|Repaying loans – training for borrowers|
|Repaying loans – training for borrowers
If you owned a bank, who would you lend money to? To big businesses, wanting to get even bigger? To manufacturers wanting to increase their output and their profits? To people just starting their first business venture, whether in a town or a rural area?
To be sure to get your money back, you might decide it was safest to lend to those with experience. But all over the world, microfinance organisations are lending money to people with little or no experience of business. It sounds risky – what percentage of these borrowers ever repay their loans?
The organisation Credit du Sahel was set up in the north of Cameroon 10 years ago to lend money to fight poverty. And over those 10 years it has achieved an amazing repayment rate for its loans. Martha Chindong met General Manager, Daniel Kalbassou, to find out how it has been achieved, and began by asking just how good the repayment rate has been.
IN: “The repayment rate right now is around …
OUT: …you have the same situation.”
BACK ANNOUNCEMENT: Daniel Kalbassou, General Manager of Credit du Sahel, a microfinance organisation working in northern Cameroon. The interview comes from a resource pack produced by CTA.
Kalbassou The repayment rate right now is around 94% in rural areas. Generally if there is no problem of water the repayment rate is 99%.
Chindong If you have succeeded so much in the rural area it means you have a secret. What is your secret?
Kalbassou Our secret in fact is training. Because in rural areas, when we started in 1998 in giving loans to small farmers, we experienced bad results. We had around a 60% repayment rate and we started thinking about what to do to improve this. In our area, farmers, most of them are illiterate. We have to train them in local languages. And therefore we started organising them and training them.
Chindong What is usually the content of this training that has made farmers so successful?
Kalbassou There are various contents. There is organisation: how to manage an association. And we told them that we cannot give it to an individual, they have to be in groups. And therefore the first thing is to organise the GIC, a sort of cooperative of 5 to 20 members. They have no guarantee. The only guarantee we got from them is what they call solidarity among members, which means that if one member is not paying it is the responsibility of all the members. And also we ask them to participate, generally from 10 to 30% of the amount of financing they need. Therefore the first thing is to organise them in an association. Explain to them how the organisation works; at least they have to have every month meetings, and we attend the meeting. That is the first thing. The second thing is the techniques of producing what they produce. If they produce rice, there is a technique. If they produce millet or sorghum there is a technique. And therefore we are not the only ones organising this training. We call for technicians to come and assist us in explaining to them the techniques. And the other training is how to use the credit, because it is an important factor. We explain to them, if you get credit it is not your money, it is someone else’s money. You have to repay it and the benefit, you will keep the benefit for yourself. Therefore you will take credit only for what you cannot do by yourself. Which means that they could buy fertilisers with the credit, pesticides. And at the end, we ask them to save too. And we are asking them that each time, you could save the equivalent in money of a bag of 100 kilos. If you produce rice, when you sell you could save in your account the equivalent of 100 kilos of rice. That is the system we put in place, and so far it works very well.
Chindong How long does it take to train the groups, considering that you consider all aspects of production?
Kalbassou Generally we organise the training 2 or 3 months before the rainy season starts, this is 2 or 3 sessions of training. One is on the organisation and the financial side of it and the other one on the technical side of it. And during the production cycle, our people on the field, they go there to meet those people, to follow up, to discuss with them the problem they have on the field, and how to solve it. And generally when they meet together at the monthly meeting in the organisation, they explain to each other, the members explain what they did in order to overcome such difficulties they met on the field. And in this case we have been very lucky in getting help from these various international organisations. It has allowed us to buy motorcycles for all our technicians in the field, allowing them to go every month to see what is going on during the production cycle. Therefore, if you are following them up, you know the problems right at the beginning, before the repayment, and take measures before. And all this helps them to succeed and also to repay our loan.
Chindong So it means the training is continuous?
Chindong If people who are trained and they have already received the loan, they have a need for extra training is it still possible?
Kalbassou Yes, it is still possible if they are many in the area, or if they change their production. They are producing rice, now they want to add millet or something else, we could organise another training for them.
Chindong For people who are operating in the same area of microfinancing as you do, what lessons do you think they can learn from you?
Kalbassou What they could learn is the fact that the key of success is the training, the follow ups. And also you have to know the mentality of the people in the area. Because I am from the north, I grew up there, therefore I talk to people in their own languages. And when I take someone to follow up those farmers in their own areas, I take someone from the village who understands the language, who can talk to them in their local language, who understands also the mentality and so on. It’s an important thing. And I think you could apply it everywhere, not only in the north of Cameroon, but everywhere you have the same situation. End of track.