The Vision Thing
During the recent meeting in which I faced opposition to our business ideas, one person raised a simple but important question: "What's the vision for this project?" he asked.
His vision and mine didn't match, which made me realize that I need to spend more time articulating and selling a clear vision. Let me back-track a bit.
The objective for my work in Mozambique is to identify and remove any barriers that exist to economic development for members of our churches and their communities. This objective will be accomplished in three ways:
- Micro-enterprise training and mentoring opportunities, including financial stewardship and accountability at personal, church and business levels;
- Facilitating access to business opportunities and resources, including business franchising opportunities; and,
- Promotion of village-based savings and credit services.
There are an abundance of microfinance institutions working here already. Thirty-two, by last count. Several of them are sophisticated, international organizations whose core business is the financial services that they provide.
Credit is available, albeit at a high price, to those who want it, particularly in urban areas.
Many proponents of microcredit like to simplify the world into two groups: those who are thriving with microcredit loans, and those who have not (yet) received microcredit loans.
Africa is more complex than this.
The challenges are clear: well-established microcredit banks have come to the conclusion that microcredit lending is extremely expensive, and have reflected that conclusion in their interest rates.
As well, Mozambique’s credit culture is sufficiently weak that many people readily interpret loans – particularly loans from deep pocketed Westerners – to be grants. Gifts to be repaid only in the event that the borrower becomes wealthier than the lender.
A better model for the people we want to target is to start building a savings infrastructure so that people can accumulate wealth. They can do this amongst themselves, as a group. When people need to borrow, they can borrow from the group’s pool, and pay a modest amount of interest that is in turn given to deposit holders. People won’t object as strongly to paying interest to themselves.
The model also provides for a modest form of group insurance by collecting a small fee from group members and redistributing it, by consensus of the group, to those with a pressing need, like malaria testing.
It’s really a model of grassroots banking. It will be slow to implement, since no loans will be paid out until savings have been received, but will be more sustainable. Our role will be to train Mozambicans with the process and structure and let them implement it. They won’t need us to maintain a complex or expensive banking infrastructure.
This vision, I would argue, is quite bold and exciting. The vision means that Mozambicans can make donor-driven microcredit lending obsolete by filling their own savings and credit needs until those needs are large and sophisticated enough to qualify for commercial banking.
In an earlier entry, I implored Nobel laureate Dr. Yunus to lead the way in the development of a better microcredit model. The model that I am proposing is neither new nor perfect. In some ways, it mirrors important features of the Grameen bank that have been removed by its successors, chief amongst which is ownership by the borrowers.
Our vision is to fight poverty by giving power back to the people.
Further Reading
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