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The Secret Sauce

“Poverty Bye Bye!” is what a beneficiary said to me. Here is the secret sauce for micro-loans that can and has helped many escape poverty.

The first step will surprise you. In a previous post I said you don’t want to be FOR someone you want to be WITH them. Dedicated and motivated volunteers living in the community is the first step. If you miss the first step – guaranteed failure. These volunteers live in the community, know the people and have a dedication and passion to help those in need. They are often spiritually motivated as man is more than a physical being. There is no material benefit for the volunteer just the satisfaction of helping others and seeing them succeed. The volunteer scours the community looking for those in greatest need and having the capacity to start a small business. 


Step Two Once the volunteer has identified and screened 10 to 20 beneficiaries he/she forms them into a self-help group. In our experience co-ops seldom work. We have had 100% success with self-help groups. Part of the screening process is having the beneficiary find a guarantor for their loan. This ensures the person is honest with a good work ethic if they have someone that will be a guarantor for them.


Step Three the Self Help Group is given training on finances, how to run and market a business, setting up savings accounts and how to run a self help group. They are told that if one member fails to pay back a loan or fails to contribute to savings- the whole group becomes ineligible for the next level of loan. This motivates them to help each other.


Step four is to meet weekly as a self help group with the volunteer as the coach. The volunteer will collect and track the loan repayments and their contributions to the savings account. They help each other with their business, meet weekly with their coach/volunteer and after 10 months have paid back the loan.


This repeats itself 4 times with each time qualifying for a larger and larger loan. By the 4th time many will have multiple businesses operating and a steady stream of income. They also graduate by getting the savings they have been contributing to which is substantial. It all starts, however with dedicated volunteers living in the community and coaching those in their small businesses. In Bahirdar there are 17 kebeles, (wards for Canadians), There is a volunteer for each kebele. There has been 100% success and repayment as far as I know unless someone has died. Three cheers to the volunteers and their sacrifice for the sake of others!!!

-Bob Black

Executive Director

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