial indicators soft-
                                                            do not have to worry about them.                  ware.

                                                            NH How long have you been with ECLOF              NH Does the RFR help you
                                                            and what do you do?                               meet people from other MFIs?
                                                            NA Since October 2003. I am the Director          NA Yes! I have clients that I met through
                                                            of Projects but my responsibilities are a bit     the RFR (these are institutional clients).
                                                            of everything. I administer the portfolio,        The benefit of meeting others is really
                                                            review loans, work with the budget, etc. I        important. It shows that we are not alone.
                                                            like the work because it has different            We can make alliances. In fact, ECLOF
                                                            aspects to it. I enjoy my contact with            Ecuador has made several new relation-
                                                            clients; it is very satisfying to see the         ships thanks to the RFR. Before we joined
ECLOF staff member Nelly Abara visits some of her clients
on their broccoli farm.                                     progress they make. Lending is ECLOF              the RFR, we were not very well known but
                                                            Ecuador’s primary business and we need            now we are! The RFR also helps with
NH Nelly, where are you originally from?                    to focus on it. However, in the future I          making contacts outside the country,
NA Riobamba City. It is the capital of                      hope we can also develop non-financial            as with the Inter-American Development
Riobamba province, and has a population                     services. Clients ask us for them and,            Bank      (       and     the
of about 250,000. The province itself has                   rather than sending people elsewhere, we          Microfinance     Information    eXchange
the highest percentage of indigenous peo-                   could have a database of service providers        (
ple in the country, and agriculture is the                  to whom we could refer clients, and there-
biggest activity. There are few jobs in                     by earn a commission from these referrals.        NH How do you see
Riobamba City other than public services.                                                                     ECLOF Ecuador’s future?
The result is that many people leave to                     NH What is most difficult in your job?            NA There are lots of possibilities and plans
find work elsewhere.                                        NA We work as a team but sometimes we             for new products. I see us growing to a
                                                            could do with planning together more.             US$14 million loan portfolio. We could
NH Is that why you left for Quito?                          However, there are so few of us that we           become a regulated finance institution and
NA Yes. I did my university graduate and                    do not always have time to do this. We are        collect savings. In Ecuador, this is one
post-graduate studies in Riobamba. After                    also in a period of transition with new staff     level off being a bank. We have the ability
graduation and despite my academic qual-                    that have come on board. One of our               to grow and become really big. Obviously,
ifications, it was hard to get a job because                problems is arrears. The older the loans,         to achieve this we will need more money
I lacked experience. Therefore, I studied                   the more difficult they are to collect.           and support from ECLOF International, as
business management and got a job with                      Things move slowly in the legal system.           well as a strong board.
an oil transportation company. However, I
really wanted to work for an organization                   NH But your arrears have dropped!                 NH What does its relationship
whose concerns went beyond profits.                         NA Yes, that is true and I sometimes look         with ECLOF International mean for
Eventually, I joined a financial co-opera-                  at how long I spend collecting old loans          ECLOF Ecuador?
tive. It was during this time that I married                and wonder if it is worth it. However, if we      NA It is a strength for us. It helps us grow.
and had two children. My job was two                        are to continue to grow, we need the cap-         We see we are part of a global family with
hours away from Quito, where my hus-                        ital that is tied up in arrears, as well as new   a common mission and vision. It helps us
band worked. In the end, I left the cooper-                 income.                                           strengthen our relations. Your presence is
ative and joined my husband in Quito with                                                                     very important. I am able to tell our clients
the children. There, I found another job                    NH I understand you have just been                that we are part of a global network.
with a co-operative. From that job I went                   appointed to a body known as the Rural
on to the Christian Youth Association (ACJ)
and then to ECLOF Ecuador.
                                                                                                   Ecuadorian discussions
NH How did you manage
childcare throughout this time?                                                                 Jorge Salinas (right), Executive Director of ECLOF
NA Working and being a mother is hard.                                                          Ecuador, and Manuel Quintero, communications
We had domestic help but this brought its                                                       director of the Latin American Council of Churches
own problems. I like work, and I want to                                                        (CLAI), during a visit by ECLOF international to their
work and do so professionally, but this                                                         two organizations. During the meeting, ECLOF and
was a difficult situation. It is hard to bal-                                                   CLAI representatives discussed their respective
ance home and work responsibilities.                                                            activities and exchanged views about areas where
                                                                                                they could work more closely together. Since this
NH Is the situation better now?                              meeting, Manuel Quintero has been appointed the new director of Frontier Internship
NA Yes, my in-laws help. We moved close                      for Mission, which is based at the Ecumenical Centre in Geneva, Switzerland.
to them. This is especially beneficial for

