Economic Development Projects
CADRA's economic development projects provide training and resources to individuals and families without access to other economic opportunities.
These projects:
- create access to micro finance savings and credit for borrowers
- include intensive training in financial, small business management and vocational skills
- provide women with skills and resources that allow them to become self-sufficient for their children and families.
Micro-enterprise Development: A Long-term Solution to Poverty
In some of Africa's poorest nations, CADRA's community banking - or micro-finance - program is helping thousands of families escape poverty's vicious cycle. With loans as low as $50, men and women set up small businesses, enabling them to earn a steady wage to provide for their families.
By providing a hand-up instead of a hand-out, community banking;
- empowers impoverished families to become self-sufficient
- restores a sense of self-worth and dignity
- offers a long-term solution to poverty
- gives hard-working parents the opportunity to support their families for a lifetime instead of for just a few days
How does it work?
Families receive a small loan to set up or expand their modest business. Perhaps they'll sell vegetables at the market, or mend shoes.
Typically, a group of people borrows money from a CADRA community bank - and each participant is accountable to the others. If one member defaults, the other members must cover the deficit to ensure access to another loan. When all loans plus interest are repaid, the money can be used to help others. The interest charged helps to fund the program and make it self-sufficient.
What is Micro-enterprise Development?
Micro-enterprise Development (MED) helps families in extreme poverty to improve their status, health and welfare. By providing micro-finance services (loans, savings and insurance) and business development services (business training and marketing assistance) MED programs help very poor families improve their businesses and earn a steady income.
What is Micro-finance?
Micro-finance provides long-term access to small business loans and a safe place to save. Many participants eventually earn enough to effectively manage their businesses so that they no longer need these loans. Loan repayments are 'recycled', offering other needy families the opportunity to set up or expand their own business enterprises.
Micro-finance:
- encourages group solidarity. Community members form a group, and the Micro-finance Institution loans money to the group. Bank members remain accountable to each other - promoting mutual support and trust
- reaches a large number of people in a cost-effective manner
- provides access to financial services and resources for very poor people - not through charity, but through capital
- promotes skills in budgeting, saving, business planning, community participation and marketing.
- provides an effective alternative to both formal banking (which requires collateral and reaches only a small segment of the population) and money lenders (who reach many people, but often charge excessive rates of interest)
- reaches many people, with moderate interest rates - not for private gain (the motivation of money lenders), nor for corporate gain (the motivation of commercial banks), but for the community's gain
Ten Reasons Why Community Banking Makes Sense
1. It's "micro" finance with "macro" impact"
One person out of five struggles to live on less than $1 a day. But loans as low as $50 can make the difference between abject poverty and a life with hope. What's more, the money is recycled over and over to help more people!
2. It helps people help themselves.
Small loans help very poor families raise their standard of living under their own management and initiative. Creating a successful small business generates ongoing income for food, shelter, essential healthcare and schooling.
3. Members bank on each other.
It's positive peer pressure! In CADRA's micro-finance programs, groups borrow a lump sum and distribute smaller loans to each member in the group. Members guarantee each other's loans. If a member defaults, the others must cover the deficit to qualify for another loan.
4. Small loans are direct deposits against hunger and disease.
When parents earn a steady income, the whole family benefits. Increased capacity to buy food improves the family's diet, making them less vulnerable to malnutrition and life-threatening diseases.
5. It doesn't create dependency.
Micro-finance is not charity; it fosters self-sufficiency and rewards hard work. Credit to the poor provides a hand-up, not a hand-out, helping to restore hope, nurture dignity and foster well-being. Participants embrace and value opportunities to improve their lives through their own enterprise and initiative.
6. It breaks the cycle of suffering.
In Africa, more than half the population survives by working in small-scale businesses or micro-enterprises. Access to credit enables poor people to grow their businesses and transform their communities. And because the money is recycled, micro-finance cost-effectively reaches far greater numbers of people than traditional aid programs.
7. Members learn while they earn.
Members learn skills that improve their businesses and personal lives. They elect officers, keep records, budget their income and savings, and share marketing strategies. Some groups add health education to their regular meetings.
8. It provides a safe way to save.
Commercial banks require high minimum deposits that exclude very poor people. Savings plans in micro-finance groups offer a secure place for participants to save, protecting their investments from theft, exploitation and natural disasters.
9. It develops more than small businesses.
By providing support and encouraging individual empowerment, micro-finance groups promote stronger families and strengthen society. Members often use their new skills to build up community organizations.
10. It pays for itself.
Micro-finance programs have the potential of becoming self-sustaining. The interest charged helps finance program operations and provides ongoing capital for more loans.
Fulfilling the Mission of Canadian Aid to Africa through Micro-finance
CADRA is convinced that building micro-finance institutions - through Community Banking Programs - and cultivating other micro-finance initiatives - such as savings groups - are fundamental in fulfilling our organization's mission.
What do micro-finance institutions do?
Micro-finance institutions and initiatives relieve suffering. CADRA is one of few organizations that establishes and cultivates Micro-enterprise Development in challenging environments - areas coping with instability due to disasters or armed conflicts, extreme poverty, religious or ethnic tensions, or volatile economies. Addressing these challenges holistically requires a multidimensional approach. CADRA fosters reconciliation within and between communities in order to realize peace and develop long-term economic growth in conflict-affected environments.
