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Micro-credit
SAACID's micro-credit programme comes under its 'Women's Empowerment (Women's Advocacy and Women's Rights') programme sector.
SAACID began its micro-credit programming in 1993. In 1996, SAAID received its first substantive capital injection from Oxfam America. Oxfam America provided the capital outlay for the initial training-of-trainers, training in numeracy, literacy and business principles for destitute Somali women, and an initial loan of US $200 for 200 women. This initial capital injection was extremely successful and since that time SAACID has operated the programme by itself very successfully; and has received further capital injections from Oxfam Novib and the Mennonite Central Committee (MCC), as well as ffrom private donations.
Since then SAACID has received micro-credit funds from Oxfam Novib and the Mennonite Central Committee (MCC).
Unlike most other micro-credit models around the world, SAACID imposes only a minimal service charge on loans it provides to poor Somali women (1-2% - in Somalia, where the dominant religion is Islam, 'interest' is perceived as usury [riba] and is against the principals of Islam). SAACID's philosophy is not to gouge a large profit margin out of the participants, but to help those participants out of poverty and provide them with dignity and economic independence. The downside of this is that the core capital stock grows slowly, meaning that we remain relatively limited in our capacity to help large numbers of poor and illiterate Somali women. We hope to continue to build our capital stock for loans through ongoing inputs from governments, international organisations, companies and individuals who see the worth of this loan initiative.
SAACID uses a large number of layered mechanisms to ensure the repayment of loan. The core principal that we use is know-your-customer. As we work so closely with local communities, we have an intimate understanding of the structure of these communities and what mechanisms and strategies to put in place to ensure loan repayment. One of mechanisms is an incentive-based loan mechanism. The first loan provided is US $300 and has to be repaid over 38 weeks. The current service charge on this loan is 2%. Three hundred dollars is not really sufficient to develop a good business plan in the Somali context, but it does teach fiscal discipline. SAACID staff monitor and support all participants on a weekly basis through this first cycle. This provides the necessary support net that helps ensure that no one fails. If the participant wishes to take out a second loan, she is permitted to take a loan for US $600 and this has to be repaid over 46 weeks (the service charge remains flat at 2%). A third loan ceiling is allowed at US $1,000, which has to be repaid over 72 weeks (the service charge currently remains flat at 2%) and a fourth loan at US $2,000 (to date though, SAACID has not graduated anyone to a US $1,000 loan, as we do not have the capital stock to do so).
SAACID also binds women receiving loans into solidarity groups. Women are bound into a group of 5; a group of 20 and a group of 100. This layered grouping approach provides a loan guarantee mechanism. It also provides a support group for common problem solving and a safety net for agreed short-term individual financial difficulty (see photos of a solidarity group working through issues with SAACID managers - above). Solidarity groups are organised as a formal association - having their own constitution, rules, regulations, Board and weekly meetings. Finally, women wanting to enter the programme have to provide both a security guarantee (a deposit) and a guarantor from the wider community that will support the worthiness of the applicant. This layered process has preserved the capital stock in SAACID’s Poverty Bank to the point that there has never been a default in the programme.
To date, SAACID has not had one defaulter on those loans. This is startling, as Somalia is still in an anarchic state, and there are none of the formal or legal mechanisms that mitigate risk in most other countries around the world. This is a testament to the ingenuity, flexibility and resourcefulness of SAACID's managers in adapting a general model of micro-credit to the prevailing Somali context. This programme is a real jewel in SAACID's strategic programming, and we find it scandalous that we cannot source funds to substantially expand the programme.
How successful is the programme?
In late 2005, SAACID conducted a 10-year review of the programme. It randomly selected 300 women that have been in, or are currently in the micro-credit cycle. Below is a summary of that review. For the complete results of the review, see Micro-Credit Survey Report 2005.
The survey was designed to elicit demographics, loan history, business and income and expenditure information, entrepreneurial experience and dreams, and other socio-economic date. Those interviewed came from a random selection of 300 women, who have received one or more loans from SAACID’s micro-credit program from 1996 to the present. Twenty-seven percent of the women interviewed are still currently in a loan cycle; while 73% are either between loans or have completed the programme.