JUNE 2005      ISSUE 33

ECLOF Uruguay                                                                                  New faces at
                                                                                               ECLOF International
                                                                                               Someone already well known in the
Top posts for board members                    marketing of products through the estab-        ECLOF family has joined the international
                          The government       lishment of alliances within South and          staff in Geneva. Joy Cadangen
                          of Uruguay has       Central America.                                Lumbag, a former international board
                          appointed Alicia                                                     member, is now our finance manager. Joy,
                                               ECLOF International congratulates               a former treasurer of ECLOF Philippines,
                          Melgar, a former
                                                                                               belongs to the Igorot indigenous people of
                          board member of      Alicia and Celia on their important
                                                                                               the Cordilleras in the Philippines. Joy holds
                          ECLOF Uruguay        appointments and wishes them well in            qualifications in accountancy and business
                          (FEDU), to head      their new spheres of work.                      administration. She has a wealth of
                          up the National                                                      experience in microfinance and is a
                          Institute     of     New president                                   former finance officer of the Episcopal
Statistics. Alicia is an eminent economist                               Mario      García     Diocese of North Central Philippines as
                                                                                               well as Chief Executive Officer of her
and her appointment, which is a non-polit-                               has           been
                                                                                               church’s pension fund.
ical one, recognises her expertise. Alicia                               appointed presi-
Melgar was a board member of FEDU from                                   dent of FEDU.                                             Former ECLOF
its inception. She completed her term of                                 Mario first joined                                        International
                                                                                                                                   finance manager
office at the end of 2004.                                               the FEDU board                                            Nejib Ababor
                                                                         in 1999 as a rep-                                         hands over his
                         Celia Barrato,                                  resentative of the                                        responsibilities to
                                                                                                                                   Joy Cadangen
                         who joined the                                  Uruguayan ecu-                                            Lumbag. Nejib has
                         FEDU board last       menical organization, Servicio Ecuménico                                            overseen major
                                                                                                                                   changes in the
                         December, has         Solidario (SES), which promotes co-opera-       transformation of ECLOF finances, accounting,
                         been appointed        tives and solidarity groups in order to pro-    monitoring and reporting since joining the
                                                                                               organization some nine years ago. ECLOF
                         director of the       vide solutions to issues of health, housing,    appreciates the dedication and professional manner
                         Technological         food and work. Mario García has been part       with which Nejib has handled his responsibilities, and
                         Laboratory      of    of the SES management team since 1998,          wishes him well in his future career.
                         Uruguay (LATU).       and in charge of assessing the administra-
Created in 1965, LATU is a collaboration of    tive and accountancy needs of groups and                              In April, Perrine
                                                                                                                     Bell took up her
private and public sectors to develop new      co-operatives.                                                        post as executive
technologies and improve the quality and                                                                             assistant at ECLOF
                                                                                                                     International. Perrine
                                                                                                                     is Anglo-French by
                          Jérôme Michel Clark is the new executive director of                                       birth and enjoyed
                          ECLOF Côte d’Ivoire (Ivory Coast). He took up his post last                                a multicultural
                          September. Jérôme holds a master’s degree in business                education in England and France. She is
                          administration from Kansas State University in the USA. To           bilingual in English and French, and also
                          gain his MBA, Jérôme specialised in finance and                      writes and speaks Spanish. Brought up in
                          accountancy. Prior to joining ECLOF, he was chief accountant         West Africa as a child, Perrine studied
                                                                                               communication and diplomacy at
                          for Cargill West Africa S.A. Cargill is an international
                                                                                               university in England. She has worked
                          provider of food, agricultural and risk management products          abroad for Médecins sans Frontières as a
                          and services. Jérôme was also previously involved in the             field administrator, and also held several
 training and evaluation of microfinance institutions, including ECLOF Côte d’Ivoire. He       communications-related posts with
 is an active member of the Full Gospel Businessmen’s Fellowship.                              international organizations in Geneva.

              Planning for the future
               Mr Nils-Gunnar Smith,           The subjects Nils-Gunnar discussed with           shareholder-based and finding
               microfinance adviser at the     colleagues included:                              shareholders;
             Church of Sweden and mem-
                                                  how to improve loan collections;               capacity building, the training of staff
ber of ECLOF’s International board and
                                                                                                 and how to keep trained staff in the
executive committee, visited three African        fundraising and how NECs can
                                                                                                 ECLOF family;
national ECLOF committees (NECs) in               increase their capital from local
Kenya, Uganda and Zambia in March of this         resources in addition to those coming          effective risk management in the face
year, and held discussions about some of the      from ECLOF International;                      of HIV/AIDs, and how to develop
challenges and opportunities ECLOF faces.                                                        credit programmes to respond to the
                                                  NECs becoming regulated microfinance
                                                                                                 needs of those infected and affected.
                                                  institutions (MFIs) and the new MFI
After his visit, Nils-Gunnar said he had
                                                  banking laws that have been put into
been extremely touched by the warm wel-                                                       All these issues and more will be
                                                  place in Uganda, will probably be
come he had received in all three coun-                                                       addressed in ECLOF’s 2005/2009 strategic
                                                  implemented soon in Kenya, and are
tries. This, together with his meetings and                                                   plan and are currently issues being dis-
                                                  likely to reach Zambia later;
conversations with ECLOF officers, staff                                                      cussed during consultations, regional
and clients had made him proud to be part         requirements arising from becoming          workshops and visits by the international
of the ECLOF family.                              an MFI, for example, becoming               secretariat.

