Here is a story written by an Azerbaijani woman who received a loan from my micro-credit organization.
“My name is XXXXX and I am from XXXX (a small village). I am married with three children and have been a client for four cycles (two years). Before I owned my business, the only source of income for our family was the small household in the village (her husband is apparently unemployed, which is common. She means that the household is surrounded by a small amount of land and that they can grow vegetables and fruit trees and raise a few animals for food). Despite the fact that I started my own business, our family’s financial and living position did not improve. Also, my business was not growing because there was no financial institution to support small businesses like ours.
Our group began (loans are made to groups, who choose their own members. The group is responsible for paying back the loans if one of the members doesn’t pay. This is because there is usually no collateral) when a group of women was talking about micro-credit loans. According to what they said, loans from this organization had caused a lot of changes in their acquaintances' lives. We agreed that we would apply to change our lives as well.
So, our group of women received our first loan. Possibly this was one of the happiest days for each member of the group. As women, we were given a chance to change our lives independently. Now our trade is recognized and well-known all around and we feel respected and surrounded by support. This experience has helped others to have confidence in us, which we intend to justify. Because of these loans, the turnover of my inventory has become constant. Formerly my business was almost going down due to a lack of financial resources. Sometimes I had to use some portion of cash on hand for solving financial problems in my family, then restart everything from the beginning. But later, thanks to these loans, I could purchase more goods of high quality and get more income.
I used the loans efficiently for improving my business. The loans absolutely changed the lives of my family members and me. I increased my working capital, and even at the cost of the income obtained from the business, I expanded my household in the village, organized a wedding for my son and most important, resolved my domestic problems. (Hmm, not sure what she did with the husband :-) ). The loans also caused a change in my thoughts regarding my business; in the future my goal is to extend it again and increase the number of my business premises (she means she wants to add another store) in the trade center.
I have a great and everlasting gratitude and respect in my heart towards this organization. I am just one of their clients, but I know that they have a lot of other clients whose paths in life were brightened up and their trust in the future was encouraged thanks to this organization.”
It is very gratifying for me to work with this organization. Besides helping people who are very poor, the organization provides good jobs with benefits to its employees. These employees are not poor and are able to provide well for their families.
Loans start at $100 and go up to about $5,000. They are usually for six months, but can be renewed. The repayment rate is well over 99 percent, an eye-popping figure for a former American banker like me.
The company was started in 1984 by someone who had been a Peace Corps volunteer, then spent 15 or so years in organizations trying to help the poor before he started his own organization. It now operates in 21 countries. Out of over 500 employees in Azerbaijan, I am the only American, but there are a few people from other countries.
One fact that can be hard to get over is that interest rates are usually around 35 percent. This can sound shocking and exploitive to the uninitiated, but it makes sense when you understand the alternatives and the cost of putting small loans on the books.
For example, if someone borrows $100, they would pay $18 in interest for 6 months. Our organization has an office, many employees, computers, heat and lighting to pay for and we advertise. With the $100, the borrower can buy some goods from a wholesaler or buy some livestock, sell the goods for possibly $170 and make a profit to buy more goods.
Before micro-credit organizations, the only way to get a loan was through what we call a loan shark. And many people went without credit. Before for-credit organizations dominated, charity organizations were tried. Many of these organizations failed because the clients did not see the loan as an obligation, but as charity, and did not pay them back.
Many foreigners in Azerbaijan lament the status of women here and wonder how things can change. I feel that preaching, arguing and becoming outraged did not work in America and will not work in Azerbaijan. What works is having tools available so that some women can take advantage of them. Some will, most won’t. The women that do take advantage and succeed will change things for all women eventually.