The majority of SAACID’s clients are from urban areas, had established businesses before joining the credit-scheme, and are not considered the poorest-of-the-poor. For example, the average annual family income of clients before joining the credit scheme was US $1,370; with the average family size being 8.4. Compare that to 600 people employed at US $2 a day through a garbage collection programme implemented by SAACID in 2003. Approximately 70% of those participants were women. That group had an average annual family income of $183 and an average family size of 9.45.
Therefore, while the survey results presented here accurately reflect the experience of women currently targeted in SAACID’s micro-credit programme, they are not necessarily representative of all women in Mogadishu society or the whole of Somalia.
Demographics
Ninety-four percent of survey participants were born in the regions of Banadir, Galgadud, Middle Shabelle, Hiran or Mudug, while the remaining 6% were from other regions.
The average age of clients surveyed was 43; with 66% of clients between the ages of 36-45.
Sixty-six percent of clients surveyed indicated they were married, while 16% were divorced, 14% were widowed, and 4% were single.
Thirty-nine percent of clients surveyed indicated they were displaced (forced to leave from their original homes); while 61% indicated they were not displaced.
There were 2,519 people constituting the total household dependency of the 300 survey participants - equalling an average of 8.4 people per family.
The average number of children conceived was 5.7 children per woman. Six percent of women surveyed reported they have never conceived any children. The gross mortality rate of the participant’s children was 13%.
Education
Sixty percent of clients surveyed indicated no formal education, while 30% indicated they had primary school education, 9% indicated they had secondary school education, and 1% indicated they a college or university education.
At least 75% of participants indicated they were literate. Thirty-six percent of participants had undergone literacy and numeracy training in 1994 or after, most likely through SAACID.
Micro-Credit Programme Participation
A total of 594 loans were provided over 9 years to the 300 clients surveyed, with an average amount of US $718.67 in loans to each woman. 100% of clients surveyed repaid all of their loans.
Anywhere between 90-92% of clients surveyed (depending on the question asked) identified positive life changes, increases in status and prestige, and increases in self-esteem as a result of joining the credit scheme.
Eighty-three percent of clients surveyed said they would like an increase in the amount of loans given. The average loan amount identified by participants as ideal to succeed in their business dreams was US $6,336. The most common response came from 19% of the participants indicating they would like a $5,000 loan.
At least 78% of clients surveyed indicated they would accept a higher service charge.
Ninety-six percent of clients surveyed indicated they knew of other women who would like to participant in SAACID’s training and micro-credit scheme.
Business Activity
Ninety percent of participants had an established business before they joined the credit-scheme, while the other 10% who did not were mainly those who received tye ‘n’ dye training through SAACID as a dual programme along with their loan.
Seventy-five percent of participants used up to US $200 to start their business, while 18% of participants used between US $201-400, and 7% of participants used over US $400, personally obtained through a variety of sources.
The most popular types of business were the sale of food items at 32% of all participants, clothing/fabric at 23% and kitchenware at 9%. Other common businesses were charcoal, gold, tye ‘n’ dye, construction materials, fuel, and pharmaceuticals.
Of the markets in Mogadishu the most common business locations of clients surveyed was Bakaro Market at 38.7%, Suuq Ba’ad at 19.7%, Karaan Market at 19.3%, and Manopolyo at 9.3%. The remaining percentage is made up of various markets throughout Mogadishu.
Thirty-five percent of participants indicated members of their family assist them in the business operations.
Seventy-nine percent of clients surveyed indicated they used the loan(s) to expand their stock by increasing the quality and quantity, while 8% enlarged or moved their shop, another 8% changed their type of business, at least 4% opened an additional shop, and 1% began wholesale or import/export.
Thirty-three percent of clients surveyed indicated they would like to expand their business to import/export, 11% would like to work wholesale, 40% want to continue expansion of their current operations, 7% have ambitions of opening big companies, while the remaining 9% of participants did not indicate any future business expansion.
Seventy-four percent of participants indicated insecurity as a threat to their business, and 24% indicated inflation as a constraint. 7% of clients surveyed have literally lost their businesses due to market fires in Mogadishu.
