Micro Loans For Women Impacted by HIV/AIDS, Zambia

This project report is a submission to GlobalGiving’s 2017 Fail Forward Contest, where organizations are asked to share a story of when they tried something new that didn’t go as planned and how they learned from it. Enjoy!’

A Story About Failure

This report is different from others as it shares a story about a failure. Power of Love’s micro loans program provides business training and small loans to women impacted and/or infected by HIV and AIDS in the community of Matero in Zambia. In 2016, we made modifications to our micro loans program with the goal of achieving partial financial sustainability for the program. However, we had to abandon the modifications after trying for a year.

About our Micro Loans Program

Vision and Goals: The vision for this program is poverty alleviation, self-reliance, and social empowerment for vulnerable women impacted by HIV. The goal of our micro loans program is to: (i) equip women with the tools they need to run a successful business, (ii) create conditions for women to be socially empowered, and (iii) enable women to gather enough capital and savings so they continue to operate a profitable business even after graduating from the program.

Impact: As with most micro loans programs, our program has been successful in enabling loan recipients to have a modest source of income that helps pay for food, medicines, rent, and school expenses. More successful loan recipients open bank accounts and some extend their homes for rental income. In many cases, the women build relationships of mutual support with other women, male members of the family start helping run the business, and successful loan recipients become role models/mentors for others in the community. This implies that loan recipients are changing the established cultural norms and are on the path to self-reliance. We attribute these successes to the fact that we have gained the trust of the community, and the provision of diverse and frequent trainings during the loan repayment period.

A Novel Approach and Rationale

Since we have been embedded in the community for the last 10 years, we envisioned that this was the right time to work toward partial financial sustainability for our micro loans program. To achieve this goal, we planned on increasing the loan size and interest rate for 50 qualified women entrepreneurs. The higher interest earnings would help defray some of the administrative costs of running the program.

Project Design and Implementation: Given below is the project design and its proposed implementation in two phases.  Phase 1: This involves two levels of training for women who could benefit from larger loans. 

Training Part 1: This part of the training is new for our micro loans program and has never been done before. A group of 10 women who had graduated successfully were encouraged to form a club to mentor potential larger loan recipients. Our plan was that aspirants for larger loans will be mentored and trained by the successful graduates for 3-4 months. Our expectation was that mentors would meet trainees at least once every two weeks for 3-4 months. During this time, trainees will shadow/observe the mentors at their place of business to learn about the opportunities and challenges of running a business.  

Training Part 2: On completion of the first part of training, potential loan recipients will undergo a four-day business training to learn basic business principles and concepts. This training is an essential part of our loans program and has been provided to all loan recipients since inception of this program. 

Phase 2: Women who have completed both parts of the training will be provided with loans in the range of $400-450 and with an interest rate of 20% as compared to the current loan size of $110-125 with an interest rate of 10%. 

What we Learnt: Our team on the ground, spent a considerable amount of time working with mentors and encouraging them to meet and train potential loan recipients regularly. However, mentors and trainees met only 3-4 times over a period of six months. This was disappointing as the project was not moving forward. Our staff continued to follow up regularly with mentors and potential loan recipients to complete part 1 of the training. After 9-12 months, the participants were still not meeting and very little progress was made regarding training.

We realized that instead of reducing staff time, we had spent valuable staff time on motivating mentors and trainees to come together. We learned that both sets of women were not ready for this project. This could be due to: (i) mentors, who were essentially volunteers, may not have understood the time commitment for this assignment, (ii) mentors were not comfortable with other women observing them at their businesses, and (ii) potential loan recipients were reluctant to spend time observing and learning from another business women especially since the higher loan was not guaranteed. In addition, our goals of family sustainability and financial sustainability for the program are inherently in conflict with each other. Over the last several years we have supported women in diverse ways; by providing them with business mentoring, refresher business training, and business monitoring to increase earnings from the business on a sustained basis for the family. Since this requires considerable staff time/higher costs, financial sustainability for the program becomes difficult to achieve.   

Next Steps        

We took the decision to fail forward. We stopped following up with participants after one year, to complete part 1 of the training. We did not provide larger loans. However, part 2 of the training went on as planned and we added 50 new loans in September 2017. 

Our goal of partial financial sustainability for our loans program is yet to be achieved. We will try again in 2018 after community brainstorming/input, qualifying participants more thoroughly, and providing financial or non-financial incentives for mentors. For now, we decided to “fail forward”, and not invest additional resources in a venture with a low return on investment.

General Learnings

Our experience with this project taught us that:

1. It is critical to plan and visualize all phases of a project before embarking on the project. We learned that we should have done a more thorough job of selecting mentors who would be happy to train potential loan recipients. Similarly, we should have ensured potential loan recipients agree to the time commitments needed for the two trainings.
2. It is important to involve community members from the very beginning; for example, community members can play an active role in brainstorming, idea testing and subsequently planning stages of the project.
3. Failing forward can save resources down the line that can be used for other life-saving projects or extensions to projects.   
4. Once the decision to fail forward has been taken, project leaders and community members should brainstorm on making improvements on the original idea and how to do things differently next time.

Thanks for helping empower vulnerable women in Zambia.

Links:

• Vision behind our micro loans program
• Impact of our loans program
• About our micro loans program