by Jeanne Crump, Social Performance Intern
The microfinance community has long been asking the question: Is microfinance working? To answer the question succinctly: No. Data has shown that access to microloans alone does not lead to a substantial increase in annual income for clients. But when loans are combined and offered with Microcredit Plus services, there are positive and transformative results.
Friendship Bridge’s (FB) Microcredit Plus program provides small business loans and basic education based on a group lending model in which clients form Trust Banks, ranging in size from 7-30 members, co-guaranteeing each other’s loans. Because of our long-term relationship with clients, we’re able to offer specific products that meet their needs – such as our Mobile Health Services program that provides preventive and persistent health education and screenings and our Credisalud project which provides our clients with parallel loans to purchase ventilating stoves. Results from our Credisalud project showed not only an improvement in our client’s health from the replacement of wood burning stoves, but also a 50% savings in fuel costs each month.
In 2014, our clients logged 201,349 hours of non-formal training, which included monthly trainings on topics ranging from health to self-esteem to business management. In 2012 we introduced the Advanced Education Program in response to a desire for additional skillsets from our clients. This program offers technical and advanced business training – including learning how to produce new and high quality products, critical business and financial skills, and best practices in marketing their products. Courses include, among others, pastry making, canning and preserving, candle making, sausage making, floristry, and soap/shampoo making. Friendship Bridge covers the cost of the training and arranges all logistics and transportation to the facility.
Education has proven to be the true catalyst in our clients’ progress. We have found it is fundamental to helping clients gain empowerment and achieve financial stability. A study conducted by practitioner and researcher Chris Dunford for the Freedom From Hunger Evidence Project found: “To impact household poverty levels, the program must include integration with nonfinancial services, such as immediately useful, basic business management education and linkages to suppliers and markets.”
Yet, measuring outcomes and results of Plus services may be as equally important as providing them. In 2011, Friendship Bridge began implementing a comprehensive monitoring and evaluation program that has provided insights into our client’s performance and program effectiveness. This formalization of Social Performance Management (SPM) includes ongoing robust data collection systems and is integrated with our daily operations. SPM is a management system that sets clear social objectives, monitors and assesses progress toward achieving those objectives, and uses the information to improve overall performance toward achieving our mission.
Measuring social impact has provided us with data allowing us to see positive association between the number of loan cycles a client has with FB and her poverty likelihood. We have also seen stability or improvement in economic well-being in a sample of clients.
We discovered the key to most significant advances was social empowerment. Social empowerment manifests through self-esteem, increased opportunity, and self-actualization – having a vision for the future and a belief one can achieve it.
Empowerment also leads to the desire and will to learn new skills and abilities, increasing a woman’s support network and improving her health. In a recent Huffington Post article by Rosario Perez, President and Chief Executive of Pro Mujer, Perez states, “Women want more than a mere transaction. They seek a relationship based on mutual trust and respect that recognizes their capabilities and supports them on their journey towards greater agency and empowerment.”
Our microcredit services allow our clients to expand an existing small business or start a new one, keep children in school, and provide opportunities for a healthier lifestyle. It is our Microcredit Plus services that allow our clients to grow, learn, and develop skillsets for transformative, impactful life changes.