The financial industry in Burkina Faso has been growing significantly for the past decade. However, none of the twelve banks that currently operate in the country provide adapted services to the very low income portion of the population. The recent financial crisis has increased the banks’ unwillingness to take risks by lending to the 44.8% of the population who live on less than $1.00 per day. The number of microfinance institutions has increased in the last few years, but about 15% of the institutions own almost 75% of the market share. In addition there is not one microfinance institution that specializes in women’s activities or rural women. In most rural areas, women try to organize and respond to their money needs through “money games” within their cooperatives. The research reveals that the rural areas are therefore getting more and more attractive as they are the providers of most of the economic resources. The low rate of access to the banks by the populations (3.42% in 2009) is not being compensated enough by services such as microfinance.
Three main types of microfinance institutions exist in Burkina Faso: The mutual or saving and credit cooperatives that are the most dominant in the industry, the direct credit institutions generally operated by NGOs as part of their programs of development, and the commercial banks whose loans are not really accessible by most women. This is due to the fact that women are not familiar with the banks’ policies (the majority of women are illiterate), the conditions of eligibility are hard for most women to fulfill, and most of the women lack managerial skills. The bottom line is that only one percent of rural populations have reasonable access to credit and the typical loan cannot be adapted to the special needs of rural women.
It is utopic to believe that institutionalized charity can lead to effective development when the concerned populations are not responsibly involved in managing the resources allocated to them.
For all these reasons and more, we have the conviction that the best approach to fight poverty is through a hybrid model that arises from the traditional “for-profit” and “non-profit”, engaging the communities with the local businessmen and holds them collectively or individually accountable and responsible for their direct concerns. Several key components form this approach.
Individual to Small Group
In order for an individual woman to receive loans for her business, she has to join or be joined by a group of 4 to 8 other women. The individual to small group tactic stands as a very important feature in our business model for the following reasons:
- As members of a highly collective culture, women in rural areas feel always comfortable and enthusiastic to be part of a team rather than evolving individually.
- The Small-group-Tactic reduces significantly the failure risk rate. The group is be assigned performance goals as a condition for access to higher loans. That makes each individual member of the group feel responsible for the rest of the group as the success of the group depends on the individual and vice versa.
- Each Group is welcome to take its own initiatives to develop strategies for the success of each member of the group.
- The Small-Group strategy contributes to reduce cost of monitoring for TilgrY.
- In a society where women have been relegated to a secondary role by their husbands, the Small-group tactic helps the individual beneficiary of the loan gain in self-confidence and self-reliance.
The Spillover Effect (S.E.)
The concept of the Spillover Effect (SE) is a “progression by duplication” effect. It starts with a Proof of Concept. The women used in the POC become the advocators and recruiters. They are educated about our business model and our vision. We put a particular focus on training the women to ensure consistency of our business culture through the spillover effect. The women are provided with the best practices related to their activities. The concept of S.E. requires that the “proven women” relay information and best practices to the new entrants. We still provide trainings and education to new entrants, but the role played by “proven women” as role models is very important for many reasons including the facts that:
- New entrants are more attracted by their role models, so they learn easily from them as they are more open to people from their communities that they know better and are likely to emulate their successes. The “proven women” have the appropriate skills and approach to relay the techniques and practices to the new entrants.
- The Spillover Effect helps reduce costs of trainings and monitoring.
- Even though we provide the loans to individual women, we want the beneficiaries to promote collectivity and community spirit. The Spillover Effect helps for sharing experience and knowledge among beneficiaries of the same community.
The most successful women are selected and integrated in TilgrY’s Executive Board. These leaders take part in the decision making process and represent the voices of the women.
Our performance measurement is based on the 3BL or Triple Bottom Line system.
- Monetary profit account
In order to assure the sustainability of the venture, we need to create the conditions for our autonomy in the long-run. To comply with this requirement, the projects are rigorously analyzed and selected based on the business plans presented by the women, the feasibility of the projects, and the capacity of the project to generate profit.
- People Account (social responsibility)
The People Account metric measures the capacity of the project to bring social and economic comfort to the co-ops’ members and the communities in which they are located.
- Planet account (how environmentally responsible the project is)
The protection of the environment, which is the ultimate source of all of the resources used in the projects developed by the women, will be a very important attribute projects’ eligibility to the loans. The environmental awareness is considered in the projects evaluation process. Solar radios will be distributed in the communities. Reforestation programs will be implemented in the communities during the rainy seasons, coupled with Green living education program.