This past week two of our village banks completed their first loan cycle (a five-month loan cycle in which they repay about $140 per person with 2.25% monthly interest). After each cycle, the women decide whether they want to continue being a part of a village bank and whether they want to proceed to the next loan cycle, when they can receive a larger loan.
If the women want to continue, we evaluate them individually and as a bank to see if they qualify to move on to the next cycle. We not only evaluate them based on whether they have repaid their loan (we have had 100% repayment so far, so that is not an issue), but also whether they are fully participating in the mission of our project. They need to comply with monthly savings quotas (the women themselves decide how much they should save each month); they need to demonstrate their commitment to our business assessment program by completing homework assignments (practical tasks like naming their business and improving their customer service); and they need to participate in our community classes to show they are interested in furthering their personal development.
It’s hard to decide how much we should expect from each woman. After all, they are balancing a lot of responsibilities like running their own small business and caring for their families.
Is it fair to keep working with women who have a perfect repayment rate, but do not demonstrate interest in the other aspects of our mission? Our low interest rate (2.25% monthly) is very appealing; much lower than the interest rate they could get on individual loans here. But our funding is limited, and we want to target our loans at women who don’t have access to conventional credit; who have small businesses and are committed to expanding them; and who are interested in their personal development.
This is a tough decision, as we have to decide in the coming weeks whether one of our banks – who seem to be working with us just to take advantage of our low interest rates, and have rejected the opportunities for development we have given them – deserves to continue. While it would be difficult to let a group of women go, it would also open up space for new women to create a village bank… hopefully ones who are truly interested in challenging themselves to develop as women, businesspeople, mothers, and individuals.