Income
Eighty-eight percent of clients surveyed indicated they are the primary breadwinner in their household now compared to 66% before joining the credit scheme. Likewise, only 2% of participants claimed their husbands are the primary breadwinner in their household now, compared to 21% before. Fifty-eight percent of married client’s husbands are unemployed.
The average family income BEFORE joining the credit scheme was US $1,370 per year, while the average NOW is US $2,526 per year - an 84% increase.
The average take-home income from business is US $1,692 per year. Take-home income is over 50% of total family income for 79.3% of clients surveyed.
The annual take-home income from business increased progressively with each loan as follows: a 1st loan generated an average of US $1,440 per year – a 71% increase, a 2nd loan averaged US $1,761 per year – a 22.3% increase, a 3rd loan averaged US $2,029 per year – a 15.2% increase, and a 4/5th loan averaged US $2,605 per year – a 28.4% increase.
The monthly business revenue increased progressively with each loan as follows: a 1st loan generated an average of US $535 per month – a 362% increase, a 2nd loan averaged US $785 per month – a 46.7% increase, a 3rd loan averages US $1,374 per month – a 75% increase, and a 4/5th loan averaged US $2,226 per month – a 62% increase.
Forty-four percent of participants receive remittances from abroad. Of those who receive remittances the average received US $824 per year.
Seventy-four percent of participants indicated barriers to safeguarding money, such as market fires, insecurity, lack of a bank or financial institution, and inaccessibility to holding places.
Ninety-nine percent of clients surveyed indicated they would trust a SAACID money holding facility.
SAACID began its micro-credit programming in 1993. In 1996, SAAID received its first substantive capital injection from Oxfam America. Oxfam America provided the capital outlay for the initial training-of-trainers, training in numeracy, literacy and business principles for destitute Somali women, and an initial loan of US $200 for 200 women. This initial capital injection was extremely successful and since that time SAACID has operated the programme by itself very successfully; and has received further capital injections from Oxfam Novib and the Mennonite Central Committee (MCC), as well as ffrom private donations.
Since then SAACID has received micro-credit funds from Oxfam Novib and the Mennonite Central Committee (MCC).
Unlike most other micro-credit models around the world, SAACID imposes only a minimal service charge on loans it provides to poor Somali women (1-2% - in Somalia, where the dominant religion is Islam, 'interest' is perceived as usury [riba] and is against the principals of Islam). SAACID's philosophy is not to gouge a large profit margin out of the participants, but to help those participants out of poverty and provide them with dignity and economic independence. The downside of this is that the core capital stock grows slowly, meaning that we remain relatively limited in our capacity to help large numbers of poor and illiterate Somali women. We hope to continue to build our capital stock for loans through ongoing inputs from governments, international organisations, companies and individuals who see the worth of this loan initiative.
SAACID uses a large number of layered mechanisms to ensure the repayment of loan. The core principal that we use is know-your-customer. As we work so closely with local communities, we have an intimate understanding of the structure of these communities and what mechanisms and strategies to put in place to ensure loan repayment. One of mechanisms is an incentive-based loan mechanism. The first loan provided is US $300 and has to be repaid over 38 weeks. The current service charge on this loan is 2%. Three hundred dollars is not really sufficient to develop a good business plan in the Somali context, but it does teach fiscal discipline. SAACID staff monitor and support all participants on a weekly basis through this first cycle. This provides the necessary support net that helps ensure that no one fails. If the participant wishes to take out a second loan, she is permitted to take a loan for US $600 and this has to be repaid over 46 weeks (the service charge remains flat at 2%). A third loan ceiling is allowed at US $1,000, which has to be repaid over 72 weeks (the service charge currently remains flat at 2%) and a fourth loan at US $2,000 (to date though, SAACID has not graduated anyone to a US $1,000 loan, as we do not have the capital stock to do so).
SAACID also binds women receiving loans into solidarity groups. Women are bound into a group of 5; a group of 20 and a group of 100. This layered grouping approach provides a loan guarantee mechanism. It also provides a support group for common problem solving and a safety net for agreed short-term individual financial difficulty (see photos of a solidarity group working through issues with SAACID managers - above). Solidarity groups are organised as a formal association - having their own constitution, rules, regulations, Board and weekly meetings. Finally, women wanting to enter the programme have to provide both a security guarantee (a deposit) and a guarantor from the wider community that will support the worthiness of the applicant. This layered process has preserved the capital stock in SAACID’s Poverty Bank to the point that there has never been a default in the programme.
