Auckland social enterprise advocate, Bevin Fitzsimons shares his experience of social lending and the importance of interconnectedness when it comes to impactful lending.
How did an international loan fund make hundreds of loans over twenty-six years with 100% repayment?
Here’s the story….
For six years, I was Director of the Geneva-based Ecumenical Church Loan Fund (ECLOF). It raised money from church donors – initially for schools, hospitals, churches etc. In 1968, it began making economic development loans to communities and social enterprises in thirty-two countries. A local committee of bankers and experienced community developers, in each country, publicised and helped loan applicants plan their projects. Typical projects were: fish farms in Myanmar; tractor purchases in Tanzania; cycle rickshaws in India; wells and plantations in Malaysia. The local committee kept in touch with each borrower.
Soon after approving the fish farm loan in Myanmar, the local committee also approved a loan to a similar community fish farm a short distance up the coast. The interesting thing was that the committee told the second fish farm their loan would begin fifteen months after the first fish farm borrower (and other projects) had repaid a part of their loans. The second fish farm was immediately in touch with the first one. “Can we come and see how you do it? Can we come and help you? Please repay your loan – you’re helping us when you repay”. As a result, the two communities had a good rapport.
With repeated thank-yous from borrower two, borrower one had real pride in helping borrower two by simply repaying their own loan! They were not repaying to an anonymous foreign rich organisation. They repaid to help their neighbours and to feel the pride and helpfulness of this! Borrower two also learned a lot from borrower one before their similar project began. The system also worked well two borrower’s projects were naturally complementary. For instance, when one borrower’s loan was for a tractor and another’s was for an agricultural well.
The Ecumenical Church Loan Fund also had skilled local bankers in each national committee to ensure good planning, so those bankers’ reputations were also at stake should any loans fail. Bankers were always willing to be on the national committee to help their countrymen.
Bevin Fitzsimons now coaches social enterprises and helps them be unique in their marketplace through his company, Breakthrough Strategies. To pick his brain, you can contact him at email@example.com.