new-horizons-feb2010-eng

THE ECLOF MAGAZINEFEBRUARY 2010 | ISSUE 42

| Faith consistent investment | Lending after disasters | | ECLOF Armenia gets a gong | Peru: knitting pays for daughter’s physio |

| Typhoon Ondoy: ECLOF delivers food | India: dairy co-op thrives |

NEWHORIZONS

Page 2 NEWHORIZONS | FEBRUARY 2010

A year ago I wrote the following in my first Director’s Message: “We must evolve into a dynamic network that responds to the changing landscape, while honouring our vision and mission.” Twelve months later, we have moved closer to this goal in important ways.

When I wrote the above sentence, ECLOF International was at the beginning of a new strategic planning cycle. Now we have produced a strategic framework that will guide our work for the next five years. In the process, the input of all stakeholders has been sought repeatedly to ensure that everybody in National ECLOFs as well as partner organisations can identify with ECLOF International’s future strategic thrust.

The winds of change blowing in the global finance sector have had an impact on the microfinance industry as well. And those who don’t position themselves well risk getting lost. I believe our new strategic framework gives us the necessary direction. We start by identifying ourselves with our new slogan ‘financing human dignity’. This needs to become a reality in all we do.

We have also set ourselves goals in four areas: • Quality services: It will be imperative that we

offer our clients products that are tailored to their needs. We will therefore have to improve and innovate our delivery mechanisms. We will also make a special effort to reach underserved rural communities.

• Partnerships: We purpose to deepen existing relationships and explore new ones – both in the spirit of strengthening and complementing our services to impoverished people.

• Funding: We intend to diversify our sources, be it through new ownership models for National ECLOFs or the use of financial market instruments.

• Reputation: We aim to establish ECLOF International as a trusted brand in microfinance; changes to this effect will be more than skin deep and not only touch our visual identity but also how we work and govern ourselves.

It is now up to the staff of ECLOF International – in Geneva and around the world – to make sure that we plot a viable path to the destination set out in the strategic framework. I am confident that even if the winds of change are blowing hard, ECLOF International will not loose its way.

Irene Banda Mutalima,Executive Director

Director’s MessageThe winds of change

New Horizons is published by ECLOF International and distributed without charge among ECLOF members and other interested parties who request a copy. New Horizons is printed in English and Span-ish and is available online at www.eclof.org. The opinions expressed in New Horizons do not-necessarily reflect the positions of ECLOF.

NE

WH

OR

IZO

NS

| F

EBRU

ARY

201

0

ECLOF International

P.O. Box 2100 1211 Geneva 2, Switzerland

Telephone: +41 22 791 63 12

Fax: +41 22 710 20 05

Website: www.eclof.org

E-mail: [email protected]

Coordination at ECLOF International: Roger Said

Editor: Kath Burke www.kathburke.com

Designer: Andy Mattock, www.origin8creative.co.uk

Print: Wyndeham Grange

Now we have produced a strategic framework that will guide our work for the next five years

If you would like to comment on an article, or you have an idea for the magazine, please email [email protected] or [email protected]

On the cover: Malaikkal delivers milk to a customer. See page 6 for full story

FEBRUARY 2010 | NEWHORIZONS Page 3

ReflectionThe road taken

“I shall be telling this with a sighSomewhere ages and ages hence:Two roads diverged in a wood, and I-I took the one less traveled by,And that has made all the difference.”Robert Frost

I believe ECLOF reached a similar junction as that described above, in the poem “The road not taken”, by Robert Frost. After walking the same path for 63 years while the world changed, the EI Board had to make a decision:

should ECLOF stay on the trodden path or change? By approving a new strategic framework, the

EI Board indicates a clear direction for change to a path that will hopefully achieve a consolidated network that will reach much more “un-bankable” rural and urban poor and which will be conducive to a more equal world. The Board chose the road less traveled by.

A new road usually entails higher risk because it is new, different. No one knows what difficulties lie ahead or when they will present themselves. By choosing this path we must be prepared to be flexible, innovative, and resourceful. Evidently, we must have a clear sense of purpose, and this is what the strategic framework has given us. It is the map for the new road, one that will minimize the risks.

