New evangelism: mini loans
In a working-class neighborhood on the edge of Rwanda's capital, Anathasie Mukamana has built a small charcoal empire. A rattling bicycle taxi shuttles her along the Kabeza district's dusty main road between her two vending sites. On her rounds, she hurries an occasional smile to her customers, but more often wears the squinting eyes of a serious businesswoman.Skip to next paragraph
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Ms. Mukamana employs three people and brings in nearly $3,000 a year - that's in a country where 60 percent of the people live on less than a dollar a day. For her success, she thanks the congregation at her local Assembly of God - and not just for their prayers, but for a small loan.
These days, Christian and other religious organizations, both here and around the world, are lending more than just a hand. Microloans - of as little as $100 - have become as much a part of their ministries as preaching the gospel. While microlending for budding entrepreneurs has long been recognized among development experts as one of the best ways to fight global poverty - in fact, the United Nations has dubbed 2005 "The International Year of Microcredit" - religious organizations are increasingly adopting the Talmudic sentiment that the noblest form of charity is helping others to dispense with it.
The fund that provided Mukamana her seed capital started "because we could not keep up with the needs of our poorer members" with just handouts, says cofounder Josephine Mukamuganga. Since 2001, the program has provided loans for around 100 women.
Here in Rwanda, nearly 1 in 5 of small-business borrowers receives loans from religiously oriented lending programs. The 1994 genocide, which took the lives of up to 800,000 Rwandans, kept many international lenders from working in Rwanda. Even after the genocide, political uncertainty and violence in neighboring Congo and Burundi have continually threatened the sustainability of business ventures.
Into this void has stepped the Christian micro-enterprise development (CMED) industry. World Relief, for example, a Christian organization based in the US, specializes in small-business lending in post-conflict regions. World Relief has helped start microfinance programs in Mozambique, Sierra Leone, Kosovo, and Cambodia, among other places. Its Rwandan affiliate opened in 1996 and has grown into the largest microfinance institution in the country.
World Relief's affiliate here has more than 18,000 active clients and branches in 10 of Rwanda's 12 provinces. Borrowing groups of around 30 members, who are generally too poor to put up collateral, guarantee one another's loans. With the group's approval, individual members can take out loans for entrepreneurial ventures or other large financial needs like school fees and home improvements.
The loans are not charity. The lender charges 2.5 percent per month, or the equivalent of 30 percent annually. Though the rate is higher than most commercial banks charge, it is far lower than the terms offered by community loan sharks. High interest rates are also needed to cover the high costs of processing loans to the poor.