How Does Microfinance Work?

This blog post was written by our Engagement & Finance Officer, Sasha Watterson. 

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Microfinance today is a broad term used to describe financial services (such as loans and savings) which are offered to entrepreneurs, small businesses and individuals who lack access to traditional banking services. Dr Mohammad Yunus is considered a pioneer of modern microfinance. In the 1970s and 80s, he experimented with making small loans (which he funded himself) to women in Bangladesh who had relied on loans with unfair terms in the past. 

Since then microfinance has expanded and evolved to include many different structures of microfinance - microcredit, savings-led microfinance, The Grameen Model, savings groups etc. The movement has impacted millions of families over the years, and even today the microfinance landscape continues to develop. For more than a decade Five Talents has been developing a model of savings-led microfinance which allows our clients to build a sustainable income and forge a route out of poverty.

As a microfinance charity, we provide services to more than 35,000 people living in East Africa. Our aim is to give our clients the means to save together (in groups we call Trust Groups) and take small business loans to invest in their micro-enterprises. All Trust Groups are unique and progress at different speeds but most follow a basic model:

  1. Mobilisation: Members form Trust Groups of 75-100 people, subdivided into groups of 3-5 people, who know each other well and are prepared to co-guarantee one another’s loans.

  2. Formation: Members begin saving and are trained in financial literacy and business skills. A Board is elected from amongst the members who are then trained in good governance and oversee all Group meetings and transactions. Groups write their own Constitution and hold elections each year.

  3. Launch of loan scheme: After around 6 months, members start lending to each other and the fund grows through the charging of interest (which is shared out as dividends at the end of the year). Experience shows that groups make very strong credit decisions since each of the members are invested in the loan fund. Throughout this period members continue to receive training in basic business skills.

  4. Trust Group matures: After around 18 months our involvement will begin to decrease as groups mature and are able to operate independently. Groups continue saving and lending together,  giving them an ongoing safety net through their savings and the means to keep growing their businesses.

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Each microfinance programme is based on a model that is designed and operated by our local partners. They know their communities best and, because the model builds sustainable groups, it allows us to move on and start programmes, supporting more communities. Since 2016, as a result of the generosity of our supporters, we have been accelerating the number of programmes we are starting. Visit our website to find out more about our current programmes, including a brand new programme in DR Congo.

Does Microfinance Reduce Poverty?

This blog post was written by our Engagement & Finance Officer, Sasha Watterson.

Over the past decade we have seen hundreds of cases which show the impact of microfinance on poverty. Over a three-year period, our monitoring shows that the clients in our savings-led programmes will have increased their savings fivefold.

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Whilst the savings provide a place to turn during tough times, loans help businesses grow. The members pull their savings together to form loans. At first, these loans are small, generally no more than £150. But as the businesses grow, members save more and the loan fund grows.

There are many ways to reduce poverty, but in the rural areas in which we work, microfinance and development go hand-in-hand. And what’s more, poverty alleviation through microfinance is highly efficient. Over the past decade, every pound donated to our Kenyan programmes has unlocked £12 of economic activity, either in the form of savings or loans.

Over the past ten years, Five Talents supporters have transformed the lives of our clients in a range of ways. The most important effect we see is an increase in dignity; rather than being given a handout each entrepreneur is provided with the tools to lift themselves out of poverty. The benefits of our savings-led microfinance model include:

  • Growing a safety net of savings: Microfinance effectiveness can be measured in financial terms. A central benefit of microfinance is that those who joined the programmes three years ago have grown their savings more than fivefold and each has an average of £133 in their savings account today. It’s important to think about these financial figures in a human context. Our group members typically have no savings when they join and live on less than $2.50 a day so this is a truly significant change. The practical result of this is that events such as drought or illness no longer push households into absolute poverty.
  • Building and expanding business and incomes: The main microfinance benefits are the investments made by members from loans which enable them to establish and grow their small businesses. And this is a long-term impact. Repayment rates in our Embu programme in Kenya, for example, are always above 98%, which shows that members are able to run successful businesses after receiving our training.  
  • Being able to meet basic household needs: Children indirectly benefit as members have the income to invest in their children’s schooling, diets, and improve the quality of the family’s healthcare. As a typical family has 4 dependents, by impacting 22,000 households our donors are supporting around 80,000 children. When we visit our clients, the biggest change mentioned by the majority of members is: ‘Now my children can go to school.’
  • Female empowerment: For Five Talents, the importance of microfinance is also linked to the impact it has on gender relations. Women are empowered to make decisions about how to save and invest their incomes and earn money for themselves, which increases their decision-making power in their households and communities more widely.

Microfinance success is always achieved when the model is designed with the client in mind. Each of these benefits is a result of a long-term focus on the dignity of the people we work with. We've seen this pro-community, long-term view work again and again throughout all of our programmes.

 

Living on the Edge: First Impressions of Aru, Democratic Republic of Congo.

This blog post was written by our CEO, Rachel Lindley upon her return from visiting our new programme starting in the Democratic Republic of Congo (DRC).

Crossing the land border from Uganda into DRC was underwhelming. The border was a piece of rope held by two young men, and as we waited for the inevitable paperwork, the landscape was surprisingly dull. There was none of the usual cross-border trade, bustle and bargaining. Not a single overladen truck, motorbike or even bicycle, no kiosk selling mobile phone top-ups, Coke and sun-bleached biscuits, nothing.

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Passports eventually stamped, we drove off into DRC. The contrast with the Ugandan town we'd just left behind was stark. Behind us, a thriving metropolis, with tarmac roads, men, women and children heading to work and school with all the hustle and bustle of every day life in a busy town. Just a mile away in DRC, life could not be more different. I noticed the silence first. No dust - no traffic apart from bicycles. The tarmac main road from the border was built by one of the gold mining firms, but otherwise the roads are all unmade. There is no electricity except from generators or solar panels, no advertising, no mobile money or airtime kiosks and very few roadside businesses, even the most informal.

