Malaika Neri
OTIV Alaotra Mangoro
Ambatondrazaka, Madagascar
”We’re not touching the lowest couche of the population,” she said, looking me straight in the eyes. “We tried, and [the credit risk] just wasn’t worth it.”
There it was: a slap in the face of microfinance.
Madame Eugenie, head of the Crédit avec Education program created by Freedom From Hunger (FFH – an American non-profit) at OTIV, had been explaining OTIV’s manifestation of the savings program designed around solidarity group loans – a lending model popularized by Muhammad Yunus of the Grameen Bank and Nobel Prize fame.
Someone from OTIV heads out to a village and proposes an Association de Crédit (AC) – a borrower’s group that needs no physical collateral to get its feet wet with loans. Instead, they rely on conscience solidaire – every woman in a Groupe de Solidarité (GS) of four to six people promises to insure the others’ loans and timely reimbursements. If one member defaults, everyone loses access to future credit.
When a GS member is unable to adequately reimburse her loans, the rest of the group’s members chip in from a pot of collective tahiry, or savings. And if a GS can’t complete the balance of the repayment, members from other GS – who together form an AC – can chip in, so that OTIV gets back all of its money.
“The way FFH created the program, we’re supposed to target the poorest women of society – les groupes défavorisées,” continued Madame Eugenie. “But it was toujours un échec – always a failure.”
“Les pauvres,” she elaborated, “only think of living day to day. It’s hard enough trying to get them to save their money. Repaying their loans is a whole other story. And many of them are chômeurs – unemployed.”
Instead, OTIV opts for a safer bet: la classe moyen, or middle class Malagasy: women who already have a little money, who are looking “for a bit of déroulement.” Every week, they meet with an animatrice from OTIV, who helps them organize themselves. After the first month of “training,” during which the mpikambana, or members, are sensibilisé to the rules of the AC, the women assess each other’s loan requests, and also begin with the éducation. The animatrice – typically an employee from one of OTIV’s caisses – teaches the women about alimentation, AIDS, breastfeeding, la diarrhée – everything to do with health, and all towards the goal of eradicating chronic malnutrition. After the première cycle, they continue with business development – sharing savoir-faire on growing an entreprise and developing a clientele.
And so far, the program, which began in 2000, has been a hit, with high repayment rates. In 2006, the Malagasy government in Tana sat up and took notice, permitting its expansion throughout the island country where microfinance flexes a bigger muscle than the capital-flush Bank of Africa, and its Malagasy cousin, BNI.
Yet for all its successes (and there are many, because women tend to make for very reliable borrowers), Crédit avec Education is not reaching the poorest of the poor, primarily due to the dearth of a culture of saving.
“Microfinance worked so well in Bangladesh because they already have an ingrained idea of saving money,” exclaimed a Peace Corps volunteer I met during my first week here, referencing the Grameen Bank in Dhaka. “Here, it’s a different story; people simply don’t save.”
“The questions are always about credit,” laughed Madame Naina, who runs most of the marketing efforts at OTIV. “That’s because we’re poor, us malagasy.”
The former head of Madagacar’s sénat explained a different angle.
“All the paysans are screwed,” he said, shaking his head. We were sitting in my host family’s restaurant, under the tube lights that populate every Malagasy establishment and home.
“Thing is, they take out a loan from OTIV. Then they can’t repay it, so they run off to CECAM (another local microfinance, funded by the UNDP) for another loan to repay the one from OTIV. And the cycle continues.”
This might sound familiar. Two years ago, it was all that BBC and CNN were talking about: lots of people with loans (i.e., sub-prime mortgages). Lots of people unable to repay their loans. A slew of defaults. Et voilà: a financial crisis. OTIV is in a similar muck, because the business (even if it’s not-for-profit) of lending to people who aren’t habituated to saving is a tricky one.
How do you teach people to save when they seem to have no desire to do so?
We’ve been trying, petit à petit, to spread the “it’s good to save!” message in schools around town, in French and English and Malagasy and lots of emphatic hand-wagging, and now at the regional foire – a giant amalgam of vendors from all over Alaotra Mangoro – but I keep wondering if the idea is going through, if the message translates class and race, if the listener has stopped focusing on the fact that I’m a vazaha – a stranger in a strange land – and has started listening to how tahiry can be a really good thing.
Of course, there’s value in a project that provides capital to those who stand no chance of gaining access to credit at one of the banks. But if microfinance isn’t helping out the poorest of the world’s poor in a “very poor” country, then what is?