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Wednesday, 19 November 2008

Supporting rural development - (Guest Blog : Sarah)


I am a young woman from the United States who has recently lived in Zambia for close to three years. From 2005 to late 2007, I was a volunteer with the US Peace Corps serving as an extension agent for the forestry department; I worked with local farming and women’s groups to promote sustainable agriculture, gender equality, HIV and AIDS education and youth development. I lived in both the Eastern and Northern Provinces in villages outside of Chipata and Kasama and had a unique chance to get to know the culture, languages and people outside of the tourist trade. I was very moved by my experience and even returned on my own this past summer for 3 months to re-visit some of the projects that I had been working on.

Back in the United States now in Washington, DC, I have founded a non profit organization to support community led development within Zambia through the administration of micro-loans. We aim to bolster rural efforts to alleviate poverty by giving poor communities access to the resources that they need to begin small enterprises; the loans cover material start-up costs and each group is also required to participate in trainings on small business skills and group leadership.

Our priority is to support sustainability through focus on capacity building and environmental stewardship; each group will have the option of receiving loan forgiveness of one USD for every tree that they successfully raise in a nursery and transplant before the rains. We are currently working with local Peace Corps volunteers who are living in the villages to serve as a guide for applicants in select areas of the country and to assist with monitoring and evaluation for at least one year after inception of a program. Ultimately, I would like to afford our own staff within country to serve as monitors and trainers for our partner groups; until we have that financial capacity however, we will rely on NGO and government extension agents to volunteer their time to assist groups in the village, conduct business and skills related trainings, and to offer monthly reports on the status of the project (all transport to and from the work site for the volunteers will be paid by our organization).

I am looking for advice from Zambians and those with experience in the development sector regarding program planning and implementation. I have never worked with micro-loans before but after living in the village, realize how important it is to instill a sense of ownership amongst the community for their programs. One area I am struggling in is what to do when a group defaults on their loan since hardly anyone owns their own land to place as collateral, and so how so we hold people accountable for their financial payments? Also I am looking for as many contacts within country as possible since the bulk of our energy is going to be spent on quality monitoring of each project as well as support for capacity building trainings.

I offer the floor to anyone and everyone who might like to become involved or offer support. Our web site is still being worked on, however I can be reached at and will be happy to provide anyone with more information. Our name is “Colour Me In”, based on my experience one day when a group of young children drew coffins when asked to depict the uses of trees. I was struck, and the nature of our corporation is one in which we aim to help communities to paint a better future based on the vision that they have for themselves and who simply need help accessing the resources to fill in the lines.

Thank you for your time and I look forward to benefiting from a healthy dialogue and to learning from the expertise of this community.

All the best ndi zikomo kwambili,

Sarah Grant / USA

(Guest Blogger)


  1. Thanks Sara,
    It's great to hear your experinces in zambia and the initiatives you plan to undertake. Congratulations for that, and wish the best of success to your plans.

  2. Thank you Tiza, your support is well noted and appreciated.

    All the best,


  3. Sara, you are welcome, and hopefully when I return home to zambia, will try to see how we can best help in improving the lives of our people in zambia. I'm also interested in doing that but currecnly am not in zambia, might return some time next year end.
    Nevertheless we can keep in touch.

  4. Sarah,

    Thank you (and Cho) for re-posting your questions in guest blog form. I was afraid that I would have to hunt through 2007 archives to find the original thread.

    The issue of securing loan repayment is of course central to all lending operations, however as you point out traditional collateral based contracts are inappropriate in the type of microlending you propose. It is also my understanding that you do not intend to become a deposit-taking institution, at least not any time soon, as the capital and infrastructure requirements are significantly more rigorous. I mention it because there has been apparent success by Kenyan lenders using a prospective borrower's consistent savings rate as a strong indicator of loan repayment propensity and ability, as well as ensuring a sufficient capital reserve base by indexing loan amounts to savings deposits.

    Given the condition of banking services in rural Zambia, or lack thereof, it is unlikely that such an approach would be practical without operating both savings and lending facilities simultaneously. Therefore there is really no form of financial security you can obtain as the lender, but that doesn't mean you can't hedge your risk somewhat by tapping social networks.