People in Aru live on the edge in more ways than one. They are on the edge of DRC, just a few miles from Uganda, and many have fled there when conflict and violence have erupted. Decades of civil war in the region mean communities have experienced hideous atrocities as well as famine and sickness that come from fleeing your land and home. As we write, thousands have fled their homes just 100 miles south of Aru, to escape violent machete attacks, raping and looting. Thousands more risk starvation.

I received a warm welcome in a village in Aru, DRC

Thankfully, Aru itself is currently peaceful, and the communities we met could not have been more welcoming - nor more desperate for our programme to begin. Most NGOs are working in the conflict zones, where the need for disaster relief is urgent. But in Aru, people urgently need a way to boost the local economy, increase the number of small businesses, build some savings in case of emergencies and support their children to go to school.

Our programme will integrate literacy training because so many adults missed out on schooling during the years of civil war, and trauma counselling to help adults and children come to terms with the attrocities they have seen and experienced. Despite the horrors in the past, Aru is a place of hope - living on the edge of opportunity with powerful resources of community solidarity, fertile land and a belief in creating a better future for their children. We're privileged to be part of this journey with them.

Client Story: Sarah from Embu, Kenya

This blog post was written by our Engagement & Finance Officer, Sasha Watterson and a member of staff from the Five Talents Kenya programme, Brooks Anderson

 

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Like many people of Embu county, Sarah never had access to financial institutions or a safe way to save. So when a visiting reverend spoke to her congregation about the Five Talents savings programme and its potential, she gathered her close friends and start a savings group. The group started small, with only five members, slowly building up their savings until eventually, they were able to start loaning. With her first loan, Sarah bought a goat she named Kiama, or “Blessings” so she could use the milk to feed her family and sell to make a little bit of money. Five years later, she continues to save reliably with her friends while paying off her current loan, four times larger than her first. With this loan, Sarah was able to invest in a shop where she sells cornmeal, clothes and other things the community may need. This small store helps ease the trials of the summer months and gives her control over her own personal finances. Her group is still growing, now with over 100 people.

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Kiangazi, meaning the dry season, is especially tough on Kenyan farmers like Sarah and her husband. As with many living in the region, her family mainly produced tea to be sold to any of the government or private collection centers scattered across Embu’s steep hills. But now the months between planting season are a little less trying as her family need not rely solely on their patch of land. She was even able to find relief from the pressures of school fees through the loans she took. Her eldest son, now 27, was able to find a job as an accountant thanks to his mother’s resourcefulness.

Click here to read more of our client stories.

What did our evaluation tell us about our impact for women in East Africa? Part 2

This blog post was written by our Programmes and Systems Manager, Hannah Wichmann.
Five Talents recently conducted an independent evaluation of our work in Kenya to learn more about the impact of our work there.

As we mentioned in last month’s post, women are at the heart of our programmes, in fact over two-thirds of Five Talents’ beneficiaries are female. So during our evaluation finding out as much about how our programmes impact women was critical. We know that in Kenya, just 34% of women have a bank account compared to 50% of men.

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During the evaluation, we visited groups where we asked members to raise their hands if they owned a business. There was a clear trend. Significantly more men raised their hands than women. We then asked the women who didn’t have their hands raised, what their businesses were.

Margaret, one of the members in Nakuru in Kenya told us that whilst she doesn’t have a business, she did borrow a loan to buy chickens and sells their eggs to pay for the school fees of her two grandchildren who she cares for. She then added that she doesn’t think of it as a business because she didn’t think it was big enough. In fact, this was true for many of the women we met - they didn’t recognise themselves as the entrepreneurs and small business owners that they are.

Using the evaluation, we’re going to help women benefit even more from our work. One of our aims is to improve the training our female members receive. We know that small changes such as adapting the language used can make a big difference. By avoiding words such as ‘business’ and instead use terms such as ‘income generating activity’, we will see an even greater impact for the women we support.  

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This will help women, in particular, to continue building on what they already have - small businesses, relationships with each other, a small amount of savings. And we know from over a decade of experience that with this training, these resources can accumulate to a lot. Over £16M in small loans to be exact!

As women have invested these loans, they’ve begun to earn more and in turn, this gives them greater decision making power in the home. Over eighty percent of women told us that relationships in their households had improved since they joined the programme. By helping women to save and grow their businesses, we expect this to grow even further.

If you want to find out about what else we found during the evaluation click here

This evaluation was made possible through the generous support of the London Chamber of Commerce and Industry's Commercial Education Trust. We are extremely grateful to the Trust for their support of this project.

Financial exclusion of women is a global issue but how will our microfinance programmes help? Part 1

This blog post was written by our Engagement & Finance Officer, Sasha Watterson.

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Empowering women through microfinance is at the heart of what we do. 70% of the worlds poor are female. What’s more, studies have found that internationally, women are more ‘financially excluded’ than men. This isn’t just a developing world issue; studies in the US and Europe have shown women are more likely to be financially excluded (less able to take a loan for example) than men [FinMark Trust, 2016].

In 2012 the State of Microcredit Summit Campaign Report found that of microfinances’ reach, 82% of the very poorest were women. Too many women struggle to access financial services - even the most basic, like a safe place to save.

We know that financial exclusion is a major issue for women worldwide; women and girls comprise half of the world’s population but own only 1% of the wealth. [Advocates For Youth].  We see the result of this inequality in the lives of our clients. Before joining our microfinance programmes, many of our female clients were forced to rely on their husbands, fathers, or brothers when they needed money. They had no control over their finances, meaning they had no control over their futures. For women in poverty, microfinance offers an opportunity they have never had before.

