Out of poverty with an entrepreneural spirit


The farmers had suffered a bad harvest and their families were likely to die of hunger. But the village mayor had an idea. What if the more prosperous farmers were to help the needy families back onto their feet with loans? And so it came to pass: the poor received food for IOUs at a low interest rate and they were able to buy new seeds. The "Brodverein", founded in 1846, was the first step towards establishing modern cooperative banking associations – which were originally nothing more than self-help organisations. Today they are inextricably linked the name of the mayor: Friedrich Wilhelm Raiffeisen.

Prior to founding the "Brodverein" the farmers of Weyerbusch were only able to borrow money at an extortionate rate of interest – and that is still the case in rural Ethiopia. Farmers who borrow the equivalent of € 50 from local lenders must often pay back € 100 after two months. There are no branch banks in Ethiopian villages, and the banks in the towns normally refuse to allow the penniless villagers to open an account or borrow money. Even those with an entrepreneurial spirit have no chance of lifting themselves out of poverty. They lack the starting capital needed to unfold the full potential of any business proposal.

Promoting and challenging

In this sheer hopeless situation for potential entrepreneurs an outside impulse is needed, such as that of Menschen für Menschen according to the principle of "promoting and challenging". Just as Raiffeisen once did, the employees of Ethiopia Aid encourage the village women to form credit cooperatives. First of all, to demonstrate their perseverance, they must save small amounts of money every month for a year. Then the women, none of whom have ever attended school, participate in courses held by Menschen für Menschen, where they learn business basics. Only then do they receive their first loan of 2,000 Birr (about € 110).

The business models of the small businesswomen, which for lack of alternatives are mostly related to agricultural production, demonstrate that creativity is needed to earn money. One borrower buys an ox and rents it out for ploughing. Another buys a plastic barrel and barley to brew a local beer and open up a tavern. Five women get together to buy a diesel-powered mill in which the local farmers are charged a fee to have their grain milled.

Starting aid for a better life

Shop owner Johara tells her story with pride and wide open eyes – not to be taken for granted in rural Ethiopia. “The traditional concept of the women’s role is to rear children and do menial chores,” Almaz Böhm explains. "Many of them identify with this role, and they lack any form of self-confidence." But as long as the commitment of women is suppressed, it will hardly be possible to eliminate poverty.

"That’s why Menschen für Menschen consciously gives the loans to women, to strengthen their role in society," the Executive Chairwoman of the Foundation stresses. To date about 15,000 women have received this "starting aid for a better life". Like Johara, almost all borrowers manage to repay their loan with interest within two years. At about 7.5% per year the latter conforms to the Ethiopian government’s interest regulations – nothing compared to the usury of private moneylenders.

Menschen für Menschen does not require repayment of the initial loan. It remains in the cooperative as capital to fund further loans to its members. A members’ board decides on the amount and priority of new loans, and the experts from Menschen für Menschen are available for advice. The aim is for Ethiopia Aid to withdraw from this model of "circulating group loans" and allow the cooperatives to continue – in line with the self-help approach taken by cooperative founder Raiffeisen. 150 years after the first "Brodverein" his guiding principle is still relevant to the work of Menschen für Menschen in general: "What one person can’t achieve, many of them can."


"The great success of our loan programme is attributable to the well-structured process and clear rules. The cooperatives are subdivided into groups of five women. Formally the loans are not granted to individuals, but to these groups. If one woman fails to repay her loan, the whole group is liable. This social control means that the repayment rate is 99.9%."


Wondemu Weldemeskel, Head of the small loan programme of ethiopia aid in the Illubabor project area

"Der große Erfolg unseres Kredit-programms liegt auch daran, dass wir den Ablauf gut strukturiert und klare Regeln aufgestellt haben. So werden die Genossenschaften in Gruppen von je fünf Frauen aufgeteilt. Formal werden die Kredite nicht an Einzelne vergeben, sondern an diese Gruppen. Zahlt eine einzelne Frau nicht zurück, haftet die Gruppe. Durch diese soziale Kontrolle liegen die Rückzahlungsquoten bei 99,9 Prozent."

Wondemu Weldemeskel, Leiter des Kleinkreditprogramms der Äthiopienhilfe im Projektegebiet Illubabor


CHF

Beneficiary:
Donations account:
Account Number 18180018
Bank Code 701 500 00
BIC SSKMDEMM
IBAN DE64701500000018180018
Donations account:
Account Number 18180018
Bank Code 701 500 00
BIC SSKMDEMM
IBAN DE64701500000018180018
Spendenkonto:
Postkonto 90-700000-4

Stiftung Menschen für Menschen Karlheinz Böhms Äthiopienhilfe, 8002 Zürich

IBAN-Code:
CH97 0900 0000 9070 0000 4
BIC SSKMDEMM
IBAN DE64701500000018180018
Out of poverty with an entrepreneural spirit