                                                                                                                                    JUNE 2005       ISSUE 33

Meet ECLOF clients
House of education
                                                                                                                In some ways, Mi amigo Jesús is unconven-
                                                                                                                tional. It bans chocolate, sodas and artificial
                                                                                                                sweets in favour of natural more healthy
                                                                                                                food snacks. Pupils take home what they
The Mi amigo Jesús (My friend Jesus)                      Over the years, the solidarity group                  grow in the school’s vegetable gardens.
school located in the village of Mariscal                 formed to operate the school has received             The school is modern in outlook; it pro-
Caceres – 35 kms from Lima, the capital of                a number of ECLOF loans. The first one, in            vides computer training for children from
Peru – just cannot seem to stop growing.                  1998, helped the school to get going. A               nursery age. Parents are directly involved
                                                          second loan, in 1999, made possible the               in the running of the school and meet reg-
Rosa and Eugenio Trujillo opened the                      building of a second floor to provide more            ularly to discuss policies and plans.
school in 1998 after moving to Mariscal                   teaching space. Two years later, the school
Caceres, when Mr Trujillo retired from the                used a further loan to equip a kinder-                The Mi amigo Jesús school is another
navy. To do so, they used Eugenio’s retire-               garten, as well as first and second grade             example of what a series of ECLOF loans
ment pension and the family savings. Their                classrooms.                                           can achieve over a period of years. One
decision was motivated by the fact that the                                                                     wonders how much higher the Trujillo’s
only state school in the district was over-               Further loans paid for a third floor to be            home can get!
crowded and the level of education there                  added to the building, more classrooms,
notoriously low. There were good local                    and a computer laboratory with ten work-                Many of the pupils at the Mi amigo Jesús
private schools but many parents could                    stations and PCs. The school received its               school come from very poor families.
not afford to pay the expensive fees.                     latest loan of US$8,000 last January and                Tania Gutiérrez, aged seven, was in the
                                                          has used the money to provide new bath-                 first grade of the Mi amigo Jesús school.
The school began in the Trujillo’s home with              rooms and three more classrooms.                        Tania lived with her mother and her 20-
eight pupils. Within three years there were                                                                       year-old sister. Their father had
95 children and the family home was burst-                Today, the school has more than 200 stu-                abandoned them. Tania’s mother was
ing at the seams! Today, the Trujillos contin-            dents in classes from elementary to 10th                terminally ill with cancer, and her sister,
ue to look after the administration of the                grade.                                                  who worked as a housemaid, was the
school, and employ high quality teachers.                                                                         only one who brought any money into
                                                                                                                  the home. From her income, Tania’s sister
                                                                                                                  just about managed to pay for Tania’s
                                                                                                                  schooling. After their mother died,
                                                                                                                  Tania’s sister could no longer afford to
                                                                                                                  pay the school fees so Mi amigo Jesús
                                                                                                                  awarded Tania a scholarship for the rest
                                                                                                                  of the school year. In 2004, Tania’s sister
                                                                                                                  enrolled her again and the school was
                                                                                                                  able to help by allowing her to pay as
                                                                                                                  and when she could.
                Growing up in Peru and becoming well educated, thanks to a very special school.

 Fivefold success in Arazap!                                                             The farmers housed all of their animals in a cattle shed owned
                                                                                         by the group leader, Hmayak Asatryan, who had received the
                                                                                         building in the share-out of state properties during the
 In Armenia, shortly after the collapse of the Soviet Union in the                       privatisation process.
 early 1990s, the privatisation of former state properties began
 to take place. As a result, individuals each received animals,                          The members of Arazap-3 come from a variety of backgrounds.
 buildings or small plots of land. Many families were then able to                       Hmayak Asatryan used to work in the top management of a
 begin farming.                                                                          state collective farm. He has good farming knowledge and
                                                                                         experience, including a university diploma. Marjanik Arakelyan
 However, people had received so little that for many it was                             is also a university graduate and was previously a director of
 almost impossible to produce enough food for personal                                   the local government-run kindergarten. Mamikon Kostanyan
 consumption, let alone enough to run a business. The answer                             used to work as a herdsman. The remaining two members, who
 was for individuals to form small groups.                                               are in their late twenties and much younger than their
                                                                                         colleagues, went straight into farming from school. By the time
 That is what five members from three families did in the small                          they joined Arazap-3 they had enough experience to be eligible
 village of Arazap in the Valley of Ararat. The outcome was the                          for an ECLOF loan.
 Arazap-3 solidarity group. Between them, group members
 already owned ten cows. The five farmers took out a first ECLOF                         To date, the Arazap-3 group has received three ECLOF loans that
 loan of US$2500 ($500 each) to buy ten more cows, and with                              have been well used to expand cattle breeding activities, as well
 the addition of US$2400 of their own money, they also bought                            as the production of milk and meat. The farmers plan to increase
 ten bull calves and some fodder.                                                        milk production further, and diversify into cheese making.

JUNE 2005          ISSUE 33

Enterprising expansion
Eleven years ago, a group of 23 Kenyan                          Ngecha Tablecloth Women’s Group, as the                    from Nairobi, the capital of Kenya. The
women, who individually made and sold                           women call themselves, show that micro-                    average age of the Ngecha Tablecloth
knitted goods and tablecloths, got together                     credit coupled with strong leadership can                  Women’s Group members is 47, and it is
to try to increase their incomes and                            produce long term development.                             the longest standing client of KECLOF’s
expand their businesses by finding sources                                                                                 regional office in the nearby town of
of additional capital.                                          The group’s name, explains founder mem-                    Limuru. To date, the group has received
                                                                ber Miriam Njeri, derives from where the                   six increasingly substantial loans. The lat-
Since then, many group members have                             women live and work. Ngecha is an area                     est credit was for a total of just over one
taken out a series of ECLOF Kenya                               with a population of about 10,000, and lies                million Kenyan shillings (US$13,300).
(KECLOF) loans. Today, the results of the                       within the Kiambu district, some 25 kms

 With her first KECLOF loan, Mary Wangui Mbiyu                                                                                                   Miriam Njeri says she
 increased her stock of materials for making tablecloths. A                                                                                      has greatly benefited
 second loan meant she could increase the range of items in her                                                                                  from the ECLOF loans
 shop; sales increased substantially. As a result, Mary Mbiyu                                                                                    she has received over
 bought a plot of land with the hope of having a house on it                                                                                     the years. “Poverty used
 one day. After a third loan that enabled Mary to expand her                                                                                     to create a strain
 business even further, this enterprising woman built her                                                                                        between me and my
 planned home. Then came a fourth loan and Mary Mbiyu                                                                                            husband because we
 diversified her business. She bought three cows and also                                                                                        were not able to pay to
 began to buy other goods from a southern African company.                                                                                       educate our children”,
 She sold these goods in her shop on commission. Mary used a                                                                                     Mrs Njeri explains.
 fifth loan to buy some laying hens, and was then able to sell                                                                                   “Now we can do so,
 eggs to local schools. Currently, Mary is repaying a sixth loan                                                                                 and this is helping the
 that she has used to increase her number of hens and buy the                                                                                    general fight on
 feed they need.                                                                                                                                 illiteracy and
                                                                                            A pay phone, bought with an ECLOF loan, has          dependency in our
                                                                                            increased the takings in Miriam Njeri’s shop.        country.”