But is all this empowerment having an effect? It’s easy to say the work we do is empowering but how empowering? Could we be doing better? All of these questions (and many more!) led to the decision we needed to independently evaluate our programmes - so that’s exactly what we did (and in next month’s post we will tell you what we found!).

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Women’s empowerment through sustainable microfinance is important, not only because it offers a route out of poverty, but also because it addresses problems of inequality. Research has found that women farmers are responsible for 60-80% of food production in low-income countries, but, globally, own less than 20% of agricultural land - and less than 5% of the world’s titled land [Advocates for Youth]. Giving women the chance to build and scale their own businesses is an effective way to deal with this inequality.

Research has also shown that women are more reliable when it comes to repayments, which is important when our clients are borrowing from a communal savings pot!

Providing access to financial services when accompanied by business training, increases women's’ decision-making power in the household and improves their socio-economic status in the community. In essence, for our female clients, it’s all about respect and self-empowerment. In our opinion, women and microfinance are a great combination!

And what’s more, the benefits aren’t limited to the women themselves. Studies have shown that women are more likely to invest extra income on the children’s education. Research has shown that when the mother controls the household’s budget, a child’s chances of survival increases by 20%.  [Journal of Health Communication]. Whenever we ask our clients what difference the programme has made, the answer is normally simple: “now my children can go to school.”

Running through the hills of rural Kenya: the Kericho Impact Marathon 2017

This post was written by a combination of Five Talents staff and marathon runners.

Months of anticipation, long weekend runs and carb loading had brought us here - the start line of the inaugural Five Talents Impact Marathon! Against the beautiful backdrop of the worryingly steep tea plantations, the time had finally come! Running through Kericho with the locals cheering us on (or joining in) and monkeys raiding our water/banana stations was an incredible experience! One of our runners, Mahoo, wrote to us afterwards: 

‘As a novice runner, the Kenya Impact Marathon provided a challenging, but undoubtedly memorable experience. The camaraderie, the laughs, the nerve-racking bus journeys, the never-ending spinach supply, the breath-taking sights over the Rift Valley – all helped to make the week one that I will never forget.

We were so warmly welcomed by the team in Kericho. Seeing the projects and hearing from Trust Group members really cemented my desire to cross the finish line, and support some really great work. I am very proud to say that I ran in the inaugural Five Talents Impact Marathon.’

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But the running was just one part of this adventure. We were delighted to take everyone to visit our savings groups in rural Kericho and see for themselves how Five Talents’ work transforms local communities.  Several of the team had never experienced anything like this and were genuinely inspired;  Jamie reflected:

I found the event so tough - keeping going for 6 hours was in itself a gruelling endurance effort, let alone the totally new terrain and environment. Kenya just takes you in - a week passed so quickly, with a whole lot of standout experiences. Meeting a new savings group and hearing about their plans, and running alongside elite Kenyan athletes rank amongst the best of my time out there.’

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Similarly, Margaret summed it up: ‘I felt privileged and humbled to be given such an amazing welcome... It was an unforgettable life changing experience. I’m still waking every morning in Kenya.’

It was unforgettable for us too. Spending the week in Kenya with so many of our amazing supporters, visiting our fledgling Kericho programme and running the race of a lifetime was definitely a highlight in our year. We brought back some incredible memories and photos, made new friends and raised over £40,000 - so next year we plan to do it all again!

If you or anyone you know would like to join the adventure of a lifetime, register your interest here.

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A Year On From the 2016 Big Give Christmas Appeal: Karamoja

I’m writing this whilst sheltering from torrential rain with two of the new team spearheading our programme in Karamoja - Revd Joseph and Sam. We’re in a church which is almost completely bare; earth walls with holes in for windows, dirt floor, some benches and one table. We’ve also just been joined by two goats who have wisely taken shelter too; the rain is really hammering down onto the tin roof!

We’re in Amudat district, Karamoja region, eastern Uganda, visiting the newest Five Talents programme which was launched earlier this year thanks to your generosity in the 2016 Big Give.

The communities you’re helping here really are isolated. Today I’m visiting a new Trust Group in a village 54 km from Amudat town, along an un-tarmacked road. We didn’t pass a single 4-wheel vehicle on the way here – just some motorbikes, women carrying firewood and water on their heads, herds of goats and cows, a hunter with a bow and arrow, and even some camels shepherded by a small child, kept for their milk.

Aside from the challenges of isolation, life is tough here, especially for women and girls; child marriage, FGM and polygamy are still common. In Pokot culture (the main ethnic group in this part of Karamoja) women are not encouraged to speak in mixed groups. In this Trust Group meeting, the men sit on benches or on the small stools they carry whilst the women sit at the back or on the floor.

 
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Yet despite this, the majority of the Group members are women and as the female Treasurer introduces herself it’s clear that things are already beginning to change for the better. The members of this Trust Group have begun to start their own small businesses – one grandma buys a bit of maize, gets it ground in a mill and then sells it by the mugful from a washing up basin by the roadside. Another sells rice similarly in mugs from a bucket, and another has a tiny kiosk-shop.

These businesses are essential for these families. The grandma tells me the small profits she makes help to cover school fees for some of her grandchildren. But she can only afford to buy stock in the harvest season, when she has some money. During the rest of the year when there is no money to spare, the whole family struggles to afford even enough food to put on the table.

The only banks here are in Moroto town and the public transport fare from Amudat costs around 12 days of day-labourer wages. Clearly, access to any formal financial services is out of the question for these rural communities living on the poverty line.