To date, SAACID has not had one defaulter on those loans. This is startling, as Somalia is still in an anarchic state, and there are none of the formal or legal mechanisms that mitigate risk in most other countries around the world. This is a testament to the ingenuity, flexibility and resourcefulness of SAACID's managers in adapting a general model of micro-credit to the prevailing Somali context. This programme is a real jewel in SAACID's strategic programming, and we find it scandalous that we cannot source funds to substantially expand the programme.
How successful is the programme?
In late 2005, SAACID conducted a 10-year review of the programme. It randomly selected 300 women that have been in, or are currently in the micro-credit cycle. Below is a summary of that review. For the complete results of the review, see Micro-Credit Survey Report 2005.
The survey was designed to elicit demographics, loan history, business and income and expenditure information, entrepreneurial experience and dreams, and other socio-economic date. Those interviewed came from a random selection of 300 women, who have received one or more loans from SAACID’s micro-credit program from 1996 to the present. Twenty-seven percent of the women interviewed are still currently in a loan cycle; while 73% are either between loans or have completed the programme.
The majority of SAACID’s clients are from urban areas, had established businesses before joining the credit-scheme, and are not considered the poorest-of-the-poor. For example, the average annual family income of clients before joining the credit scheme was US $1,370; with the average family size being 8.4. Compare that to 600 people employed at US $2 a day through a garbage collection programme implemented by SAACID in 2003. Approximately 70% of those participants were women. That group had an average annual family income of $183 and an average family size of 9.45.
Therefore, while the survey results presented here accurately reflect the experience of women currently targeted in SAACID’s micro-credit programme, they are not necessarily representative of all women in Mogadishu society or the whole of Somalia.
Demographics
Ninety-four percent of survey participants were born in the regions of Banadir, Galgadud, Middle Shabelle, Hiran or Mudug, while the remaining 6% were from other regions.
The average age of clients surveyed was 43; with 66% of clients between the ages of 36-45.
Sixty-six percent of clients surveyed indicated they were married, while 16% were divorced, 14% were widowed, and 4% were single.
Thirty-nine percent of clients surveyed indicated they were displaced (forced to leave from their original homes); while 61% indicated they were not displaced.
There were 2,519 people constituting the total household dependency of the 300 survey participants - equalling an average of 8.4 people per family.
The average number of children conceived was 5.7 children per woman. Six percent of women surveyed reported they have never conceived any children. The gross mortality rate of the participant’s children was 13%.
Education
Sixty percent of clients surveyed indicated no formal education, while 30% indicated they had primary school education, 9% indicated they had secondary school education, and 1% indicated they a college or university education.
At least 75% of participants indicated they were literate. Thirty-six percent of participants had undergone literacy and numeracy training in 1994 or after, most likely through SAACID.
Micro-Credit Programme Participation
A total of 594 loans were provided over 9 years to the 300 clients surveyed, with an average amount of US $718.67 in loans to each woman. 100% of clients surveyed repaid all of their loans.
Anywhere between 90-92% of clients surveyed (depending on the question asked) identified positive life changes, increases in status and prestige, and increases in self-esteem as a result of joining the credit scheme.
Eighty-three percent of clients surveyed said they would like an increase in the amount of loans given. The average loan amount identified by participants as ideal to succeed in their business dreams was US $6,336. The most common response came from 19% of the participants indicating they would like a $5,000 loan.
At least 78% of clients surveyed indicated they would accept a higher service charge.
Ninety-six percent of clients surveyed indicated they knew of other women who would like to participant in SAACID’s training and micro-credit scheme.
Business Activity
Ninety percent of participants had an established business before they joined the credit-scheme, while the other 10% who did not were mainly those who received tye ‘n’ dye training through SAACID as a dual programme along with their loan.
Seventy-five percent of participants used up to US $200 to start their business, while 18% of participants used between US $201-400, and 7% of participants used over US $400, personally obtained through a variety of sources.