                                                                                            With a first loan, Miriam increased the stock of her tablecloth
                                                                                            business. She bought a dairy cow with a second loan, more
                                                                                            stock with a third, and then, with a fourth, built some rooms for
                                                                                            rent at the Ngecha trading centre, where she is based. Mrs
                                                                                            Njeri also added to this loan money she had saved as a result
                                                                                            of increased income because of her earlier loans. With a fifth
                                                                                            loan, Miriam bought a pick up truck to transport her goods and
                                                                                            animal feedstuffs. This saved the hefty monthly rental bill she
                                                                                            previously had to pay for a pick up truck, and now Mrs Njeri
                                                                                            also has the flexibility to use her truck whenever she needs it.
                                                                                            Today, her shop sells a wide variety of food and household
                                                                                            goods. Miriam is currently repaying a sixth loan with which she
 Everything starts somewhere. Mary Mbiyu begins another tablecloth for sale in her          bought a payphone for her shop, plus added stock. She hopes
 shop. From small origins, her business has increased thanks to a series of ECLOF loans.    to open a supermarket in Ngecha in the future.

 According to Pauline Njeri, ECLOF’s loan programme has made
 her dreams come true. She recently bought a piece of land and is
 hoping to develop it soon.

 A decade ago, Pauline used her first two loans to expand her
 tablecloth business and also to buy a cow and sell milk.

 With a third loan, Pauline bought a sewing machine to make
 dresses. Her business expanded and with two more loans she
 bought two more sewing machines and increased her stock. Her
 business continued to grow; now her tailoring shop employs other
 members of the community. Pauline is on her sixth loan with which
 she bought some land on which she plans to build a more
 substantial shop.                                                                         With a series of ECLOF loans, Pauline Njeri built up her tailoring business, now owns
                                                                                           three sewing machines, and can provide employment for others in her community.

                                                                                                                                 JUNE 2005     ISSUE 33

Whatever happened to…?
                                                                                                        NH Why are you concentrating so firmly
                                                                                                        on bee-keeping?
                                                                                                        DM Because it has many advantages com-
                                                                                                        pared to other agricultural activities. For
Five years ago, New Horizons (Issue 24) told the story of Daniel Moreno and his                         example, honey can be exported and we
passion for bee-keeping, on which he had based his family business in Uruguay.                          get paid in US dollars. In addition, the
New Horizons has contacted Daniel again to find out how things are going today.                         market is such that we can sell everything
                                                                                                        we produce. The business provides per-
                                                          request a loan, they must calculate           manent jobs for local people; this prevents
                                                          whether their business plans will bring in    migration from our area. Investment costs
                                                          enough money to repay the debt as well        are low and we also do not have to own
                                                          as make a living. The calculation should      the land on which we keep our hives.
                                                          also take into consideration the fact that
                                                          the market price of what is produced may      NH Do you work outside your family
                                                          go down, and production costs may rise.       business?
                                                          Then, there is always a chance that there     DM Yes, I am an adviser to others who
                                                          might be bad weather, when little or noth-    wish to invest in bee-keeping. For the last
                                                          ing can be produced.                          three years, I have been a consultant to a
                                                                                                        group in Artigas, a region in the far north of
                                                          NH What happened to you after you             Uruguay. I also belong to a group of bee-
                                                          received your loans?                          keepers in my own region and we work
                                                          DM On this point, let me tell you that dur-   with seven similar groups from other parts
                                                          ing the 1999/2000 season, we endured a        of the country. As an association, we act as
Daniel Moreno (right) and his business partner, Marcos,   period of drought caused by the El Niño       consultants to more than 130 honey pro-
carefully tend their bees.
                                                          phenomenon. During this time, we pro-         ducers. In addition, the members of this
NH Daniel, you have received two loans                    duced no honey and, to make matters           association now combine efforts and we
from ECLOF. What were you able to                         worse, we lost a high percentage of our       have begun the direct exporting of the
achieve because of these?                                 beehives. As a result, we were late in mak-   honey that we all produce. There are many
DM The results have been significant, par-                ing our loan repayments. Thankfully, the      other ways in which we cooperate with
ticularly because we received the loans at                next season we recovered and paid the         each other. For example, we buy and sell
a time when the price of honey was low                    amount we owed.                               bees to each other, and we support various
and there were restrictions in Uruguay’s                                                                research projects to improve both the quan-
foreign exchange system. Without the                      NH How is your family business doing          tity and quality of the honey we produce.
ECLOF credit, we would not have been                      now?
able to develop our business.                             DM Thank God, it is doing well and we                                  NH Do you think these
                                                          are in a healthy situation. The high prices                            experiences can apply
NH From your experience, is it always                     we received for our honey from the last                                to other regions or
right for micro-enterprises to seek loans?                two harvests have allowed us to pay all                                countries?
DM It is a very positive thing to do but                  our bills; we are now planning a 30%                                   DM I believe so but they
some considerations should also be taken                  growth in the business through the use of                              must be adapted to local
into account. First, before any individuals               our personal assets.                          Daniel Moreno.           and regional realities.