I’ve only been here in Karamoja for 2 days but already I can see why this Five Talents programme will make such a difference. Our programme will mean members can buy stock and earn a little money all year round. Most keep no business records either, so our training will help them to know which stock is most profitable, and make sure no-one is conning them (this is one of the challenges they identified - sadly it happens all over the world). They will be able to start planning for their futures with the knowledge and resources needed to make their aspirations a reality.

I’m looking at the small children napping on the earth floor of the church in their threadbare clothes, whilst their mothers listen to Sam encouraging them to save little by little, week by week. Most of these young mothers never went to secondary school. It’s incredible to think that some of their children could even go to university from this remote village in Karamoja, now that their mothers have voted to start saving today.  

This is exactly what we should be doing and where we should be doing it. Thank you for making it possible.

This post was written by our Programmes Manager Rachel Lindley whilst on a programme visit.

When Savings and Loans Become Tractors and Schools

Five Talents funded the startup of a new branch in a particularly rural area of Uganda’s Mukono region called Kayunga. This blog was written after a visit to the branch in the summer of 2016.

It’s easy to get an impression of the scale of his vision for the Diocese when you’re sitting round the breakfast table with Bishop James Ssebaggala and his wife (affectionately known as Mama Bishop). He talks about the Diocese starting new schools in some of the poorest rural areas and about training farmers in techniques to increase their yields. But with such limited funds, for years these optimistic ideas remained just that.

 The SACCO provides rural schools with loans for, amongst other things, building classrooms.. 

The SACCO provides rural schools with loans for, amongst other things, building classrooms.. 

This frustration led Bishop James to start the Mudi SACCO, a type of credit co-operative that Five Talents has been supporting for the past year. His vision was that it would act as it’s own micro-economy, enabling the poorest to deposit their savings and borrow small loans whilst also offering larger loans to the rural schools and projects he so desperately wanted to support. Now that the SACCO is in place, schools can borrow loans to invest in (what is often the most basic) infrastructure and repay with interest from the school fees. Not only that, but the lady selling bananas in her village can borrow small loans from the growing fund. At least that’s the idea.

Soon though we’re heading down a long untarmacked road following Daniel, the Loan Officer, who rides a motorbike that Five Talents helped purchase to reach these highly marginalised locations. After about an hour we pull into Destiny Primary School and greeted by over 200 children - quite a change from the usual programme visits we make to small businesses.

The school is very basic. Probably more so than you’re imagining. The earth walls of the three classrooms only reach to hip height with a gap between the mud bricks and the tin roof. The headteacher tells us that the school opened in January in response to the need of the poorest families in the nearby villages who couldn’t afford the transport costs to send their children to the nearest government schools.

But what he really wants to tell us about is the roof. The (fairly unremarkable) roof which was built using a loan borrowed from the SACCO. Without it, the school would never have been able to open. They have already repaid the loan using the school fees and hope to borrow a second loan to finish construction.

The impact of the SACCO for just this one school was quite staggering and a recent independent evaluation noted that access to these kinds of loans had been fundamental in allowing community projects like this to go ahead in the very poorest communities. The SACCO is currently supporting 15 schools and various other projects. It was particularly exciting to see midwifery school and a tractor which local farmers can rent with the help of small loans which are repaid after harvest.

We also often talk about the benefit of working through the local church; the trusted, rural-reaching network it provides. The evaluation of the SACCO also found that, its links with the Church were the primary reason that individual members trusted the organisation. During our visit we also met several women running small businesses - more of what you often hear us talking about. One group of women we met had saved together and borrowed small loans to start a business making mats. As a result, they said one had rebuilt the roof of her deceased son's home and rents the house to earn an income to support her orphaned grandchildren. From another woman, we hear exactly what we hear again and again from our clients: now she is able to send her children to school.

“I used to spend all my excess money but now I run to the SACCO to save it,” says Isabirye Stephen Lowly - a farmer who grows passion fruit and other vegetables

My Visit to South Sudan: Literacy, Blindness, & Hope

A version of this blog was written by Suzanne Schultz Middleton, Five Talents US's Programme Director, and originally appeared on Five Talents USA's website. 


80% of women in South Sudan missed out on education and are not literate, so it was not a surprise that in the community learning circle in Gorom, South Sudan, the three facilitators were all men.

A few years ago, Angelo, Pierensio, and Oliver were tasked with the creation and running of three circles of learners consisting of 32 women and 12 men. Their aim was simple: to improve basic literacy and numeracy. Incredibly, today, all 44 participants have been accredited as literate and numerate.

In 2012, the three literacy circles combined to form a single community Savings and Loan Association. The members voted to call this association "Light". The group has continued to flourish and is fortunate in receiving the support of a local chief, Charles, who has even joined the group himself. 


Left to right: Community facilitators in Gorom, Angelo and Pierensio; Oliver and Charles in the Gorom community meeting; Arrival into Gorom.


Charles' membership demonstrates his support and endorsement. But he’s not just a passive member. In fact, Charles applied for and was granted a loan which he used to open a small shop to supplement his income from charcoal production. In the year following the loan, Charles earned four times the GNI per person for South Sudan. He gave half his profit to his wife to start a peanut paste business and the remainder is used to send each of his nine children to school.

As I was leaving the group, Oliver approached me, thanking us for bringing this training and for not bringing money. He said, "even 1 million SSP (£124,000) would be eaten but this knowledge will stay with us always".

This was powerful testimony to a programme that set out to transform the lives of women, their families, and their communities in South Sudan. We found women and men working together, sharing new knowledge and leadership roles to improve their ability to provide for their families. 

At the end of the meeting I greeted the Pastor and thanked him for letting us meet in the church and for his support for the programme. He also wanted us to know that while he himself was blind, the Gospel was read every Sunday in the church by women from the literacy circles.


At the time of posting, South Sudan is experiencing a shaky ceasefire. Will you support Five Talents' financial inclusion and help move the country towards stability? Donate here.

