Phakamani’s micro-enterprise programme is modelled on the internationally renowned Grameen Bank. Our system of training, group borrowing, and on-going support brings both accountability and practical assistance to the development of the micro-enterprises.
Focusing on the Rural Unemployed
Our programme targets rural and peri-urban areas with very high unemployment. The neediest people within these communities are identified by using a household index, an asset test, and a basic interview. Women who may be interested in starting their own micro-enterprises are invited to learn about Phakamani’s programme.
Assessment and Training (Before any Lending Takes Place)
- Phakamani evaluates the level of poverty in the home of a potential client.
- Interested applicants form solidarity/accountability groups of five women, each with her own business idea.
- Phakamani evaluates the existing or potential business activity of applicants, and for those selected we assist in forming basic business plans. Loans are only approved for self-chosen, income-generating activities that can earn immediate returns and that employ skills already possessed by the borrowers.
- Phakamani evaluates the affordability of requested loans, with a requirement to ensure that all clients can afford not only to pay back the instalments but that they will also have new income generated for use in their home.
- Each group is trained in basic business concepts and group management, for at least 10 hours over four days.
- A group savings account is opened at a local bank.
Special (Pro-poor) Loan Conditions for Micro-enterprises
- No physical or financial collateral is required but each group of five entrepreneurs guarantees the payments of all members.
- Loans are repayable in monthly installments over a period of 4 or 6 months.
- Interest and fees are charged as defined by the National Credit Act, which was designed to protect consumers. Phakamani endeavours to keep charges below the allowed maximums whenever possible. Our goal is to assist the poor while still covering costs. (Read more on this topic.)
- Renewal loans are given in escalating amounts depending on the repayment discipline and growing value of each business.
- All loans are structured to stress both credit discipline and collective borrower responsibility.
Continued Support After Loans are Disbursed
- Phakamani staff monitor the use of borrowed capital.
- Set-up of a regular installment and savings plan for each group.
- Coaching and encouragement on a regular basis through site visits and group meetings.
- Provision of regular business tips and life skills training to the entrepreneurs at monthly “centre” meetings. All groups are affiliated into centres of up to 40 women. These centres are led and managed by the programme participants, supported by Phakamani staff.
- Performance of poverty impact analyses and micro-enterprise evaluation at the start of each new loan cycle.
- Phakamani provides Fast Loan Renewal to groups who pay on time, have growing businesses and save according to our guidelines.
Phakamani Branches are not Buildings
Our employees live and work in the villages that they serve. Centre meetings are held in homes, churches, courtyards, and other public spaces, and they are led with the assistance of the women entrepreneurs. Staff members supervise the use of micro-loans, provide guidance to the micro-enterprises, and assist the community in any way they can. Branches cover an area of 15 to 20 villages, or approximately 150 000 people, with one branch manager and six field officers (development loan officers).
Centrally Processed Loans
Branch managers in the field make loan recommendations but all loan applications and payments are processed at the head office in White River. We use a cashless system for loan disbursement and re-payment, using the group bank accounts that are opened in local Nedbank or Postbank locations.