Microfinance for Africa's Future Grace Essel lives in Ashaiaman, Ghana and began working as a seamstress to earn extra income to support her children, ages four and six. In 2006, Grace decided to join with a group of her neighbors to take out a microfinance loan from Opportunity International.
Grace and her neighbors formed a "trust group." Trust groups are made up of 15-35 women who collectively take out a loan. By taking the loan together, they are co-guaranteeing to pay back the money, offering support to each other and a safety net in case one woman falls behind.
For these women, microfinance loans are the only real way to access money and grow their small businesses. Because Grace had no real assets, she would have been denied services at a commercial bank. If microfinance weren't available, her only other option would be to go to a black market money lender, who could charge 100% or more in interest.
Grace borrowed $250 from Opportunity International and repaid the loan weekly over four months. She used her initial loan to buy fabric and other materials to make her clothing products.
The first loan went so well, that Grace took out a larger second loan six months. Grace currently works out of a small stall, with no roof and only two walls. Her dream is to save enough money to purchase her own small store with a lock to protect her goods at night.
The extra income Grace earns helps her and her husband, Enoch, pay to send their children to school and buy books and uniforms. It also helps the family to pay for health care when they need it.
"My loan has helped me a lot. It has helped me to gain something better for myself and for my children and our future," says Grace.
Grace is one of hundreds of thousands of women benefiting from microfinance across Africa. And innovative financing like trust group loans have tremendous potential to lift millions more out of poverty.
Microfinance works, especially for women: 98% of women who take loans from Opportunity International repay them. That's much better than most commercial banks can boast!
Microfinance is also a smart investment for donors. Because clients repay the loans, and organizations like Opportunity International charge modest interest rates, many microfinance operations are self-sustaining and eventually require no further support after initial investments.
Opportunity International also supports its clients by offering an eight-week small business course, before women are approved for a loan, which provides them with invaluable training and education to improve their businesses.
Across Africa, women's groups like Grace's aren't just generating income. Their weekly meetings are also an ideal time to provide health education, including AIDS prevention, and adult education.