    For example, some of the most successful lenders in Bangladesh and India combine the concept of "savings clubs" with revolving loan funds. If we imagine a village with a pool of 25 qualified potential borrowers, and a loan pool sufficient to cover 5 loans at once, then it is possible to organize them into a committee of sorts which can determine which of its members should be given access to limited loan funds first. Since the remaining twenty would-be borrowers cannot get a loan unless and until the five current borrowers repay theirs, there is strong incentive to choose those most capable of responsible and rapid repayment. An individual must then consider the repercussions of default on their standing within the community, as weighed against the positive reinforcements provided those who fulfill their contracts and vindicate their nomination by the group.

    This can also serve to extend the support network available to borrowers who may experience temporary difficulty meeting repayment schedules, since other members have the group have direct incentive to help active borrowers meet their obligations on time or risk delaying their own access to capital. Requiring membership in such a group can also ensure a certain minimal credit education attainment by the time funds become available as well as opportunities for the collective to directly observe the snares and pitfalls confronting previous borrowers.

    While it is entirely possible, even likely in some village societies, that a few otherwise deserving individuals will be excluded from participation due to social animosity unrelated to the loan program, and distasteful as that is, such a "side-effect" is probably best addressed after the fact with a targeted follow-up program. Ironically, the very fact of their exclusion initially can be used as a guide to identify them for extra future scrutiny as overlooked potential borrowers.

    I hope this helps!

  5. Hello Yakima!

    Yes, your comments are very helpful and I have heard of such revolving loan funds before, although never seen them in work. I am looking forward to continually learning more about what methods of community accountability have been proven best to work and hope to put them to use in our own programs.

    Because I want to allow the opportunity for borrowers to forgive some of their debt through a tree-planting program to help quell the great rate of deforestation in Zambia, I have been working on a way to recycle the funds that are re-paid into the community. What do you think of allowing a second community group to receive as a loan or small grant the money that the first pays back in cash? Does this make sense?

    For example: if a women's group takes out a $1,000 loan to begin keeping chickens, they have the option of re-paying 80% of that loan, or $800 in newly-planted seedlings (one tree for every USD). The remaining 20% or $200 must be paid in cash from their profit and will stay within the community somehow, either serving as another loan or donated to a local school. In this manner, because it is remaining within the community then they will feel pressure from their colleagues to offer up the re-payment and if it goes to a school for the purchase of supplies or a project that has been designated before-hand, then their children and families will gain from the passing on of the gift.

    This is my idea at this point and we are beginning several projects right now in-country so we will soon learn from experience to find the best method of maximizing loan impact and community ownership.

    A major appeal with planting trees is that we can hopefully source some nitrogen-fixing seeds and help people to experiment more with the benefits gained from planting them in their fields. I was a volunteer with the forestry department so of course this is on my mind. :)

    I have also heard that President Banda has pledged to reduce the price of fertilizer to k 50,000. Is this true? I do not know what this means for conservation farming.

  6. Sarah,

    The juxtaposition of business loans with reforestation is intriguing, though I worry that the latter may be unduly hampered by the scale of the former. In other words, if there are funds available to encourage tree planting on a donor basis, it would seem counterproductive to limit the tree planting labour pool to loan program participants only.

    The primary advantage of revolving funds is that, with appropriate interest rates to offset inflation and operating overhead, they are self-sustaining and require capital outlays for the initial loan offering only. A secondary advantage is that the finite nature of the fund encourages repayment, as persons waiting for funding of approved loans will apply social pressure on current borrowers to repay in full. This incentive disappears if new capital is provided for each loan, and failure to repay may be viewed only as failure to support the external donors rather than failure to support the community.

    Your concept of linking repayment to funding for local education may potentially overcome that indifference, though it might be best expressed as a matching donation, thus maintaining the revolving concept as additional community incentive. I will be very interested to hear how your current projects fare as you proceed.

  7. Sarah,

    Just a thought, but have you considered trading trees for books? Schools would seem ideally suited for the purpose of both widely distributing trees within a community and disseminating information on nitrogen fixation and forest contributions to sustainable agriculture. By entering into agreements with schools to provide supplies in proportion to confirmed rooting of saplings distributed through them to farm families, you may be able to achieve the same or greater results without the need for cash distribution (which would increase the risks of the simple cash for trees concept I was thinking of in my last comment), or the limited labour pool of loan program participants. Is that a viable and relatively attractive option do you think?


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