 Youth job creation in Tanzania                                                                         salary, though some opt to leave and
                                                                                                        begin their own businesses. After
                                                                                                        completing a tailoring course, fourteen
 Many young people have found employment in Tanzania thanks to a project that has                       girls branched out on their own. Three
 grown significantly over the years.                                                                    others remained with AYDS and, as part
                                                                                                        of their work, look after beehives in their
                               Back in 1983,              meal, cinnamon and honey. Originally          backyards.
                               Afri-Youth                 based in the city of Arusha, where there
                               Development                has always been a good demand for             From food production, the group has
                               Services (AYDS)            AYDS products, the group has expanded         moved into food processing. The market
                               was created to             and recently opened new branches in           for its goods is so buoyant that AYDS
                               tackle                     Moshi and the capital, Dar es Salaam.                                 finds it cannot
                               malnutrition                                                                                     keep up with
 Bottling honey needs a steady among children             Afri-Youth Development Services received                              demand. More
 hand at the Afri-Youth
 Development Services, where   and sick elderly           a loan from ECLOF Tanzania in 2002                                    financial support
 many youngsters find steady   people, as well            and ploughed back into the business the                               will be needed if
 employment.                   as to provide              extra profits the loan made possible. In                              Afri-Youth
 vocational training for young men and                    turn, the group was able to improve and                               Development
 women who were not able to go on to                      increase its business with the result that                            Services is to
 secondary education from primary                         AYDS opened its two new branches.                                     build on its
 school.                                                                                                                        current success
                                                          Young people who complete their                                       and fulfil its
 AYDS now produces clothes and                            training at AYDS are able to remain with                              potential.
                                                                                                        Feeding corn into the mill to
 foodstuffs, such as flour, soya drink, soya              the project at a guaranteed regular           produce fine flour.

JUNE 2005       ISSUE 33

 Sporting chances in Brazil                                                                            Onda Sport is well known for its high
                                                                                                       quality and well designed products. Over
                                                                                                       the past 14 years, it has increased its
 An ECLOF loan of just over US$28,000             1991, Onda Sport began to make a                     workforce substantially. As a result of the
 has enabled a sports clothes manufacturer        number of clothing items, including shirts,          ECLOF loan, Onda Sport was able to
 in Brazil to expand and provide significant      blouses and swimsuits. Six people, using             take on 20 new employees. The total
 additional work for local people.                four sewing machines, worked in the                  workforce now stands at around 80, of
                                                  factory at the beginning. After a year,              which 92% are women. Many of these
 Onda Sport is based in Barrio Uruguay,           Onda Sport received a commercial bank                women have had little schooling (25%
 which is a poor area of the city of              loan to buy more sewing machines and                 reached first grade and 51% second
 Salvador in the State of Bahia. In this          increase its working capital. In 1999, the           grade). In addition, 40% of Onda
 region, a low-income family needs three          factory began to make polo shirts, and in            Sport’s female workers are mothers who
 salaries in order to meet their basic costs.     2000 moved to its current location,                  represent the only source of income for
 Almost 55% out of a total population of          where many micro-enterprises connected               their families.
 54,000 are in this position.                     to the clothing industry are located.
                                                                                                       Onda Sport used its ECLOF loan to
 Until the 1940s, Barrio Uruguay and the          More than profit                                     increase further its working capital in
 surrounding area was the centre of               The enterprise has an impressive                     order to improve its ability to buy raw
 Brazil’s textile industry. Then, it moved        approach to social responsibility. On one            materials and keep production lines
 elsewhere and people had to find other           day each month, the clothes produced                 running all year round. This means
 ways of earning a living. Recently, a            are donated to local children in need.               workers can be employed continuously
 shopping centre opened in Barrio                 Any fabric left over from making these               rather than on a seasonal basis. It also
 Uruguay with products and prices                 garments is given to community groups                ensures that stock is available in periods
 suitable for residents in the area. Items        to use for handicrafts and other small               of high demand, for example, around
 on sale include goods produced by local          income-generating products.                          Christmas and the end of the year.
 micro-enterprises, such as jewellers,
 tailors and other clothing manufacturers.                                                             Onda Sport sells almost three-quarters
 Most of the 240 shops and businesses in                                                               of its production to retail shops.
 the centre have signed a Local                                                                        Interestingly, the factory also sells 20% of
 Production Agreement. This agreement is                                                               its clothing to sacoleiras: women who sell
 a local initiative of organizations in the                                                            in market places and door-to-door. Many
 textile industry to develop cooperation                                                               of these women belong to micro-
 and common policies.                                                                                  enterprise solidarity groups. The women
                                                                                                       have not only improved their own life
 Onda Sport                                                                                            chances but through their doorstep
 One of the businesses that has helped to                                                              selling in remote communities, they also
 re-introduce the clothing industry to the                                                             provide quality clothing products to those
                                                  Quality control at Onda Sport is a key part of the
 Barrio Uruguay area is Onda Sport. In            company’s success.                                   who have no access to regular shops.

Lending to lenders
                                                                                                       collateral conditions that apply to MFI
                                                                                                       directors’ personal assets are also required.