The most popular types of business were the sale of food items at 32% of all participants, clothing/fabric at 23% and kitchenware at 9%. Other common businesses were charcoal, gold, tye ‘n’ dye, construction materials, fuel, and pharmaceuticals.
Of the markets in Mogadishu the most common business locations of clients surveyed was Bakaro Market at 38.7%, Suuq Ba’ad at 19.7%, Karaan Market at 19.3%, and Manopolyo at 9.3%. The remaining percentage is made up of various markets throughout Mogadishu.
Thirty-five percent of participants indicated members of their family assist them in the business operations.
Seventy-nine percent of clients surveyed indicated they used the loan(s) to expand their stock by increasing the quality and quantity, while 8% enlarged or moved their shop, another 8% changed their type of business, at least 4% opened an additional shop, and 1% began wholesale or import/export.
Thirty-three percent of clients surveyed indicated they would like to expand their business to import/export, 11% would like to work wholesale, 40% want to continue expansion of their current operations, 7% have ambitions of opening big companies, while the remaining 9% of participants did not indicate any future business expansion.
Seventy-four percent of participants indicated insecurity as a threat to their business, and 24% indicated inflation as a constraint. 7% of clients surveyed have literally lost their businesses due to market fires in Mogadishu.
Income
Eighty-eight percent of clients surveyed indicated they are the primary breadwinner in their household now compared to 66% before joining the credit scheme. Likewise, only 2% of participants claimed their husbands are the primary breadwinner in their household now, compared to 21% before. Fifty-eight percent of married client’s husbands are unemployed.
The average family income BEFORE joining the credit scheme was US $1,370 per year, while the average NOW is US $2,526 per year - an 84% increase.
The average take-home income from business is US $1,692 per year. Take-home income is over 50% of total family income for 79.3% of clients surveyed.
The annual take-home income from business increased progressively with each loan as follows: a 1st loan generated an average of US $1,440 per year – a 71% increase, a 2nd loan averaged US $1,761 per year – a 22.3% increase, a 3rd loan averaged US $2,029 per year – a 15.2% increase, and a 4/5th loan averaged US $2,605 per year – a 28.4% increase.
The monthly business revenue increased progressively with each loan as follows: a 1st loan generated an average of US $535 per month – a 362% increase, a 2nd loan averaged US $785 per month – a 46.7% increase, a 3rd loan averages US $1,374 per month – a 75% increase, and a 4/5th loan averaged US $2,226 per month – a 62% increase.
Forty-four percent of participants receive remittances from abroad. Of those who receive remittances the average received US $824 per year.
Seventy-four percent of participants indicated barriers to safeguarding money, such as market fires, insecurity, lack of a bank or financial institution, and inaccessibility to holding places.
Ninety-nine percent of clients surveyed indicated they would trust a SAACID money holding facility.
Expenditure of Participants
The average family food spending by clients surveyed was US $55 per month BEFORE they joined the credit-scheme, compared to US $100 per month NOW - an 82% increase.
The average amount spent on child education was US $7 per month BEFORE compared to US $24 per month NOW - a 243% increase.
The average amount spent on healthcare was US $4 per month BEFORE compared to US $12 per month NOW - a 200% increase.
Seventy-two percent of clients surveyed indicated they have purchased or engaged in self-defined luxuries since joining the credit-scheme. The average take-home income of those who identified disposable income for luxuries was US $1,884 per year.
The average amount spent on business stock BEFORE joining the credit-scheme was US $153 per month compared to US $726 per month NOW. This is a 375% average increase in stock turnover due to growing sales (see supporting numbers in increased monthly business revenue).
Seven percent of clients surveyed have hired employees, who receive US $10-50 per month; while 93% of clients do not have hired employees.
Socio-economic Indicators
Nearly 100% of clients’ surveyed advocate for the education of girl children, with only 1 participant saying they support girl education, but only after a boy has the first opportunity.
Thirteen percent of clients surveyed have never visited a doctor, while 6% last visited a doctor from 1989-1995. Eighty-one percent of clients have visited a doctor since 1996, the year the SAACID credit programme began.
Over fifty percent of clients surveyed indicated medical problems, including: 30% indicating malaria, 4% indicating malnutrition and 2% indicating having diabetes themselves. Twenty-six percent of client’s children or family members were cited as having malaria, 9% malnourished, 9% suffer from bronchitis, and 7% suffer from TB. These numbers are seen as an underestimation, due to complications in how the question was asked.