Programme Update: Big Changes!

 

KENYA & UGANDA WORKSHOP - The Programme Workshop in Kenya went very well - our partners were all very interested in our sessions on in-country fundraising and we also presented a range of new training manuals to begin the process of reviewing all of our business and financial training in East Africa.

Progress was also made on new M&E measures and this week PPI and PPI+ (two systems of measuring our impact, an international standard and a custom one we've developed) went compulsory for all new member registrations at MBF. For the first time ever we'll get a full spectrum of baseline data rather than the samples we've had hitherto. It was also good to meet the representatives from Karamoja, Uganda and Kericho, Kenya where we hope to work in the near future.

 


MBF, Tanzania - On Monday, MBF opened a new branch! It's in Ifupila, near Mafinga. This now makes four MBF branches: Iringa, Mafinga, Morogoro and now Ifupila.

Ifupila is a tea-growing region and most of the clients will be tea-pluckers. There is a strong need in this area as the pluckers do not save year-round. This means they live well in tea season but not the rest of the year. MBF plans to teach them savings and business skills so they can save for off-season and also start side businesses to give year-round income. 
 


Ifupila is only 25km from Mafinga but the community because Ifupila communities were spending large sums on transport to and from Mafinga and really wanted services closer to home - the need was so acute that local leaders donated the building for an MBF office. 

Two staff have been posted there - one is a former IT officer from Iringa who is freed up now that the cloud-based Musoni system is bedded in, and the other is a female intern who has previously been volunteering her time, but who has now been offered a job. The MBF Programme Leader, Japhet Makau, predicts this branch will break even within three months thanks to commission on MKOPA's solar loans and CRDB agency banking, and because the operating costs are very low. 

Japhet is also planning to start a new branch in Dodoma region which will serve 4 dioceses. So, we currently have four branches in three Tanzanian dioceses and could add another four dioceses through the Dodoma branch if that gets going. Mama Bahati Foundation is very definitely spreading her wings. 


To hear more about the specifics of these changes, please feel free to contact the programme team. As always, we ask you to consider signing up to give small amounts on a regular basis. As little as £10 a month can have huge cumulative impacts. 

Trip Notes: Coming Back To Iringa

This was my third visit to Mama Bahati Foundation (MBF) the Five Talents project based in Iringa Tanzania. My last visit was in September 2014 so it was interesting to see how the project has developed over the last 18 months. The intervening period has been a tough one for MBF. As the programme has expanded, we have not been able to fund the project to the extent that they would like.

  Children waiting outside a Trust Group meeting. 

Children waiting outside a Trust Group meeting. 

The trip was the usual round of meeting clients and hearing their stories; as well as hearing from the leadership about the plans and budgets for the future. In addition, two of our team were also looking at the possibility of raising funds via some non-traditional channels.

I was interested that some of the centres which had been closed for a period and then reopened were now operating with renewed vigour. Several of the clients mentioned that although there were other MFIs working in the area, once MBF was able to restart they preferred to come back to them. We heard from a client who told us that although she had come across MBF at her local church, it was the word on the street that had persuaded her to come along and take a loan. I found both these aspects very encouraging as they show the high regard that clients have for MBF and the loan officers.

At one of the meetings I attended it was a great privilege to hear one of the loan officers giving business advice about increasing your client base and how to market your business. I’m sure that it was far more effective to be given by the loan officer rather than one of the visitors via a translation. Another highlight of the centre visits was seeing loans being issued through M-Pesa and hearing mobiles buzzing and ringing at the end of the meeting.

  A member of the MBF staff with a Musoni tablets

A member of the MBF staff with a Musoni tablets

It was great to hear about the plans that MBF has for expansion with another branch office to be opened in Morogoro. There was also talk of expanding the work in other dioceses of Tanzania - with the caveat that it would only be possible with additional funds, the right people to operate the new offices, and robust systems to ensure that the new operation can function in a sound manner. There were also exciting plans for additional services to be provided such as the solar loans.

Currently MBF is very fortunate to have Japhet Makau as the Chief Executive along with Donald Mtetemela; who as the founder and now chair of the trustees have guided MBF to its current position. However, MBF needs to be able to retain the quality of loan officers that they currently have and to be able to train up members of staff to fill the new positions that are emerging as the work expands. It was interesting to note that at the time of our visit there was only one female loan officer and Japhet acknowledges that they want to recruit additional women so as to improve the balance in this area.

One area, which I think, still needs to addressed is how does MBF continue to look out for the rural poor who have no other access to financial services or credit. At the time of my initial visit in 2009, it was envisaged that after a certain number of successful loan cycles clients would be able to graduate to an MFI which was prepared to loan to established businesses.

However it appears that clients are reluctant to move on and other MFI lenders or banks are unwilling to take on the clients. This puts an increasing stress on the funds that MBF has available and makes it increasingly difficult to continue to focus on the core clientele, the rural poor. Although this is a structural problem within the Tanzanian MFI/banking sector, it is to the credit of both Japhet and his loan officers that they are aware of this problem and are seeking ways to maintain the focus on the rural poor while also seeking to meet the needs of larger existing clients.

All in all it was a very enjoyable trip and was well organised by both Five Talents and MBF in Tanzania. I would thoroughly recommend any supporter who has the time to make one of these visits to do so. You will learn so much about the practicalities faced by the clients and come away with a better understanding of what both Five Talents and the project you visit are seeking to achieve. However when travelling in Africa you do have to be prepared for the unexpected despite how well you prepare for the trip beforehand.


