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FROM THE FIELD

NEF Community-Based Credit for Sudan--Capital to Rebuild Lives--More Needed

18 Apr 2007 08:25:00 GMT
Source: Near East Foundation (NEF) - USA
Roger Hardister, NEF VP for Program Development

Website: Website: http://www.nefdev.org

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NEF selects low-income communities, invites participation by local leaders, and provides training in community-based lending and credit fund management.

Background

• Sudan conflicts

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Thirty years of drought, desertification, floods, and civil wars across Sudan have displaced millions of people, lost livelihoods and the means to replace them. Many of the displaced have settled in and around towns and cities throughout the country in squatter areas and unplanned settlements where living conditions are virtually unbearable, water insufficient and unclean, and sanitation services unavailable. Unemployment often tops 50 per cent and those employed can earn less than $1 per day.

In 2001, NEF (Near East Foundation) established a community-based credit program to provide training in credit fund management for local leaders; and loan capital for individually-owned, income-generating projects and micro-enterprises in 10 communities. The program targets the poorest of the poor--those generally denied access to commercial capital and resources. It is based on similar and successful NEF programs in Jordan, Lebanon, Mali, Egypt, and Swaziland.

Moussa Gismalla, NEF Sudan Financial Manager, explained the rationale. "To be able to help themselves, people need access to basic goods and services, education, agricultural inputs, water, alternative sources of energy, transportation and marketing facilities. With a little help, they can provide much of this for themselves. But given the existing shortage of direct assistance and cash subsidies, an important ingredient in this process is assuring local communities access to credit--a commodity in short supply among the vast majority of the world's low-income rural residents," he continued.

"NEF has seen time and again that given access to investment capital, together with appropriate training and technical assistance, individuals and communities can help themselves and will repay borrowed funds so that others can benefit," he summed up.

Roger Hardister, NEF Vice President for Program Development, agreed: "What we learned from these early experiences in Sudan and elsewhere is--when resources are made available, most people can rebuild their livelihoods and their lives and move forward on their own. While some may require special assistance, many simply need access to basic capital to begin their journey."

IN SUDAN

Community-based credit funds are designed to assist low-income people in squatter and resettlement areas in and around Greater Khartoum as well as rural residents in the Bara District of North Kordofan (Western Sudan) and the Abu Hamid area (North Sudan). (See the final section of this article for detailed sites and records) Loans range from $50 to $700, although a slight increase is anticipated in the future.

While income generating activities and micro-enterprise projects differed among areas, projects generally funded include: trade in consumer goods, sewing and tailoring, animal husbandry, water distribution (donkeys and donkey carts for water transport), transport, refrigeration, skilled and semi-skilled trades, dairy product production, buying/selling of crops, poultry production, services, and street vending.

To be precise, a loan of as little as $50 can help women and youth establish home-based income-generating activities, purchase commodities for trading, buy tools and equipment for craftsmen, or purchase small animals or poultry for sale, goat milk or egg production. Only $150 will purchase a machine or textiles for sewing. A donkey cart for water transport can be obtained for as little as $250. $300 or more will purchase larger animals, refrigeration equipment, or transport services. $500 can help provide important initial training and technical support for loan committees, assuring greater effectiveness, increased transparency and accountability; and $50 can support supplementary training for credit committees.

NEF'S APPROACH

NEF selects low-income communities, invites participation by local leaders, and provides training in community-based lending and credit fund management. Participants are introduced to the basics to enhance their livelihoods and develop their community; and trained in income generation/micro-enterprise project selection and financing, credit provision, follow-up, and reporting.

Composed of local residents, a credit committee is established to recommend recipients, manage funds and collect repayments...under the watchful eyes of NEF. Initially, funds are managed jointly with NEF signing off on individual project loans approved by the committee. Later, responsibility for fund management shifts entirely to the committee.

NEF capitalizes funds and supports credit committees with on-going coaching and supervision. As additional funds are available for capital expansion, NEF rewards committee performance with access to additional capital and training. Funds collected are recycled in the same community to encourage repayments. While the program encourages business startups and expansion in areas where loan recipients have skills and experience; where additional training is required, referrals are made to other institutions or special skills training programs provided.

The NEF portfolio provides 500 loans per cycle and two cycles per year in each of 16 communities. Estimating on average 3.5 individuals per family, the program directly benefits approximately 3,500 people annually. Significantly, funds are not consumed but continue to support additional loans in the same communities.

For borrowers and their families this means increased household income and additional employment opportunities generated by more or expanded micro-enterprises and income-generating activities where they live. Further, as people grow stronger economically and diversify their assets, they are less vulnerable to natural disasters and periodic emergencies--and better able to cope when they do occur.

