Savings and Loans

Three types of loans are currently offered through the program, while voluntary savings accounts are available for clients of Type 1 and Type 3 loans.

TYPE 1 LOANS

Olivia is a subsistence farmer with several milk cows. With a loan of $100, she is able to purchase a bicycle, tripling the amount of milk she is able to transport and sell, and medicine to improve her cows' health and production.

Value: $50-500
Repayment interval: Biweekly installments, spread over 18-50 weeks.
Goal: To support women with business skills.

Conditions: Type 1 clients receive training and advisory services for their businesses. If their loan applications are approved, they organize five-person groups (homogeneous in terms of age, geography and socio-economic status, but representing a diversity of business types). The group is given a loan and then monitored until all repayments have been made, after which, they become eligible for a new set of larger loans.

TYPE 2 LOANS

Patrice has surplus maize that he would like to transport to the city in order to sell for a higher price than the local market. With a loan of $30, he is able to rent a pick-up truck with several other farmers, bring his maize to the city and return the next day with his profits to pay back the loan.

Average value: up to $50
Repayment interval: One time, in full, after no longer than three months.
Goal: To provide 'fast cash' for short-term needs/emergencies.

Conditions: Type 2 clients must attend at least one MESO training course ("Introduction to Microfinance Services") in order to apply for a loan. Loan applications are processed in one hour or less; collateral is required. Interest increases each week that the loan is outstanding, and the loan must be repaid in full within three months.

TYPE 3 LOANS

Juma, Elizabeth and Petro run a small health clinic in their village. By combining some of their own money with a loan of $500, they are able to purchase a machine that tests blood samples for malaria. 

Value: $200-1000
Repayment interval: Monthly installments, spread over three months to one year.
Goal: To support group-run businesses that provide some form of community service.

Conditions: The business owner must attend at least one MESO training course ("Introduction to Microfinance Services") in order to apply for a loan for his/her business. S/he must demonstrate that the business has a record of profitability and, specifically, how the loan will be used to improve a needed community service. Loan applications are processed in three business days or less; collateral is required. The business is monitored  until all repayments have been made, after which, it becomes eligible for larger loans.

VOLUNTARY SAVINGS

Clients of Type 1 and Type 3 loans are encouraged to maintain savings accounts with MESO (Type 2 clients are ineligible for savings accounts because of the short-term nature of their loans). There is no service charge to open an account nor to make transactions. Several conditions exist:

1. Type 1 clients must open a group account; all deposits are made under the group's name.

2. Only 50% of the account balance may be withdrawn in a single day, unless the withdrawal is being used towards a loan repayment.

3. A Type 1 client may only withdraw money when accompanied by one or more of her group members (to prevent secret withdrawals).

4. The account balance may not exceed the client's outstanding loan balance.

5. The account closes when the loan has been completely repaid, unless the client is applying for a new loan.

 For more information, read our...
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new brochure (pdf)

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manual of operations (doc) - English or Kiswahili

You can also forward any questions or comments to micro.meso@gmail.com

MESO - The Multi-Environmental Society
mesotz@hotmail.com

(C) Copyright 2004

FAQ:  frequently asked questions

Why are your interest rates so high?

Microfinance is designed to be self-sustaining - it is not charitable. Thus, interest rates must be relatively high in order to cover program costs, provide effective service to clients and allow for gradual expansion to new areas.

What factors determine whether applicants are credit-worthy?

Although there is no formula for determining whether a client is credit-worthy or not, the loan committee considers clients' honesty, business experience, work ethic and living situation as the primary factors. The loan committee is comprised of village residents who have firsthand knowledge of clients' histories.

Can a client ever have more than one loan at the same time?

Type 2 loans may be granted, in some cases, to existing Type 1 or 3 clients in emergency situations.

What sort of collateral is expected on loans?

For Type 1 clients, the group is viewed as collateral on the loan. If one member of the group is unable to make her repayment, it is the group's burden to cover her. The group is motivated to do so primarily to enable them to continue using the program's services in the future.

For Type 2 and 3 clients, several forms of collateral must be provided. These include land, livestock, mobile phones, bicycles, etc. that can be sold or rented if clients default.

How is microfinance funded?

MESO microfinance was begun initially through private donations, though we are currently seeking grant funding. MESO recently achieved operational self-sustainability at the branch level.

What does training and preparation entail for clients?

Every three months the program offers a week of training courses. Each morning, the course "Introduction to Microfinance Services" is offered; each afternoon, a different pair of small-business development courses are offered, presented by local experts. Typically, the first half of each course is devoted to lectures, while the second half is open for questions and group exercises. Although there is no entrance fee for training courses, clients must pay a small fee upon receiving their first loans designed to cover training costs.

When applying for a loan, clients also receive advice from the loan committee through informal meetings. Here a client is advised regarding the investments to be made with his/ her loan and management of his/her business assets.


Training seminar participants March 2005