To serve a population it could not otherwise reach, ECLOF Uganda has moved into
providing loans to other microfinance institutions (MFIs).                                              Women gain from new approach

Uganda has one of the lowest GDPs in the          Problems and solutions                                In line with its policy of lending to the
world. An estimated 80% of the population         This approach is not without its draw-                poor and most marginalized, ECLOF
lives below subsistence level. Most citizens      backs. It takes at least three months to set          Uganda has formed a partnership with
(more than 80%) depend on subsistence             up a new process and disburse the first               the Uganda Finance Trust Limited, which
farming and small-scale trading activities        loan. Some smaller MFIs that could be                 is a microfinance institution formed in
for their livelihood. Therefore, the demand       involved chose not to be, whilst larger               March 2004 to assume the financial
for microfinance services is very high. The       MFIs have more options open to them.                  services business of the Uganda
large financial institutions have traditionally   Smaller MFIs represent a larger risk than             Women’s Finance Trust Limited (UWFT).
failed to provide credit to the poor, which       bigger agencies, and their need for capital
makes organizations such as ECLOF vital.          is seasonal and unpredictable. It is also dif-        UWFT offers a woman-friendly financial
                                                  ficult to standardise terms and conditions            environment whereby women are
On its own, ECLOF Uganda does not have            for all MFIs. In addition, most smaller insti-        counselled and introduced to the
the capacity to reach and service large           tutions do not have property to offer as              benefits of saving and using credit
numbers of additional clients. One answer         collateral.                                           appropriately. Today, UWFT has over
to this is for ECLOF to lend through other                                                              21,000 borrowers and 90,000 savers.
microfinance institutions (MFIs). It increas-     To cope with these problems, it is neces-             Operations are run at 21 branches in
es client and area reach at reasonable cost,      sary to set fairly stringent conditions and           20 districts. ECLOF Uganda supports
whilst minimising risks. For ECLOF, it also       target a few well-established institutions.           the organization by providing capital
means lower overheads and increased net-          In doing this, it makes sense to use local            for on-lending activities to UWFT’s
working, and staff are freed to concentrate       microfinance associations to market prod-             clients.
on loan collection.                               ucts and vet applications from MFIs. Strict

                                                                                                                     JUNE 2005       ISSUE 33

Books and publications
Sustaining Microfinance in                       mate mission of the MFI – to be a sustain-        Any MFI thinking of going into new areas
Post-Disaster Asia                               able provider of financial services – is not      to provide emergency financial assistance
Guidance for MFIs and Donors                     compromised.                                      is advised to plan its long-term presence in
By The Consultative Group to Assist                                                                these areas carefully. Clients without prior
the Poor                                         MFIs                                              knowledge of an MFI’s commercial rates
                                                 The CGAP briefing contains some key               and commitment to sustainability may ini-
                            As the communi-      principles for MFIs:                              tially view the organization as another
                            ties most affect-                                                      relief agency or temporary donor pro-
                                                    maintain a commitment to sustainable           gramme.
                            ed by the recent
                            tsunami contin-         customise solutions according to               Donor support
ue to rebuild their lives, microfinance insti-      clients’ needs (CGAP suggests that             CGAP says that donors must understand
tutions (MFIs) can play a powerful part on          specific criteria should be defined for        the options available to MFIs in post-disas-
the path to recovery. Since the immediate           loan officers to make decisions about          ter situations, as well as the corresponding
aftermath of the tragedy, MFIs have been            rescheduling and providing grants);            constraints. Donors should be responsive
providing and coordinating emergency                                                               to the local context, ensure the separation
relief, and a few are beginning to help             be realistic about MFI role.                   between relief and microfinance (MFIs are
local communities reconstruct homes and                                                            not relief agencies), stick to microfinance
return to economic activity.                     Amongst some suggested guidelines, CGAP           good practices, and avoid setting disburse-
                                                 says MFIs should lift compulsory savings          ment targets (this may tempt an MFI to
Against this background, The Consultative        requirements in branches affected by the          take on clients who will not be able to
Group to Assist the Poor (CGAP) has pub-         tsunami until the emergency stage has             repay their debt).
lished guidelines for microfinance institu-      passed and clients have begun reconstruc-
tions and donors. The guidelines are             tion. It adds that rescheduling loans on a        The    full    text   of    Sustaining
intended to help MFIs provide the appro-         case-by-case basis can help MFIs avoid            Microfinance in Post-Disaster Asia is
priate range of emergency and longer-term        losses and defaults on their loan portfolio,      available, free of charge, on the CGAP
assistance to their clients, while enabling      and ensure that any cash flow earned by           Web site at:
both MFIs and donors ensure that the ulti-       those hardest hit stays in the household.         CGAPBrief_03_03_05.pdf.

              Microcredit:                       author provides an excellent introduction         acceptable level and therefore a relevant
              Sound business or                  to the world of microcredit. In fact, this is     development target.” Even more challeng-
              development                        Gert van Mannen’s aim. The publication is         ing are the author’s thoughts on what
               instrument                        not for experts. Instead, it is a primer for      would be the implications for the distribu-
                Gert van Maannen,                those who are relatively new to microcre-         tion of world income and entitlements if
                Oikocredit/ICCO                  dit, which exists to serve those Mr van           the figure were to be raised from one to
                                                 Maannen calls “unbankable”.                       two dollars a day.
                   The author of this accessi-
                   ble book, Gert van            It is worth reading this book for many rea-       In answering the question posed by the
                    Maannen, is a former         sons, and not least because of the chal-          book’s sub-title, and when push comes to
              Managing Director and board        lenging slant the author puts on familiar         shove, the author plumps for microcredit
member of Oikocredit. This is an ecumeni-        facts and figures. For example, today,            as a development instrument rather than a
cal development cooperative society found-       microcredit supports around 50 million            commercial one. However, he also
ed at the initiative of the World Council of     people. This sounds impressive, says Gert         believes that sooner or later microfinance
Churches in 1975 as an alternative invest-       van Maannen, until one realises that the          institutions have to stand on their own
ment instrument for churches, and designed       figure represents only 5% of those who try        feet, and not always depend on friendly
to operate closer to the values of the           to survive on less than one dollar a day.         donor capital. Discovering how van
Sermon on the Mount than to Wall Street.         He also describes this yardstick as “too          Maannen reaches this conclusion is well
                                                 simplistic… because, first of all, it creates     worth the time it will take to read his
Microcredit: Sound business or develop-          the impression that one dollar a day is an        book.
ment instrument is a revised version of a
paper presented by Gert van Maannen                                                              New Web site for ECLOF USA
during his farewell symposium in June
2001 at the Royal Tropical Institute in                                                          New Horizons is pleased to announce that
Amsterdam.                                                                                       ECLOF USA, which supports and promotes
                                                                                                 the work of ECLOF in the United States, has
As the title indicates, the book examines                                                        launched its own Web site. Check out what
whether microfinance institutions should                                                         our colleagues have to say at
primarily be commercially or development                                               
oriented. In addressing this question, the