Martin Williamson is a long-term supporter and advocate who has visited our programmes on a number of occasions. Inspired? Click here to read about our upcoming trips or follow this link to read about our advocates network

Life Outside the Forest: The Journey of Petronie & the Batwa of Burundi

During 2015, Burundi witnessed boycotted presidential elections, violent protests, and an attempted military coup.After the announcement by Pierre Nkurunziza that he would run for a controversial third term, gunfire and grenade attacks by armed groups continued to occur frequently. 

Throughout this period, while embassies were withdrawing personnel and the tourism industry was plummeting, Five Talents USA stood with the local community. During 2015, we added 150 new savings groups, and reached over 25,000 members and 100,000 beneficiaries with a savings safety net.


Changing Times For A Nomadic Tribe

The Batwa are an ancient people who inhabited the forests around the great lakes of equatorial Africa. A semi-nomadic pygmy tribe, in many ways they are the guardians of the forests, known for their great skill in hunting and dancing. For over four thousand years they lived in trees and caves, gathering honey, leaves, and fruits of the forest and hunting with poison tipped arrows.
 


Over just the past fifty years, the Batwa have been evicted from the forests of Uganda, Rwanda, and Burundi. They've been displaced in mass in order to support the creation of national parks and the establishment of tea plantations and other farms. As an ethnic minority, life outside the forest has been hard. Batwa were discriminated against by other tribes and denied access to education and basic government services. During the Rwandan genocide, up to 30% of the Batwa were killed by the Interhamwe.

Batwa families lacked economic or agricultural skills and many succumbed to starvation or disease. Most became destitute. Many died. Others became beggars or hired themselves out as day laborers. In some areas, women began to sell traditional clay cooking pots to survive. As a result, pottery became a key symbol of modern Batwa identity.

Working with local church partners, Five Talents US has made an intentional effort to reach Batwa families and to help them integrate into the local church and community. Financial inclusion and peace-building are especially important for Five Talents US programs in Burundi.


Petronie's story

Petronie (pictured) is a mother of six children and a member of the Batwa in Burundi.

"Since I am from a marginalised ethnic group", she says, "I was isolated and discriminated in the community... My life was very bad because it was very difficult to be with other persons, either Hutu or Tutsi. We were obliged to remain only with Batwa."

Petronie says she was especially discriminated against because her family had "no means to wear clean clothes or buy sufficient food." Like many Batwa, they were forced to rely on begging. Alongside her husband, Petronie began to gather clay from a local marsh and make cooking pots. They hoped that the pottery business would provide a sufficient income to support their family. Petronie had few clients, however, and their income was never enough. Most people "no longer use traditional cooking pots made out of clay", she explains.

One day, Petronie received an unexpected invitation to join other low-income entrepreneurs from her community in a Five Talents US savings group. With some apprehension she accepted and began meeting on a weekly basis at a local church with women and men from other tribes who welcomed her. They shared their stories and learned business skills. Group members pooled their meager resources to create a savings and loan fund for business development. Today Petronie counts her savings group members as close friends.

The savings group became "an opportunity to welcome everyone in our families. We work together, save money and if one falls sick, we assist one another by providing food, working in her gardens and contribute to the medical bills... Today we know each other and we are united in Jesus name and we work together", Petronie says.

Before joining the program her main aim was to provide food and clothes for her children. Now Petronie has learned to save and plan for the future. With the help of small loans from her group, Petronie and her husband developed a business raising pigs and goats. They buy and sell livestock and use the profits to take their children to school and provide for their household needs. In the future, Petronie has plans to buy land and begin using modern farming techniques to increase production. She also intends to buy dairy cows and is saving to build a permanent home for her family.

Petronie says that members of the Batwa community were "very surprised" when she joined a group with Hutu and Tutsi. Now Petronie has become a respected leader in her community and has helped other Batwa join mixed savings groups.

"Since I joined the program, we do income generating activities together with other community members from different ethnic groups."

Petronie has grown spiritually and is often in the church. She enjoys her freedom and can now "live together peacefully with Bahutu and Batutsi. The [program] has helped me to become leader in the community. . .Yes, a great transformation took place in my life."


“Let us run with endurance the race that is set before us” (Hebrews 12:1)

Marathon running is not always the most dignified of sports (I’ll spare you the details of anti-chafing cream or the dreaded runners’ trots) so it’s ironic that it’s that word, dignity, which got me thinking about some parallels between the marathon and the work of Five Talents. I’ve just got back from running the Boston Marathon, and when you’re running that far there’s plenty of time for random musings, so humour me with this chain of thought.

First, dignity in the face of disability. There were 43 wheelchair users, 45 mobility impaired and 39 visually impaired runners on the start-line in Boston. I saw several blind runners with guides on the course as well as Rick Hoyt of “Team Hoyt.” Rick Hoyt was born in 1962 and diagnosed as a spastic quadriplegic with cerebral palsy. In 1977, his father pushed him in a wheelchair over a 5-mile sponsored run. Rick loved it, telling his dad (he can move his head to select letters from the alphabet to communicate) that he didn’t feel disabled when they were running. Since 1977, “Team Hoyt” has competed in 1,116 races including 255 triathlons and 72 marathons. Equally moving was seeing Patrick Downes and Adrianne Haslet, single and double amputees respectively who had lost limbs in the 2013 Boston bombings and returned this year determined to run with prostheses.

They reminded me of the slogan I’ve often seen in Kenya: ‘Disability is not inability.’ It certainly is not, as all of these runners proved. Their dignity and perseverance also reminded me of some of the Five Talents members we’ve seen facing their challenges with equal grit; some of you have met Sebastian, the widowed cobbler in Embu who, thanks to our programme, makes and sells shoes in the market in Embu. He suffered polio as a child and can’t walk but that hasn’t stopped him setting up a small business to support his 4 children. When we last met him, he was saving to buy a wheelchair. Whether the result of disease, accident or terrorism, the strength, spirit and dignity that every Rick, Patrick, Adrianne or Sebastian brings is genuinely humbling.
 