Ninety-one percent of clients surveyed were circumcised with the Pharonic form of female genital mutilation (FGM), while 9% were circumcised with the Sunna form. Eight-nine percent of clients were circumcised in the age range of 6-8 years.
Four percent of participants indicated they will not circumcise their daughters, while 94% indicated they would have or had their daughters circumcised in the Sunna form, and 2% indicated their daughters would have or had the Pharonic form of circumcision.
Eight percent of clients surveyed said they feel their human rights are not protected, 13% said they feel protected by NGOs, 33% said they feel protected by Islam, 37% feel protected by their family or clan, 2% feel protected by local leaders, and 7% feel protected by did not specify by whom/what.
The results of this programme are outstanding by any measure, yet SAACID finds in virtually impossible to attract further international partners to develop the initiative further. SAACID has constantly lobbied governments, UN agencies and International Organisations (IOs) for further capital inputs, but, except for some assistance from NOVIB in 2003-5, we have been unable to secure any further inputs, despite the overwhelming success of the programme.
In 2003-5, the Netherlands Organisation for Community Development (NOVIB) has provided extra cash injections to the capital stock for this initiative. This is the first external capital input that SAACID has been able to secure since the initial funds from OXFAM - America in 1996. Remember, SAACID has no recurrent financial capacity; we rely totally on year-to-year programming proposals to governments, UN agencies and IOs to the capital necessary for the development of initiatives.
Rural
Oxfam Novib also has been a partner in developing micro-credit initiatives for rural communities in Somalia. SAACID's attempts to extend cash loans to rural communities were less than successful. Constant drought and flood (a natural feature of the Somali environment) ruined the successful urban model that SAACID tried to transfer to the rural Somali context. Natural disasters destroyed what the rural Somali women had invested in - agriculture (seed stock). This again left them destitute - with a total lost of the seed stock that they had purchased, and with no capacity to repay the loans provided.
SAACID modified its strategy and provided loans to women's cooperatives that it helped set up in rural villages. This spread the loan risk over a much larger population base - thus mitigating individual risk and increasing the individual capacity to repay any loan provided.
SAACID also modified how it dispensed loans. Instead of providing loans in cash it provided the loans in 'kind' - in this case in chicks. SAACID developed a core hatchery that then provided 'offspring' (chicks) to the various cooperatives that had been established. SAACID provided the necessary education and infrastructure for each cooperative to reproduce the commodity that it had been loaned. The advantage of this process was that the cooperatives did not have to repay the loan in cash, but could repay the loan in 'kind' - with chicks from their own hatcheries - which were then used as stock for more cooperatives.
The pilot was extremely successful. It provided a substantial increase in the food security of the rural villages involved in the pilot programme. In that, cooperative members took home a portion of the production to eat in the form of meat and eggs. Further, excess production is then sold in the local markets for cash, which was then distributed amongst the cooperatives members. Egg sizes were 30% greater than eggs produced without the education and training inputs. Animal sizes were 20% greater than animals produced without the education and training inputs.
There was one setback to the pilot programme. We found that along the Shabelle River the mortality of the chicks and chickens was 6 times higher than in the semi-arid and arid communities that took part in the programme. This was due to the very high rates of endemic disease that are prevalent along the swampy areas of the river. Overall chick birth rates greatly exceeded mortality rates, so this did not provide a catastrophic event for the pilot programme, but the high mortality rates did have a significant impact in the capacity of riverine cooperatives to convert chickens and eggs into cash in local markets.
SAACID believes this initiative has great merit in providing rural women with some economic capacity, as well as increasing the overall food security of rural populations in Somalia. To date, SAACID has been unable to engender any interest from international donors to expand on this initial pilot programme.