JUNE 2005       ISSUE 33

                Mobilizing Savings –           Mobilizing Savings has been developed by       There are four chapters: 1)Why and how
                Key issues and Good            Intercooperation, a Swiss development          do poor households save?; 2)Mobilizing
                Practices in Savings           organization, on behalf of The Swiss           monetary savings from low-income house-
                 Promotion                     Agency for Development and Cooperation         holds: The institutional perspective;
                 Isabel Dauner Gardiol,        (SDC), which stresses the strategic impor-     3)Product development, diversification and
                  Swiss Agency for             tance of savings for development. The          innovation; 4)Legal and economic frame-
                  Development and              author is from Intercooperation.               work for savings mobilization. All chapters
                   Cooperation                                                                contain examples and case studies.
                                               In an introduction, SDC says that, “Even
This publication is aimed at all those         poorest households want to save and do         Mobilizing Savings is available on the
involved in the promotion of savings serv-     save, be it in kind or in cash, to overcome    Intercooperation      Web    site   at:
ices to the poor. As readers of New            difficult periods. They save in financial
Horizons will be aware, this is a topic of     institutions if they have access to those      ce/download/tec-notes-savings/techni-
current high interest to microfinance          institutions and if they trust in them”.       cal-note-saving-final-eng.pdf, and is
organizations such as ECLOF.                                                                  also available in French and Spanish.

Capacity building
The ART of “upscaling”
                                                                                              leagues for ways in which we could
                                                                                              upscale our portfolio. This included diver-
                                                                                              sifying the loan products we offer, and
                                                                                              providing higher working capital loans to
Tissa Jayawardena, a programme officer with ECLOF Sri Lanka, has taken part in a              suitable micro-entrepreneurs, who could
three-week workshop on “The ART (Advanced Reflective Training) of upscaling                   then be expected to provide employment
microfinance”. New Horizons asked Tissa to tell us about the experience and what              for others in their communities. I also sug-
he had learnt.                                                                                gested that ECLOF Sri Lanka should pro-
                                                                                              vide seasonal loans to clients irrespective
The workshop began in Madurai, India,          Lending to the poor                            of any outstanding loans, but only if clients
and then moved to Dhaka in Bangladesh          We considered the fact that microfinance       have a good record with ECLOF. I also rec-
in order for participants to consider micro-   institutions (MFIs) have to realise that       ommended that we should organize
credit in different contexts. The              money lent to the poor is not always used      regional workshops for rural clients.
Development        of    Humane       Action   for the purpose for which it is given; some-
Foundation (DHAN), a professional Indian       times loans are diverted for other purposes.   Profile of the clients of an MFI/NGO
development agency, organized the ART          This is because the poor often have to con-
course, during which we looked at:             vert their assets, including basic posses-
     the context of microfinance for the       sions, into cash in order to provide food or
     rural poor;                               other basic daily needs. So, when cash
                                               comes into a household, it may well be
     organizing the unorganised for            spent on survival needs rather than business
     microfinance;                             development. Therefore, a loan applicant’s
     organizational models for upscaling       family circumstances must be assessed
     microfinance;                             before microcredit is provided. Then, where
                                               appropriate, credit can be provided, and
     upscaling microfinance programmes;        sometimes the terms of a loan can cover a
                                                                                              Used by permission from Microcredit: Sound Business or
     microfinance and poverty reduction;       combination of various expenditure items       Development Instrument by Gert van Maanen (p.55, see also
                                               including consumption/income genera-           Books and publications, p.21)
     microfinance and livelihood               tion/entrepreneur loans/agriculture/general
     promotion;                                purpose loans (e.g. for housing).              Those at the top of the pyramid receive
                                                                                              bigger loans, and those at the base benefit
     information technology for
     microfinance.                             Savings                                        from smaller loans.
                                               The workshop examined the provision by
                                               MFIs of savings schemes. Savings can be        When focusing on the rural poor, micro-
“Upscaling” in this context means reaching
                                               especially helpful to the poor because it      credit needs to promote a progression
large numbers of people by providing
                                               helps them deal with expenditure over a        from:
more high quality products, and doing so
over a wider geographical area more            period of time, and to draw on past income         survival activity to enterprise activity;
quickly, more equitably, and on a long         or against future earnings, particularly if
                                               current income is low or non-existent.             poverty lending to enterprise lending;
lasting basis. There is a serious need for
upscaling microfinance because huge                                                               consumption capital to working
numbers of poor people around the world        Follow up                                          capital;
who need microcredit have still to be          When I returned to ECLOF Sri Lanka, I
                                               made various suggestions to my col-                microfinance to development finance.

