At MicroLoan Foundation we are committed to monitoring our activities and progress towards social and economic goals for our clients. The data we capture helps to not only measure the effectiveness of our work, but also to develop and adapt our products and services to continually improve to help our clients succeed.
Charlene Lui, from the department of Social and Political Sciences at the University of Edinburgh, travelled to visit our work in Malawi to conduct research for her dissertation on microfinance. We wanted to share her findings with you so you can gain a better insight into our clients’ journeys and the impact our work is having on their lives.
The difference a loan makes to our clients’ businesses
MicroLoan’s mission is to give those living in poverty the opportunity and skills to work their way out of poverty. We support women to start businesses that will increase their household income and enable them to provide for their families. Over 80% of the clients Charlene interviewed reported a positive increase in weekly sales and profits after joining MicroLoan. As many of our clients lived on just £1 a day before receiving a loan, this increase is the difference between the family going hungry and being able to afford to eat.
We are very proud to create a sustainable difference that is changing this. We often refer to MicroLoan as giving hope not handouts. This is because we want to make a lasting difference to our clients’ lives. The ongoing support we provide goes beyond just the loan provision. Women complete eight training modules in preparation for receiving their first loan. These teach basic business principles and how to manage their money. Training sessions continue fortnightly, so we can monitor a client’s progress and identify issues where they may need support.
In her research, Charlene found that clients showed an active awareness of business competition and were better able to understand and respond to customers’ needs and demands. The more we equip women in business practice, the better prepared they will be to deal with the ups and downs of running a business and on how to make it a success.
Nearly three quarters of the women Charlene interviewed said they were extremely confident in the success of their business, and 94% were able to put aside savings. Because the majority of our clients lived below the poverty line before joining MicroLoan, they have not previously had any form of financial security. Our LTOs encourage the women to make regular savings so that they can gain this security and are armed to deal with any adverse circumstances. This safety net that they build can relieve the pressure of bad harvests or taking in additional family members or orphans after the death of a relative.
The difference a loan makes to our clients’ wellbeing
Most of our clients have never experienced financial independence before. But with MicroLoan’s support, 93% of those Charlene spoke to said they felt more self-reliant. The difference this makes to our clients’ confidence and self-worth is huge. In the countries we work in, women are often disadvantaged by local culture and traditions, including poor access to education and the pressure of being the primary carer.
The difference a loan makes to our clients’ families
The businesses our female entrepreneurs run bring real improvements at home as well. With their increased income, our women’s financial worries are reduced. Many of them have been able to put money aside to make improvements to their houses. Three quarters of the women Charlene interviewed had improved their living standards. This gives their children safer and more comfortable homes to grow up in. The business skills that MicroLoan helps our clients to develop also help make managing the household finances simpler.
Education is one of the key mechanisms to break the cycle of poverty. For many of our clients, being able to afford school fees and the associated costs, such as books and uniforms, was not possible before they started working with MicroLoan. With the household budget so tight, children are often forced to leave school to contribute to the family income. Positively, nearly every school-going age child of the women Charlene spoke to was attending school. This gives them access to vital education for a brighter future.
Where can MicroLoan improve?
Meeting the needs of our clients is our top priority. Conducting research helps us identify the areas where we can do this better.
Many of our clients have little to no business or financial management experience, and our training prepares them for this. Business accounting, such as calculating sales, profits and expenditure, can still pose a challenge, though, particularly as many of our clients did not receive much education. Of the women interviewed, 15% received no formal education at all and a further 61% only went to primary school. Through adapting our training sessions to focus more on business accounting, we can increase our clients confidence in this area.
“The evidence from MicroLoan Foundation’s clients has illustrated that access to credit is highly valuable in supporting livelihoods and in improving the quality of living for the poor.”
– Charlene Lui, University of Edinburgh