Innovation
In 2006, the Mennonite Central Committee (MCC - US/Canada) provided funds to SAACID to link micro-credit for women without any business history with education of their children. Forty-four women completed the identification and review process in the Bermuda area of Mogadishu (one of the poorest areas of the city). They were given 3-months of numeracy, literacy and business development training. MCC provided US $150 in loan funds to each of the women; and another US $50 in funds as a loan guarantee. SAACID provided US $50 to each woman in loan funds. This allowed these women with no business experience at all – and coming from a family with an annual income of less than US $200 per annum – to begin their own business. The loan repayment period was extended from the normal 34 weeks for a US $200 loan to 52 weeks. No interest or service charges were applied. Instead, each woman enrolled a fee-paying (US $6 per month) girl or boy child in SAACID’s primary school in the Bermuda area.
This initiative has been extremely successful. All 44 women have repaid their loans fully, and are actively building their businesses; and have continuously placed one of their children in SAACID’s fee-paying school in the Bermuda enclave. Further, MCC has committed to funding a Block II US $400 loan for these 44 women; as well as providing the support training for a new 50 women to receive a Block I US $200 loan. The 44 women all successfully completed the Block II $400 loan; and they did this in the midst of an Ethiopian military occupation, and viriliant insurgency. Some 34 of the women decided to take on a Block III US $700 loan - this despite an ongoing insurgency that continues to devestate Mogadishu City.
SAACID now believes that this methodology can be the cornerstone for extending a loan system to rural areas; and also creating sustainable education institutions in rural areas – something that is not being achieved now.
SAACID has strong expertise in practical micro-credit programming in the Somali context. If you would like to know more about our micro-credit programming, or like to contribute to future programming, please feel free to contact us.
The average family food spending by clients surveyed was US $55 per month BEFORE they joined the credit-scheme, compared to US $100 per month NOW - an 82% increase.
The average amount spent on child education was US $7 per month BEFORE compared to US $24 per month NOW - a 243% increase.
The average amount spent on healthcare was US $4 per month BEFORE compared to US $12 per month NOW - a 200% increase.
Seventy-two percent of clients surveyed indicated they have purchased or engaged in self-defined luxuries since joining the credit-scheme. The average take-home income of those who identified disposable income for luxuries was US $1,884 per year.
The average amount spent on business stock BEFORE joining the credit-scheme was US $153 per month compared to US $726 per month NOW. This is a 375% average increase in stock turnover due to growing sales (see supporting numbers in increased monthly business revenue).
Seven percent of clients surveyed have hired employees, who receive US $10-50 per month; while 93% of clients do not have hired employees.
Socio-economic Indicators
Nearly 100% of clients’ surveyed advocate for the education of girl children, with only 1 participant saying they support girl education, but only after a boy has the first opportunity.
Thirteen percent of clients surveyed have never visited a doctor, while 6% last visited a doctor from 1989-1995. Eighty-one percent of clients have visited a doctor since 1996, the year the SAACID credit programme began.
Over fifty percent of clients surveyed indicated medical problems, including: 30% indicating malaria, 4% indicating malnutrition and 2% indicating having diabetes themselves. Twenty-six percent of client’s children or family members were cited as having malaria, 9% malnourished, 9% suffer from bronchitis, and 7% suffer from TB. These numbers are seen as an underestimation, due to complications in how the question was asked.
Ninety-one percent of clients surveyed were circumcised with the Pharonic form of female genital mutilation (FGM), while 9% were circumcised with the Sunna form. Eight-nine percent of clients were circumcised in the age range of 6-8 years.
Four percent of participants indicated they will not circumcise their daughters, while 94% indicated they would have or had their daughters circumcised in the Sunna form, and 2% indicated their daughters would have or had the Pharonic form of circumcision.
Eight percent of clients surveyed said they feel their human rights are not protected, 13% said they feel protected by NGOs, 33% said they feel protected by Islam, 37% feel protected by their family or clan, 2% feel protected by local leaders, and 7% feel protected by did not specify by whom/what.
The results of this programme are outstanding by any measure, yet SAACID finds in virtually impossible to attract further international partners to develop the initiative further. SAACID has constantly lobbied governments, UN agencies and International Organisations (IOs) for further capital inputs, but, except for some assistance from NOVIB in 2003-5, we have been unable to secure any further inputs, despite the overwhelming success of the programme.
In 2003-5, the Netherlands Organisation for Community Development (NOVIB) has provided extra cash injections to the capital stock for this initiative. This is the first external capital input that SAACID has been able to secure since the initial funds from OXFAM - America in 1996. Remember, SAACID has no recurrent financial capacity; we rely totally on year-to-year programming proposals to governments, UN agencies and IOs to the capital necessary for the development of initiatives.