And Basheer Medaob, NEF Credit Program Officer in Sudan, adds: "With increasing household income also come indirect benefits--better nutrition, and more money for education, housing, and health care." Not incidentally, income generating activities owned and operated by women contribute most in these areas.

The loan can be small, as long-time NEF-Sudan staffer and Financial Manager Moussa Gismalla, notes: "At NEF we know that even a very small targeted investment in household-based, income-generating activities and micro-enterprises can make a big difference for our people. There is no substitute for helping people to help themselves. In this way they provide for their own needs through their own efforts and maintain a respect for themselves and their way of life."

IN SHORT & SUMMARY

After over 20 years of experience, NEF credit develops the capacity of local communities; encourages innovation and sound approaches to programming; promotes transparency and accountability; and through pilot project funding helps local groups build a track record that supports residents and appeals to funders.

Cases in point, two credit committees, trained and supported by NEF, are now fully recognized by lenders and multi-lateral donors and are receiving significant additional capital to rebuild and expand their original funds. They now have a combined portfolio of more than $60,000.

At the moment, NEF's existing loan capital is equivalent to $47,000. Repayment rates are high. Given new developments in the country, NEF wants to revive and expand eight of its initial community-based credit programs (two having already been expanded with external funding) and to extend the program to include two or more additional communities serving displaced persons.

A total of $50,000 for new capital and $15,000 for training and support is needed. Every dollar contributed to credit capital will be matched dollar-for-dollar with loans from local financial institutions. However, the major need is training and support services such as the credit officer's salary and transportation. Only $400 a month will keep the program going until additional operating funds are found.

Support for NEF's Sudan credit program will help families and individuals rebuild their lives and launch them on the path to future self-support and maybe even beyond, towards a little prosperity--which they surely deserve. And yet another plus, that contribution goes on giving through leadership training or capital funds.

PROJECT SITES & RECORDS

Khartoum South

Salama and Suba are located 10 KM south of Khartoum and are home to 30,000 people, a majority of whom migrated to the area in the early 1990s, forced to flee South Kordofan, south and western Sudan in response to increasing civil conflict in the area. NEF is working in Salama and Suba with Disabled People International (DPI) and the Al Nada Association for the Disabled, locally registered non-governmental organizations with over 500 members.

Tayba Kababish just near to Salama, was settled in the early 1990s and now has a population of 2-3,000 people, primarily a mixture of Arab groups such as the Kababish and southerners from the Nuba Mountains, South Kordofan. A majority of Tayba Kababish residents were once migrant workers who traveled to Al-Gezira each August and September to pick cotton in the Gezira Scheme south of Khartoum. Rather than return to increasingly drought affected home areas, many began to migrate north, joining the vast resettlement areas surrounding Khartoum. The Tayba Kababish loan committee has five members, all women, and was among the first credit committees established.

Omdurman

Marzuq, 25 km to the central Khartoum, with a population of over 14,000 is one of the poorest communities in Omdurman. The Marzuq loan committee has four members. Committee members as well as loan beneficiaries are all women.

El Sero is 15 kilometers western Khartoum. This area was settled in the early 1980s by families from South Kordofan who were fleeing continuing drought and desertification.

Khartoum North

El Tawidat 35 km to the central Khartoum, 13,000 displaced persons organized into seven area blocks. Most residents of Dar Es Salaam-Tawidat are originally from southern and western parts of Sudan. NEF began lending in Dar Es Salaam-Tawidat June 2003. The area loan committee has 12 members of which seven are women.

Dar El Salaam - Block #2, was originally a village. All the residents are displaced people moved in from southern and western Sudan. The area is now home to 2,500 residents.

New Dar El Salaam, Block #4, has an almost identical population of 1,500. Living conditions are similar to those in Block #2. Seven loans were originally made with four others made later from recycled funds. Loans repayment is 100 per cent.

North Kordofan State

Ayal Ali Village, located at Bara Locality, North Kordofan State, 600 km western Khartoum State, 33 loans were made. Period of the project is 18 months. The areas loan committee consists of nine men and the others are women. Loans repayment is 98 per cent.

River Nile State

Amaki Village, 500 km north Khartoum State, the project was monitored by a visually-challenged association in the village and most of the beneficiaries are visually challenged.

Blue Nile State

Program under development.

YOU CAN HELP NOW!

Donate online at www.nefdev.org

[ Any views expressed in this article are those of the writer and not of Reuters. ]

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Last updated:Wed Apr 18 08:30:35 2007