The severity of strife in these regions of Africa often halts daily business and disrupts even informal markets. Therefore, it is critical to diffuse tensions and mitigate lapses back into violence. CADRA's micro-finance initiatives are regularly coupled with other CADRA programs to relieve suffering and enhance holistic development. For example, Micro-enterprise Development have complimented the Emergency Response Program, helping to minimize dependency on relief and assist people in getting back on their feet more quickly in the wake of both man-made and natural catastrophes.
Likewise CADRA seeks to:
- address suffering caused by HIV/AIDS, lessening the disease's devastating effects on communities through economic intervention
- empower HIV/AIDS-affected families to buy medicines, gain access to health care, afford school fees, and accumulate a small cushion of savings for needs and emergencies.
How do micro-finance institutions work?
Micro-finance institutions and initiatives relieve poverty. Community Banking gives poor, hardworking individuals a hand up rather than a hand out. This hand up provides poor people with the tools and skills necessary to begin the challenging climb out of poverty. A hand up restores dignity and offers hope to impoverished people, promoting confidence that they are not powerless and destined to a lifetime of poverty; instead, they are being empowered to change the course of their future.
An Investment in Women is an Investment in the Future
CADRA's micro-finance programs focus predominantly on women, producing a powerful impact on them and their families
Unfortunately, households headed by women are generally the most destitute and needy. Women in various parts of Africa are often subject to religious and cultural hardships that include abuse, exploitation, and oppression. Yet, these women frequently become primary caregivers for people in their communities, in addition to members of their own families, taking in the elderly, orphans, and/or other ailing persons.
Many women must take financial responsibility for their households because they are widows of war, conflict, or AIDS or have been abandoned by their spouses.
How does micro-enterprise development help?
Within Micro-enterprise Development, women:
- develop skills
- receive training
- build solidarity among their groups
which
- improves their status in their homes
- helps thembecome leaders in their communities
- encourages them to mobilize others for civic action
The impact on the well-being of entire households is evidenced in improved nutrition, more consistent provision of material needs, and educational opportunities for children.
How do micro-finance institutions help with hunger?
Micro-finance institutions and initiatives relieve hunger. Relief provisions meet immediate needs - they treat symptoms but fail to change the circumstances that cause hunger and starvation. Community Banking enables individuals to become self-sustaining. CADRA's programs not only provide working capital, but educate, equip, and develop the capacity of those who are vulnerable to hunger and starvation. Poor people achieve more stable incomes and build savings, thereby reducing their susceptibility to periods of hunger or starvation.
How do micro-finance institutions help with sustainability education?
When teamed with CADRA's health initiatives, families are also educated about proper nutrition and health practices, thus enabling communities in their move towards sustainable development.
By aiming to teach, equip and empower individuals and communities, CADRA endeavours to engender lasting change that casts off the heavy burden of suffering, breaks the yoke of poverty, and free people from hunger.
Micro-enterprise development and HIV/AIDS
Making Dignity Affordable
Solutions Through Economic Empowerment
HIV/AIDS puts enormous stress on impoverished families in Africa as they care for the sick, lose breadwinners and take in orphans. The ability of families to cope with HIV/AIDS hinges largely upon a steady income. A steady income empowers individuals to take greater control over their lives and provide for their own basic needs.
CADRA's micro-finance efforts seek to empower individuals, families and communities to curb the spread of HIV infection, maintain livelihoods and cope with ever-increasing burdens of this crisis.
How can micro-finance help battle HIV/AIDS?
It is not a cure-all, but micro-finance has proven to be an effective weapon in the battle against HIV/AIDS. Credit and savings empower women to exercise greater control over their health and sexual behaviour reducing their risk of contracting HIV/AIDS.
In addition, a loan to start or increase a small business provides much needed income for AIDS affected households who face increased medical costs, loss of productive adults, funeral costs and the care of additional children orphaned by extended family members or neighbours.
How do community bank groups spread HIV awareness?
Meanwhile, community bank groups provide an ideal forum to promote healthy lifestyles and AIDS awareness through regular member meetings. As loan recipients meet together in AIDS-ravaged communities, CADRA is helping participants - mainly women - gain a sound knowledge of how HIV is spread and how it can be prevented. Open discussions about AIDS also help combat harmful stigmas and misinformation and promote life-saving behavioural changes.
Confronting the Challenges
But while credit, savings and health education are helping to promote healthy lifestyle choices and AIDS prevention, micro-finance institutions continue to face major challenges from the AIDS epidemic with the loss of staff, clients and loan capital. CADRA is spearheading new research into how micro-finance can help address the many challenges presented by HIV/AIDS - including:
- collaboration within the micro-finance community
- partnering with health providers and
- coordinating a more united community response.
CADRA's HIV/AIDS initiative partners with non-governmental organizations (NGOs) and development agencies to improve HIV/AIDS prevention and care, promoting abstinence among youth, fidelity within marriage and providing health services. The integrated program incorporates CADRA's micro-finance and its childhood survival efforts to increase field impact and maximize resources.
