In January I visited Lendwithcare’s partner in Zambia to carry out one of our regular evaluations. We have been working with the Microloan Foundation in Zambia for almost seven years to support rural women entrepreneurs with access to finance and savings facilities. And in that time, Lendwithcare lenders have funded 21,000 women with £3m in loans. As I travelled to Zambia this time, I was acutely aware that it was the peak of the ‘lean’ season (the time between the harvests that is also know as the ‘peak hunger’ period) and that Southern Zambians, in particular, were facing severe food shortages after consecutive years of drought. In a previous blog, I wrote about these being the worst droughts Zambia had experienced since the 1980s and how millions of Zambians were facing severe food shortages as a result. And so I was keen to see how the women clients of the Microloan Foundation, and the organisation itself, were coping during such difficult times.
I was pleased to find it raining when I landed in Lusaka and to hear that it had been raining for a few days before my arrival. However, the erratic and low rains experienced in the traditional maize producing regions of the Southern and Western provinces over the last couple of years, was continuing to have an impact across the country. In addition to poor rainfall, our partner told me that the South had also experienced a big foot and mouth outbreak and not long before that the country was brought to a bit of a standstill due to an outbreak of cholera. So it wasn’t totally unsurprising when I asked ‘how people were coping’ that I was answered with ‘coping with what?’
The impact of the drought on Zambian entrepreneurs
In terms of the impacts of the drought, the harvests were very poor in April 2019. These poor harvests compounded with an outbreak of foot and mouth disease, which not only impacted on the local economy but also food insecurity, led to our partner deciding to write off 3% of their outstanding loan book towards the end of last year. They wrote off loans for those female clients who had no capacity to repay their loans and they also decided to restructure loan repayments for a large number of their worst affected clients to give them the opportunity to recover their livelihoods.
How our women entrepreneurs in Zambia are coping
This year’s harvest is looking more promising since the rains did come, albeit late. When I spoke to some of the women we have supported through the Microloan Foundation, three important practices were coming through time and time again that explained there ability to survive during these incredibly difficult times: group solidarity, savings and multiple businesses. The women clients of the Microloan Foundation borrow and save in self-formed groups of around 5 members. These groups not only access financial and non-financial (business or financial literacy training) services together but they also promise to support one another during tough times. Since the groups are not too large the burden of supporting one another is small but it does provide each of the members with that extra security net.
In addition to the group solidarity method, the Microloan Foundation also facilitates savings for each of the group members. The organisation itself is not allowed to collect deposits but they encourage group members to save at least 1% of their repayment amount at each repayment meeting and to build these savings up over the course of the loan. The members of the group also receive training on the importance of savings and using the loan to invest only in productive purposes. And finally, as with most low-income entrepreneurs around the world, the women we support through our local partner in Zambia, are often engaged in multiple income generating activities in order to spread risk. As this example from one of the entrepreneurs supported through Lendwithcare, Elida, shows:
Two years ago Elida decided to start a grocery shop business. Before that, she used to only work in her garden growing tomatoes, cabbages and onions. But she could only do this for a small period of time since once the rainy season arrived, she couldn’t work on her garden anymore and her family would often go hungry. Two years ago Elida decided to stop this cycle and set up her first ever grocery shop.
This year marks Elida’s seventh loan. She asked for 2000 kwacha (117 pounds) which she split in two. Half of it would go to restocking the shop and the other half to the garden. By doing this Elida makes sure her family has enough money for when the rain comes. For now she still cultivates her garden, but at some point the drought will be over and she needs to make sure her shop is fully stocked - it will be her only source of income.
Over these two years Elida has developed a good strategy to take care of her family. With the profit from her grocery shop she is able to pay for school fees for all three of her children. Elida doesn’t have to choose between food for the family and education for her children anymore, those days are in the past. Now, if she is going through a hard time she knows she can rely on one of her businesses and in the confidence that if she needs some extra help she can always apply for another loan. Yet for now, her plans are keeping up her business so one day she fulfills her dream of building her own six-room house.
Across southern Africa, women and girls are the worst affected during times of drought and women often suffer disproportionately from climate change shocks. Women bear the majority of responsibility for households including ensuring families have food and water as well as household chores and child rearing. They are also usually the last to eat and first to skip meals. You can help support a women entrepreneur like Elida today through Lendwithcare.