Microcredit

Micro credit is the provision of very small loans (micro loans) to people living in poverty who are not “bankable”. These individuals lack a steady income and therefore cannot meet even the most minimum qualifications to gain access to traditional sources of credit. Micro credit is however not just about money. It is also a critical instrument for changing people's mindset and creating a transparent environment in which democratic principles can flourish. In rural areas, SSF works together with so called “self help groups” to supply villagers with micro credit with which they can purchase the things they need. Interest paid over the loans is very low and goes directly to the self help group which uses it to benefit new members. A man from the village of Thlok Downsok gave us a good example of the benefit of self help groups. “With the help of my self help group I was able to repay back to moneylender that i borrowed with 360 per cent annual interest to care for my wife”, he told us. “With removing out my family from such dangerous loan we were able to grow vegetable and do other farm work to repay back to the group.”

A slightly altered version of the micro credit principle is seen back in two special community-based organizations; the so called rice- and cow banks. Cow banks are community institutions that work according to the same principles as ordinary banks but instead of using money, cows are used as the “currency”. The bank's committee members identify recipients and manage the bank's transactions. Cow banks have proved to be a successful means of helping poor farmers by providing them with draft animals for tilling soil. A cow bank begins with the Village Development Committee identifying beneficiaries, who are then given a pregnant cow to care for until its calf has grown to a sufficient size to be used as a draft animal. The mother cow is then given to the second beneficiary, and the process continues. For people who have not enough funds to feed and maintain a cow, chicken- and pig banks are set up according to a similar system. This way, every villager's access to livestock is guaranteed.

Rice banks follow a similar principle but are particularly used to provide food security in times of shortage or disaster. Villagers in SSF' project areas usually experience a lack of food during the lean months from April to November of each year while waiting for the next rice harvest. Rice banks are established which provides the initial stock of rice. Rice Bank Committees are formed in the villages and their members are trained in project management and accounting. At the discretion of the committee, rice is loaned to people in need. After harvest, or when the people can afford it, the same quantity of rice is returned along with a pre-determined amount, which serves as an interest payment. In this manner the bank continues to grow. Rice storage facilities are eventually built with the interest generated from the operation of the bank.