Big John’s Self-Help Super Microfinance Scheme
Meet John Alhassan I. He is an Agricultural Extension Agent (AEA) at my office of the Ghanaian Ministry of Food and Agriculture. His job is to deliver agricultural information to farmers in his operational area and to help them improve their farms, whether that means reducing the level of poverty in a household by adopting better agricultural practices, or helping commercial farmers to get in touch with the market. John sees all types of strengths and needs in his daily work as an AEA.
One of the farmer groups that John works with is a women’s group of 24 members. He started building up this group using EWB’s Agriculture As a Business program last June. Through the program, group members were encouraged to contribute group savings to a bank account that John had helped the group to open a few years ago. Each member contributes 50Gp (about $0.35CAD) per week. After a few months, the group had built up their savings and they were ready to invest.
John was concerned that the group was too large to give a loan to each woman. If they divided the savings 24 ways, it wouldn’t really make a difference. Instead, he divided the group into four groups of six women each. He randomly selected one group to receive loans first by drawing the numbers 1-4 on pieces of paper and selecting one from a pile in front of the women. Each of the six women in the first group received a loan of 100GhC (about $65CAD) to invest however she wanted, but with the understanding that in two months time she would have to pay back the full 100GhC, plus 5GhC of interest. Most of the women are processors, so they elected to invest in bulk purchases of rice, groundnuts or shea nuts to process and sell at a profit. After two months, 100% of the money and interest were paid back to the group bank account, and the next round of loans were given out to six new women.
After each group had received the loan once, John upped the stakes – the next round of loans were for more money (120GhC), but the interest also increased (10GhC). Again, the repayment rates have been 100% so far. The group is currently on this second round of loans and their bank account balance is still increasing. The women are dedicated and determined and John is encouraging them every step of the way. The goal is to make enough money for the group to buy a grinding mill, a purchase which will give them an even higher return on investment.
Why do I think this is such a great story?
John is really passionate about helping people in his role as an AEA. Though many farmers have been trained over the years to sit around and wait for government money to come, John knows it isn’t coming any time soon. He also knows that the banks aren’t often willing to help; he already took this women’s group to the bank for a loan and they were rejected. Help isn’t coming from outside, so John is helping the group to help themselves. This group is serious, dreaming big and working hard to achieve their goals.
John has now taken this scheme to other farmer groups, where it is also working successfully. But why is he so successful in this approach? There are a few key elements of this grassroots project that have made it work so far:
- There is no time limit on this project. This is John’s own initiative, so he has taken the time to build up and groom his farmer groups until they are ready to handle serious money. He is not under pressure from donors or banks to report quarterly on his progress, and his funding isn’t going to dry up in 3 years. Instead, this home-grown approach gives the group and the AEA time to build up their skills and capacity to handle these loans.
- The group members have a personal relationship with John and a high degree of trust in him. He visits the group often to check in on their progress, encourages them when they need a kind word and keeps them accountable to each other. He hasn’t just come in to tell them what to do “for their own good”, but he has taken the time to build a trusting relationship with the group.
- The approach is tailored to the needs of the group. This isn’t some monolithic project coming in and prescribing a microfinance approach to fit all smallholders. Instead, it’s one AEA who knows the nuances of this group and has created a program that will work specifically for them. He has decided on the timing, the group sizes and amounts of the loans in collaboration with the group so that it best fits their needs. And this completely changes for each of the groups he works with.
This is an approach that is working for John’s farmers. Of course, it wouldn’t work if you tried to scale it up. It would be too complex, with too many variables and little things that would invariably go wrong – the farmers don’t trust the facilitator, the groups are thrown together to access loans, the money is too much or too little, the ToT didn’t teach trainers to visit the groups often enough. Farmers are smart – they’ve seen it all before, and they know how to manipulate the system. If you tried to scale this project, it just wouldn’t work.
The beauty of this approach is that it was developed out of a clear need: to find financing for the group to meet their goals. It’s a tailored approach that is based on a strong relationship between the AEA and the group members. The problem presented itself and the AEA was pushed to find a solution. In the development world, where we often find solutions in need of problems rather than the other way around, this is a refreshing turn of events.
I admire John for his dedication and creativity in meeting the needs of his groups. I wanted to highlight him as one of the many AEAs in the Ministry who are working tirelessly with inadequate pay and resources to do the best they can for farmers. These are the small beacons of hope that keep me motivated to keep working for change in the Ministry. John is truly an inspiration!
So I say, to all of you, keep doin’ it for Dorothy!