“Double Bottom Line” Loans

Kampala, Uganda A loan funded by Kiva social lenders benefits the Microfinance Institution (MFI), the lender, as well as the poor borrower. The MFI potentially earns gross profit from the loan to sustain its business and, in the case of a MFI structured as a for-profit company, to generate a financial return for the owners.

Where the MFI is a not-for-profit venture, surplus interest income may be invested in non-financial programs which generate expenses but little or no revenue.

One such non-financial poverty program is the BRAC Adolescent Program. Although this start-up program is initially being funded by a grant from the Nike Foundation, it is expected that the rapidly growing BRAC Uganda Microfinance Program will generate enough profit to sustain an expanding Adolescent Program when Nike’s funding ends in three years.

The purpose of this post is to describe the BRAC Adolescent Program and demonstrate how integrated approaches to poverty reduction give Kiva social lenders a double bang for their loan dollar.

Background: Uganda has one of the highest birth rates in the world.

Afghanistan 46.21 births/1,000 population (2007 est.)

Mali 49.61 births/1,000 population (2007 est.)

Sierra Leone 45.41 births/1,000 population (2007 est.)

Somalia 44.6 births/1,000 population (2007 est.)

Uganda 48.12 births/1,000 population (2007 est.)

United States 14.16 births/1,000 population (2007 est.)

When you walk the streets of Kampala it sometimes seems as if everyone in this country is a teenager. In the villages, schools are overflowing with uniformed young students packed 50 or more to a classroom.

In Ugandan society women still have fewer advantages than men and, as mothers, they bear a disproportionate burden of poverty. These two factors; high birth rate and female inequality point to adolescent girls as a growing risk group in society.

Any parent knows that adolescence difficulties are not limited to girls in poor countries. We all face them, first as a young person ourselves, and then again if we are parents. The critical nature of adolescents in the developing world is that they are a disproportionate share of the population and these young people represent the future, and best hope, of their countries.

Girls are the starting point for BRAC for several reasons. First, money is limited and you have to begin somewhere. BRAC opted for a female only approach but ultimately expects to design programs for male adolescents in the future.

Secondly, young boys have significantly more socializing opportunities through sports. For example, Uganda is a soccer (football) crazy country. Wherever there is a flat piece of ground you will find a group of boys kicking some sort of a round object toward an improvised goal. In three months in this country, I have not seen a single girl playing soccer or any other sport. Unlike the US, where the government mandates equal access to school sports, girls in Uganda are largely denied the socializing benefits of sports.

Thirdly, BRAC found through household surveys that girls often have limited access to reading material. The daily newspaper is a good example. Typically the father brings it home from work and reads it first. Two hours later when he is finished, the mother reads it. Then the sons, if they are interested, get a crack at it. Finally, the daughters, if it is not already past their bed time, have a chance to read the paper. A cornerstone of BRAC’s Adolescent Program is to make quality reading material available to girls.

Finally, age 13 is a common school drop-out point for young girls. Few have basic literacy skills at that grade level. BRAC’s household surveys show that many return home after dropping out and do nothing. With limited literacy, little earning potential, no job skills, no money to invest, and a lack of parental confidence in them, these girls are positioned to be non-starters in society. Without intervention they represent part of the problem of poverty rather than part of the solution. A myriad of bad outcomes await them.

The Idea: BRAC’s Adolescent Program is designed to empower girls between ages 13-19 from poor households for;

· Knowledge

· Skill

· Income earning ability

How It Works: At the heart of the Adolescent Program is the Adolescent Club. This is a group of up to forty young women from age 13-19 who meet every Saturday and Sunday at the same location with a peer mentor. School drop-outs have preference. During the program roll-out, each of ten participating BRAC microfinance branches will be assigned one full time paid project staff member to establish and supervise ten Adolescent Clubs. The staff member will also conduct periodic parent meetings and develop programs to foster community support and involvement.

At club meetings the girls will have access to sports of their choice such as basketball or net ball. The objective is socialization and peer group formation. They will also have access to quality reading material, in English, pertaining to life skills. If a girl cannot read, other club members will assist her. The point will be to gain knowledge, improve reading and writing skills, develop a reading habit, and move in the direction of a knowledge based society.

The weekly meeting content will evolve over time to include life skills training like hygiene and a host of female topics such as reproductive health, pregnancy, child care, disease prevention, and when and how to say “no”.

The girls who are not in school will also have access to work skills training such as tailoring, livestock rearing, hairdressing, and other trades.

Finally, as they approach age 19, the girls will be introduced to microfinance and offered an opportunity to form borrowing groups with fellow graduating club members to establish small businesses.

Benefits: While microfinance focuses on poverty reduction today, the BRAC Adolescent Program is a coordinated attempt to prevent poverty in the future. Everyone benefits from the effort.

Young girl drop-outs benefit the most by being given a second chance. All the girls benefit from socializing opportunities not otherwise available to them in Ugandan society. A host of positive outcomes is expected from the peer relationships forged at the Adolescent Clubs;

· Reduced teenage pregnancy

· Reduced sexually transmitted disease

· Improved literacy, life skills and job skills

· Fewer unwed mothers

· Fewer forced marriages for financial reasons

· A more confident and better prepared group of young females for their families, their communities and their country

BRAC benefits by reinvesting proceeds from microfinance to achieve its vision of “just, enlightened, healthy and democratic societies free from hunger, poverty, environmental degradation and all forms of exploitation based on age, sex, religion and ethnicity”.

Kiva social lenders benefit from loans with a “double bottom line” that help pay for integrated poverty programs beyond the initial peer-to-peer business loan.

And it all begins with a simple $25 loan on Kiva.org.

/>