Secondly, the role of women. The 2016 Boston Marathon was a historic anniversary for women. The Boston Marathon was first run in 1897. In 1915, the first women applied to take part and were refused. In 1966, Bobbi Gibb (pictured) applied and was told women are physiologically incapable of running 26.2m. As she regularly ran further in training, she showed up in her brother's shorts and a big hoodie and ran the course anyway. The men around her, when they realised she was a she, told her she had as much right as them to run and cheered her on and she finished the course ahead of two-thirds of them, but she was denied an official finish time or place and only got her medal 30 years later. She broke the ground, though, and in 1972 women were officially accepted into the race. This year, 50 years after Bobbi's 'illegal' run, almost half of the runners were women. Of course, there is still a lot worse discrimination against women; I think of the young women in our savings groups who have been through FGM and early forced marriage, the women globally who aren’t allowed to vote, go to school, own property or open a bank account. A lot has changed over the last 50 years but we need to keep campaigning for much more change over the next 50.

Thirdly, generosity and welcome to strangers. Supporters lining the streets were giving out water, ice, slices of orange and jelly babies, but even more welcome was their incredible cheering. I often find marathons moving. Partly it’s the sight of people pushing to their limits after months of training to raise funds for causes close to their hearts that gets me - I’m sure you’ve seen runners in T-shirts saying ‘Running to raise funds for cancer research, in memory of mum’ and similar. But it’s also the way complete strangers call your name and urge you on and tell you how well you’re doing and that you can keep going - the Bostonian phrase I heard again and again was ‘You’ve got this’ and the people shouting it really meant it (though I liked the placards some were waving saying ‘If Trump can run, so can you’ and ‘Run like Ted Cruz is behind you’ nearly as much!).

After I’d crossed the finishing line and left the runners’ enclosure, I collapsed on the nearest bit of pavement to recover for a few minutes. I soon began shivering (not uncommon after a hard race) but the half mile walk back to our hotel, a shower, and some dry clothes seemed too far to manage straight away. A lady standing nearby waiting for her runner to emerge came over and wrapped her enormous scarf round me and told me to keep it.

These are people you’ve never met and won’t ever meet again, people who might cut you up at a traffic light or people you’d push past on the tube/subway on an ordinary day - and yet on marathon day everyone seems to be in a good mood, united behind one goal and ready to urge and support everyone else. There aren’t many occasions in our fast-paced lives when we take time to encourage others, welcome strangers wholeheartedly, do simple acts of kindness or bond over a shared human experience. I’m not going to romanticise our savings groups - of course, our members are as busy (if not busier) and as human as the rest of us - but they perhaps do have more of the ‘marathon spirit’ in their everyday lives than us. The good humour, community solidarity and generosity of heart and deed I felt in Boston did remind me of several Trust Groups meetings and members I’ve visited, as did the warm welcome and hospitality to strangers. It’s not something I witness very often in London.

Escaping Poverty, War, and Disease

Kondok has experienced much suffering and hardship in her life.

Growing up on the border of Unity State in South Sudan she witnessed frequent cattle raids and attacks on her local village. Amidst poverty and harsh conditions, Kondok became the third wife to a polygamous elder. She lost her first four children due to lack of medical treatment.

"I just lost them because whenever they became sick, I could not have any money to take them to towns where the hospitals are for treatment", she said wiping tears from her eyes.

In 2012, Kondok fled her home with her only surviving daughter, escaping an attack that killed many of her neighbors. Leaving everything behind, Kondok and her daughter ran for their lives and eventually came to a settlement camp in Kuajok, the capital of Warrap State. Like other internally displaced persons they were given plastic sheets, blankets, and a small food ration.

It was there that she met an extension worker named Ajak Simon who encouraged her and other women to form a small fellowship and savings group. The Dong Baai Wei Savings group began in March 2013.

Contributing to the group savings was a great challenge as Kondok could barely make $1 a day to buy local bread for her and her little daughter. However with a lot of encouragement, Kondek became convinced that she could save 50 cents a week. She also began to fetch fire wood to sell in town and was able to save 650 South Sudanese pounds ($36 USD) by the end of Oct. 2014.The officer then advised her and other members of the group to register with the newly opened South Sudan Community Bank.

After three months, Kondok applied for her first loan in the amount of 500 South Sudanese pound ($30) and was trained with her other group members on choosing a good business. Kondok decided to farm and sell vegetables. She rented a small garden and planted various types of vegetable seeds that were donated to her group. After three months Kondok's first vegetables reached Kuajok market. She happily sold them to people in the town and neighboring villages, using new business skills she learned in her savings group.

"My vegetables are always the first to be sold and finished as I have to clean them well and I am a good friend to most of the ladies coming to town here to buy vegetables everyday".

When asked whether joining the South Sudan Community Bank program has helped transform her life, Kondok said.

"I am now very happy. I am able to feed my family from my business, which I started through this program. I feed myself and my little daughter, Arek. I pay for my house rent from my business; I pay for school fees for my daughter, I always borrow money from our community bank to do my business and from my profit I buy clothes for myself and my daughter. Last month she was sick with malaria and I took her to hospital. I would not have managed to take her to hospital, maybe I could have lost her like the other four of my children that I lost before if I had not joined this program."

Kondok continues to watch her daughter grow and is working to build a brighter future for their family.  As her business expands, Kondok intends to buy a piece of land in Kuajok town in the near future.

Help more women escape poverty, war, and disease in counties like South Sudan. Learn how you can make a gift to Five Talents today.

Gift Aid Laws & Dividends

A tax hike is about to hit some people who give to charity, following new rules for dividends starting this April. 