                                                                                                                                                      JUNE 2005           ISSUE 33

Learning in Ghana
Finance                                                                    ECLOF International to ensure that the
                                                                           results of the training had maximum effect:
An ECLOF financial training workshop for                                        follow up on the implementation of
             managers, finance officers                                         what has been learnt by individual
                                                                                                                              Financial training workshop participants.
               and credit officers took                                         course participants at the institutional
                place in Accra, Ghana, at                                       level, and monitor the impact of the
                                                                                                                                  provide regular learning opportunities
                the end of 2004. Ben R. N.                                      training;
                                                                                                                                  for all staff in the fast-growing and
                Mbai from MNA Business
                                                                                encourage participants to pass on their           dynamic world of microfinance;
              Advisory Services in Nairobi,
                                                                                knowledge to other ECLOF colleagues;
         Kenya, led the workshop. This                                                                                            design a structured training
was the second time that Mr Mbai has pro-                                       evaluate training needs through a                 programme that will become part of
vided training for ECLOF staff.                                                 structured process;                               ECLOF’s institutional development.

                                                                                                                              India already had a plan in place for
Participants from seven African national
ECLOF committees attended the workshop                                      Feedback                                          increasing overall income and
together with ECLOF staff from the                                                                                            decreasing expenditure.
Philippines and India, as well as ECLOF                                     All ECLOF staff who took part in the
International’s financial manager, Nejib                                               financial workshop in Ghana            Lindsay also believed that ECLOF India’s
Ababor.                                                                                   completed a feedback                loan processing and lending methodology,
                                                                                            questionnaire. In his             which is somewhat time consuming at the
Participants said they had found the one-                                                   answers, Lindsay                  moment, could be simplified. He added
week course very relevant to their work                                                     Sathyanesan from                  that he had benefited from hearing from
and that they would apply the skills                                                      ECLOF India said that as a          other ECLOF colleagues at the workshop
learned immediately.                                                                    result of what he had learnt          about innovative and demand-based
                                                                            during the workshop he believed ECLOF             products that had been introduced in
At the end of the workshop, Mr Mbai                                         India could now better address the issue          countries such as Kenya, the Philippines
made a number of recommendations to                                         of “delinquent loans”, though ECLOF               and Zimbabwe.

                                                                                        Board training
                                                                                        ECLOF Ghana board members attended a one-day training course on the role
                                           1    10 2 3             7            11
                                                                                        of the board and the responsibilities of members. This event took place after the
                                                         4 5                9
                                                               6       8
                                                                                        financial training workshop.

                                                                                        There are 15 members on the ECLOF Ghana board; nine are women. Six
                                                                                        church organisations are represented on the board. In addition, there are
                                                                                        three representatives from the Christian Council of Ghana, and six members
                                                                                        from non-governmental organizations linked to microfinance and women’s
 ECLOF Ghana board members include:                                                     development organizations. The outreach possible as a result of all the
 1. Anna B. Nettey, 2. Jervis Djokoto, 3. Albert Essamuah, 4. Celeste Krahene
 Williams, 5. Florence Kyei-Kwakye, 6. Seth Appeadu Mensah (President),
                                                                                        training that took place in Ghana was therefore multiplied because partners,
 7. Clara Fosu, 8. Beatrice Bernice Boateng, 9. Gladys A. Brobbey.                      as well as ECLOF staff, were able to benefit and will in turn be able to pass
 Also in photo: 10. Ben Mbai (consultant), 11. Nejib Ababor (ECLOF                      on their newly-acquired knowledge to their own organizations.

Dealing with delinquency: the Zambian way                                                                                     sible the high quality training and capacity
                                                                                                                              building of group members and officials.

Jane Ogutu, head of ECLOF Kenya’s                                          exchange learning experiences that AFRAC           On her visit to the trust, Jane Ogutu heard
(KECLOF) branch office in the town of Meru,                                facilitates each year.                             how it has also tackled the problem of
has learnt how one microfinance institution                                                                                   delinquency rates through the use of a par-
(MFI) in Zambia is bringing down its level of                              Jane visited the Micro Bankers Trust that          ticipatory approach in the appraisal of loan
arrears, a process known in the microfi-                                   was formed in 1996 to act as a channel             applicants. The trust requires that savings be
nance world as “delinquency management”.                                   through which the Zambian government               provided as collateral, and retains 20% of a
                                                                           could lend to MFIs. The trust has achieved         group’s savings to offset possible loan
The African Rural and Agricultural Credit                                  some level of success in delinquency man-          defaulting. Borrowers have to pledge items,
Association (AFRAC), of which KECLOF is                                    agement, thanks to the positive partner-           and the trust takes possession of these if
a member, organized and part-financed                                      ships it has formed with the solidarity            repayments are not made. The trust has
Jane Ogutu’s capacity building visit to                                    groups and their members to whom loans             found that thorough and regular monitoring
Zambia, which was one of a number of                                       are made. This relationship has made pos-          of clients helps keep defaulting rates down.

JUNE 2005     ISSUE 33

The Ecumenical Church Loan Fund (ECLOF) is an ecumenical lending institution.
As a matter of policy, the ECLOF Secretariat in Geneva does not process loan
applications or projects directly from applicants but works through National
ECLOF Committees (NECs). If you wish, you may contact our Committee in
your country.

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 an organization described under section 501(c)(3) of the            rue de la Corraterie 11       1211 Geneva 2
 Internal Revenue Code.                                              1211 Geneva 11                Switzerland
                                                                     Switzerland                   Account No: 620 894 L
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 TCF National Bank, 801 Marquette Avenue                             Account No: 01-121477         Account No: 620 894 60 G
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ECLOF International contact address                    New Horizons is published by the Ecumenical Church Loan Fund and
Director         Phone: +41 22 791 63 12               distributed free of charge to the ECLOF constituency and all interested people
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P.O. Box 2100    email:
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                                                       New Horizons is available on ECLOF’s web site – – in English,

New                                                    French, German and Spanish.

                                                       Writing and editorial consultants:            Printed in Switzerland

     HORIZONS                                          John and Bridget Newbury
                                                       Designer: Paul Coyle
                                                                                                     June 2005

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