Rural
Oxfam Novib also has been a partner in developing micro-credit initiatives for rural communities in Somalia. SAACID's attempts to extend cash loans to rural communities were less than successful. Constant drought and flood (a natural feature of the Somali environment) ruined the successful urban model that SAACID tried to transfer to the rural Somali context. Natural disasters destroyed what the rural Somali women had invested in - agriculture (seed stock). This again left them destitute - with a total lost of the seed stock that they had purchased, and with no capacity to repay the loans provided.
SAACID modified its strategy and provided loans to women's cooperatives that it helped set up in rural villages. This spread the loan risk over a much larger population base - thus mitigating individual risk and increasing the individual capacity to repay any loan provided.
SAACID also modified how it dispensed loans. Instead of providing loans in cash it provided the loans in 'kind' - in this case in chicks. SAACID developed a core hatchery that then provided 'offspring' (chicks) to the various cooperatives that had been established. SAACID provided the necessary education and infrastructure for each cooperative to reproduce the commodity that it had been loaned. The advantage of this process was that the cooperatives did not have to repay the loan in cash, but could repay the loan in 'kind' - with chicks from their own hatcheries - which were then used as stock for more cooperatives.
The pilot was extremely successful. It provided a substantial increase in the food security of the rural villages involved in the pilot programme. In that, cooperative members took home a portion of the production to eat in the form of meat and eggs. Further, excess production is then sold in the local markets for cash, which was then distributed amongst the cooperatives members. Egg sizes were 30% greater than eggs produced without the education and training inputs. Animal sizes were 20% greater than animals produced without the education and training inputs.
There was one setback to the pilot programme. We found that along the Shabelle River the mortality of the chicks and chickens was 6 times higher than in the semi-arid and arid communities that took part in the programme. This was due to the very high rates of endemic disease that are prevalent along the swampy areas of the river. Overall chick birth rates greatly exceeded mortality rates, so this did not provide a catastrophic event for the pilot programme, but the high mortality rates did have a significant impact in the capacity of riverine cooperatives to convert chickens and eggs into cash in local markets.
SAACID believes this initiative has great merit in providing rural women with some economic capacity, as well as increasing the overall food security of rural populations in Somalia. To date, SAACID has been unable to engender any interest from international donors to expand on this initial pilot programme.
Innovation
In 2006, the Mennonite Central Committee (MCC - US/Canada) provided funds to SAACID to link micro-credit for women without any business history with education of their children. Forty-four women completed the identification and review process in the Bermuda area of Mogadishu (one of the poorest areas of the city). They were given 3-months of numeracy, literacy and business development training. MCC provided US $150 in loan funds to each of the women; and another US $50 in funds as a loan guarantee. SAACID provided US $50 to each woman in loan funds. This allowed these women with no business experience at all – and coming from a family with an annual income of less than US $200 per annum – to begin their own business. The loan repayment period was extended from the normal 34 weeks for a US $200 loan to 52 weeks. No interest or service charges were applied. Instead, each woman enrolled a fee-paying (US $6 per month) girl or boy child in SAACID’s primary school in the Bermuda area.
This initiative has been extremely successful. All 44 women have repaid their loans fully, and are actively building their businesses; and have continuously placed one of their children in SAACID’s fee-paying school in the Bermuda enclave. Further, MCC has committed to funding a Block II US $400 loan for these 44 women; as well as providing the support training for a new 50 women to receive a Block I US $200 loan. The 44 women all successfully completed the Block II $400 loan; and they did this in the midst of an Ethiopian military occupation, and viriliant insurgency. Some 34 of the women decided to take on a Block III US $700 loan - this despite an ongoing insurgency that continues to devestate Mogadishu City.
SAACID now believes that this methodology can be the cornerstone for extending a loan system to rural areas; and also creating sustainable education institutions in rural areas – something that is not being achieved now.
SAACID has strong expertise in practical micro-credit programming in the Somali context. If you would like to know more about our micro-credit programming, or like to contribute to future programming, please feel free to contact us.