Today we spent the day in a village with a group of women who have started a soap-making business using funds from a micro-financed loan. Truthfully I thought it was going to be a bit of a boring day, but I was proven completely wrong.
First off, soap making is a fascinating process. This specific soap is concocted of lye, coconut oil, and the leaves of a tree that is used for medicinal purposes. I forget the name of the tree, but the name literally translates to "forty something cures." The soap is used to cure skin conditions, bruises, scrapes, and just about any small problem you can imagine. The process took several hours from start to finish.
There are 15 women in the group. Most of the women are primarily subsistence farmers. This business provides them with enough cash to purchase clothes etc... (basically anything they can't grow on a small farm). The women meet once per week to make soap together and discuss any important financial issues facing the group.
The group was initially given a small loan that provided the start-up costs they needed. Thus far, they have been successful in business and they have been diligent about saving and making the required payments. They are even approaching the point where they can consider making a small loan to another group of women much like their own.
I have read a good deal about micro-financing and I have always been fascinated by it. There are so many things that set it apart from charity. These differences make micro-financing a MUCH more successful method for providing help to people in need. Some of the details are:
- required repayment with interest
- multi-level approvals for different loans
- a group structure that
- uses social ties bind people together in a common cause
- creates a shared responsibility to stick to the original plan, use the money for the intended purpose, and help the project succeed
Seeing these dynamics first hand was very eye opening. We were there for a detailed discussion about how they would enforce repayment from everyone in the group, what could be held as collateral, and how they could make a plan to save more. It was very cool.
This is something that we can discuss in detail with anyone who is interested, but there is definitely potential for people to invest in this sort of thing here. I would strongly encourage people to pursue this if you are interested in making a HUGE difference in a lot of lives with a relatively small investment (some blog readers asked us before we came to keep them informed of ways they could invest here).
After working for the better part of a day, the group produces 50 bars of soap. If they sell all of the soap in a week, they make about $5.00 profit. Yes you read that correctly... $5.00. The entire group splits $5.00 once per week. This is actually enough money to make a substantial difference in the life of a subsistence farmer, but still... $5.00... per week... for the whole group!!!
On a side note, Lindsay and I purchased all 50 bars of soap that the group made today. We are planning to sell the soap when we get home and send the proceeds to the group. If you would like a nice bar of soap (one that can not only clean but also cure anything :) let us know.
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