By Ibrahim Oumarr Jalloh, Kiva Coordinator, Salone Microfinance Trust, Sierra Leone
There is a lot of wealth at the top of a palm-tree. Many would like to reap the benefits it possesses.
The palm-wine taper wants the palm-wine, the palm-oil producer wants the palm-oil, the mats designers and broom makers want the palm-leaves – even the snakes and rats want to feed from the palm fruits.
There are no rules about who is allowed to try to climb and reach the top of the palm tree to get what they want, but it is clear, because of the difficulty of getting to the top, that adhering to the policies of the palm-tree is crucial to success. There should be no thoughts about possible cunning ways to get to the top – one needs to begin from below and then work to the top. When one reaches there, one can reap whatever benefit there is.
A get-rich-quick-at-all-cost syndrome has taken grip on the thinking and behaviors of many in my community, so much so that many are being led to deeper poverty. This get-rich-quick syndrome is especially prevalent on the poor of the poorest. These ones who inherited poverty, the ones who were born and found nothing in their name and the ones who dwelled with this reality throughout their early youthful ages.
The parents of these ones, only thinking of where the next meal would come from, had no time to think of how to give any form of formal education or technical skills to their children. Instead, the children were used as a child laborers. They spent their time selling peanuts, water or plastic bags here and there to supplement the family’s daily food allowance.
I want to follow the path of one of these children to show how their lack of patience leads them to be unable to reap the benefits of the top of the palm tree.
At a late age, a wave of realization struck a young man who was born into the kind of poverty described above. He said to himself “no, this situation is deplorable, I must fight poverty, I must not remain poor.”
He decided to take up trading – this being the only skill his parents gave him. After sometime, he noticed that at his age, when he compared himself with the capital he owned, he had not achieved what he wanted. “Oh” he cried, “business has not been growing the way I had wanted it to – capital is too small and yet I want a business commensurate with my age. How unfriendly is world of business!”
Then, like a dream come true, he heard of micro-finance institutions. He heard that they had come to help the economically active poor and he knew he fell in this pool. “This is the right time to match-up with other business people, to get a business that matches-up with his age” he told himself. I must go and get this loan, he thought.
But alas, micro-finance institutions like the palm-tree have imposed policies that limited this guy’s speed to accessing the loan.
“Man, you have to belong to a group in order to access this loan. Man, the loan amount you will receive from us is only dependant on your current business size,” the people at the microfinance institution told him. These policies seemed very unreasonable to this guy – since he had wanted to do away with poverty now and here.
“The initial loan size of $ 100 is too small, I want to buy this and that, if I am able to get this and that I will be able to make this and that profit”, he cried to himself. Without grace, wisdom and contentment, he began to think of cunning ways to the top of the palm-tree.
Similar to this client is the Loan Officer. He too was born poor and had lived and dined with poverty for donkey years. But fortunately for him, unlike the client, he was able to get some formal education. Now, he can read and write, and can speak some little English. He had hated his life-long-companion (poverty) for far too long and had wanted so desperately to part with him.
But alas, the palm-tree insists that there are no short cuts to the top. Without grace, wisdom and contentment with whatever little salary he was receiving, this Loan Officer began to try figure out cunning ways to get to the top of the palm-tree as quickly as possible.
It is often said, two like things will always attract each other.
Each micro-finance institution, like any religion or dogma, has rules and policies to keep its followers on the right path. Any deviation, thinking of oneself to be cleverer then the rules, will lead one astray. Some of these rules are: be part of a group of at least *a certain varied number of* members; group members must know each other VERY WELL; group members must not be RELATED to each other; your loan size is dependant on your business capital; and the list goes on and on.
But in this case, the client begged to the Loan Officer to overlook some of these rules, and the Loan Officer supported him. “That loan size is very small for me” said the client, “and what will be my commission?” asked the Loan Officer. In the end, they struck a deal and the rules were bent or readjusted to meet the client’s comfort. The MFI remained ignorant about this alliance that had been formed in the field. Eventually, a bad loan was disbursed.
Repayment remained good for the first five months, but soon delinquency began to show up and eventually even a loan default showed. In some cases, like this one, the clients’ family members will have to repay the loan and in other cases, client will have to runaway. When Loan Officer is found guilty of such a corrupt practice, he is fired and sometimes ended-up in police cells. The “get rich quick at all cost syndromes” has at last brought them greater poverty.
When this happens at micro-finance institutions, micro-finance as a tool to reducing poverty is questioned. Delinquency and default cases will always be the end result of this unholy alliance by the Loan Officer and the client. But unfortunately, it is micro-finance that is questioned and not the route causes to the delinquency or default case.
Micro-finance institutions can be of a great blessing to any community they finds themselves in, if the clients are honest to themselves and are willing to adhere to the policies of the MFI. And, it is even more important, that the MFI adheres to micro-finance best practices.
Most of our clients are hungry, illiterate and ignorant. They are attracted to the top of the palm-tree and they want to get there at all cost and at a go. Loan Officers must be wise and strong enough against all temptations (bribes and gifts) not to feed them with more than they can chew.
To both the client and Loan Officer I say, “POVERTY”, especially chronic poverty “can not be bull dozed – you must climb the palm tree!”