Micro Finance Program for Community Empowerment

Micro Finance Program for Community Empowerment

HELP‐O’s microfinance unit issues small loans to the rural poor who cannot qualify for traditional banking credit.    Micro‐finance is often seen as the only way they can establish a business and lift themselves out of poverty.  In 2006, we received two loans from Norwegian NGO, The Stromme Foundation, totaling 12.2 Million rupees. As a result of this, we have issued loans to 884 individuals this year and our default rate is less than 1% so far.

To be eligible for a micro‐finance loan from HELP‐O, individuals must be members of a small community saving group, part of the Housing and Livelihood People’s Company, set up by us.   The individual applying for the loan needs to be certified by other members of the small savings group who act as guarantors if the individual fails to repay the loan.  They then undergo a needs assessment to determine the financial risk associated with the loan. Loans are issued in amounts of 5,000, 10,000, 15,000, 20,000 and 25,000 rupees to the villagers and are generally used to buy equipment or raw materials for their business. If someone defaults on the loan, everyone in the savings group is responsible. The microfinance project has been implemented in Matara and Weligama and is run through the HLDPC. Alongside the loans, the Stromme Foundation provides funding for resource officers to assess the financial status of an applicant.  They fund workshops to build up the skills and capacity of HELP‐O staff in areas such as office management, technical aspects of micro‐finance and project reporting and writing.