From 6 April 2016 individuals with predominantly dividend income who make Gift Aid donations could be unintentionally penalised through the scrapping of the dividend tax credit.

Gift aid relief is available to those who pay enough tax to cover the basic rate on a grossed up donation (e.g. £20 UK tax for a cash donation of £80). Donations are treated as being made net of tax (the taxpayer effectively withholds the 20%), but to retain that relief donors must have paid an equivalent amount in tax or they will be liable to HM Revenue & Customs for the shortfall.

Which means that whilst an individual currently in receipt of mainly dividends and who makes Gift Aid donations has their basic rate tax taken care of, from April no such tax will have been paid and the tax office could pursue them for the arrears.
 

Gift Aid tax trap

This looming tax trap has gone largely unnoticed up to now, but with the new dividends tax regime approaching and the government publishing more details, concerns are being raised that donors with little income other than dividends will lose out.
 

Those most affected

The new dividend regime from April comes with a £5,000 Dividend Tax Allowance, so dividend income up to this limit will be tax free. Also from April an individual will have a personal allowance worth £11,000.

So a person can earn up to £16,000 in 2016/17 and pay no tax at all. Any Gift Aid donations made by such a person will therefore land them with a tax bill. Pensioners with just a state pension and a small amount of dividend income will be particularly affected.

Conversely, an individual receiving large amounts in dividends but with minimal other income and who makes sizeable Gift Aid donations, could find his tax bill increasing substantially to cover the tax withheld on the donations.
 


A person receives £500,000 in dividends and makes Gift Aid donations of £320,000 net (tax withheld is 20/80 (£80,000) = gross donation of £400,000). His tax bill in 2015/16 will be just over £28,000.
 
But with the same figures for 2016/17, his tax bill would be less than the tax withheld on the Gift Aid donation, which is not allowed, so his tax liability will rise to the £80,000 withheld – an effective increase in his tax liability year-on-year of 185 per cent!

Action required

To avoid an unwanted tax bill, donors caught by the change will need to ensure they withdraw any Gift Aid declarations they have made. Some may not wish the charity to lose out on its valuable tax relief from the government and could choose to make up the shortfall themselves.


These changes will not affect the vast majority of our donors, but if they do please contact us so that we can amend your Gift Aid status on our database.

First Time In Kenya, First Time In Africa..

This post was written in the early hours of the morning by the Director of Operations for Five Talents after a flight back from Kenya. 

Although it has only been five days since I left London, as I sit in a coffee shop reflecting on my experience and watching the dawn over Blackfriars Bridge, I already know that this trip has crystallised why I am prepared to pour every ounce of my effort into the work that we do.

I knew Kitui was remote. I knew that the area of Kenya suffered from all sorts of social issues, including FGM. I knew there was no water or electricity and that the people were living a hand-to-mouth existence. What’s more, I work alongside people who have worked in these areas for years, who have explained why we do what we do. But nothing could have prepared me for what I experienced personally.
 


On the fourth day, we travelled for three hours across very challenging terrain. An uncomfortable trip, but a pathetic one in comparison to the journeys the people we met had made, the majority of whom had walked for the same length of time in searing heat to meet us. And it was they who thanked us for coming to meet them.

I felt a complete fraud.

That single day is the most humbling I have ever experienced in my 60 years on this planet. I know it will never be challenged. I will see the same again – I am sure of that, sadly – but the first encounter is always the most powerful. It has made me determined to be there in the Kitui district when they open their Community Bank. It may take a few years but they will get there!

One man stood up and said something, in Kikamba, that had his peers and our programme team in stitches. He said that they didn’t know how to do much other than scrape a living through growing crops, rearing animals, and stealing! They wanted an alternative way of living. They knew they without the means to take their produce to market, they were being ripped off by middle men. They also knew that if they had access to water and power life would change dramatically.

Agnes, one of the group’s trustees, spoke passionately about how she wanted to empower the women and, in some ways, more importantly, the young girls so that they had a choice. Currently, they must look after the house, fetch the water and tend the herd. If it’s too much for the mother then the older children take on some of the tasks. The group had managed to save 150,000 Ksh and, as a result of this diligence, the first cycle of Five Talents ‘loans’ were to be delivered soon in the shape of solar panels. That would be a start, albeit a small one, but from there other incremental improvements would happen. As we travelled on, our programme team spoke about how they planned to put in a large water tank next to the church that would collect the rainwater – of which there was sufficient as Kitui is high up in the mountains.

My gut reaction was to find some money to help buy a water tank for a family. However, it felt like that was putting a single sandbag beside a river bank to stop the impending flash flood. I also know that for every “Kitui” there is another waiting – either in Kenya or somewhere else in the world. The enormity of the task we are pledged to eradicate is daunting but somehow it has steeled me. I feel more driven than ever – and I was pretty driven before; just ask any one of the hundreds of individuals I have met with since joining Five Talents!


Sue Johns is the Director of Operations for Five Talents UK. If you'd like to discuss anything that appears in this piece, how you can get involved, or to talk about coming on a trip yourself, please get in touch with the team at info@fivetalents.org.uk

March 2016: The Launch of Five Talents Kenya

This month saw the launch of Five Talents Kenya, an umbrella organisation that will allow for continued growth of savings and financial inclusion programs in Kenya and demonstrates a commitment to local leadership and sustainable development.

I was really impressed by the birth of FT Kenya and the presence of many local witnesses who were able to give warmth to our international partners.To all of you who have made us who we are and who continue to reach out to other needy groups in our three continents in the spirit of the Great Commission we say thank you very much.

                                                 -
Ret. Bishop Gideon Githaiga of Thika Diocese

The new organisation will allow for greater streamlining, oversight, and growth. Five Talents Kenya will also facilitate development of strategic partnerships with a wider group of international NGOs.