We will need leadership to create one strong network, financially viable, working with the same guidelines and financial standards. For this, the EI Board empowered the Executive Director to implement all the objectives of the strategic plan. She will need all our support and full cooperation, excellent channels of communication throughout the ECLOF family and the commitment of each National ECLOF, partner, staff, and board member.

I believe we will overcome the challenges. I believe that ECLOF International will be strong wherever there are disadvantaged and vulnerable people. I believe that ECLOF will maintain its Christian values, being a unique microfinance institution. We will be able to say: we do not regret the road taken. It made the difference! Now, let’s join hands and make it possible!

Ada Wiscovitch is a board member of ECLOF International and of ECLOF Dominican Republic.

ContentsSpotlight: Sri Lanka 4-5Crisis lending tips ECLOF Lanka shares the challenges of helping more than 7,000 people after the tsunami

Meet the clients 6-11India: dairy co-op back from brink 6

Philippines: old magazines pay children’s school fees 7

Armenia: bees make money for three women 8

Tanzania: HIV orphans and albinos go to boarding school 9

Peru: knitting helps disabled daughters 10

Uruguay: fashion show highlights Indian heritage 11

Hot topics 12-13Putting your money where your faith is: views from ECLOF and 3iG 12

People & partnerships 14-15Four countries have new chairpersons 14

Typhoon Ondoy: ECLOF staff deliver food parcels 15

Rose comes top of class 15

ECLOF Armenia gets a gong 15

Back story 16News from last June’s Africa workshop 16

6 INdIAMalaikkal helps over 20 villagers thrive off dairy farming

10 PERUKnitting ponchos pays for daughter’s physio

12-13 FAITH-BASEd FINANCEWhen money and morals add up

4-5 CRISIS LENdING TIPS: SRI LANkALessons from the tsunami


ECLOF Lanka shares tips on lending after a disaster

Road to recovery

SPOTLIGHT: SRI LANKA

Thousands of Sri Lankans whose families, homes and workplaces were washed away in the Tsunami are now back in business, thanks to ECLOF.

ECLOF Lanka’s ground-breaking tsunami lending programme has helped people to gather their strength and confidence after the 2004 tidal wave.

ECLOF Lanka’s Executive Director Gamini Samarasinghe says disaster lending is totally different from the usual microloan scenario. Repayment rates for instance were under half the usual rates achieved.

“The affected people have to be nurtured to bring them back to reality away from a traumatic condition,” he says.

“We need to give our clients confidence and train them in new ventures. It’s almost like developing a new human being – trying to recreate the life they had before the disaster.”

Tsunami damageThe Tsunami of 2004 killed nearly 35,000 Sri Lankans and made thousands more homeless and jobless. Hotels and factories were badly damaged or went under, taking their suppliers down too.

People came to ECLOF needing help restarting their businesses or trying a totally new project. Such people had lost most of their belongings in the tsunami so most banks would not lend to them.

“At first, people needed aid – they were not in the state of mind to take a loan,” explains Samarasinghe. “But after a while they wanted to get on with their lives, and some of them preferred to

get a loan rather than aid.”ECLOF Lanka waited six months until relief

agencies had given out most of their grants. Before designing the programme, the team asked local governments what help people needed most.

The Tsunami programme launched in June 2006, with loans to 22 societies and groups including non government organisations. ECLOF International’s partners Church of Sweden and Kerk in Actie backed the Rs 38 million fund.

In the past three years, ECLOF has recovered some 40% of the original sum invested. But this falls far short of the impressive 95% repayment rates ECLOF Lanka usually achieves.

Falling repayment ratesSo why did repayment rates slip in 2008 compared to 2007 and 2006?

ECLOF Lanka puts it down to political turmoil, a culture of tsunami handouts and clients’ poor business skills.

The intensification of the civil war in 2008 and 2009 with its security alerts hit small businesses. By 2009, inflation was running at over 22%.

“Eclof Lanka has not written off any tsunami loans but we find it difficult to pursue these defaulting lenders when they have only recently overcome a traumatic experience. ”

Disaster lending tipsGamini Samarasinghe shares ECLOF Lanka’s lessons on disaster lending.1. Offer grants alongside loans People recovering from a disaster need both. Borrowers after a disaster often have problems paying their loan back because they have to use 10% of the loan to cover basic living costs – instead of investing it in their businesses.

“If we design a portion of the money as a grant, then clients will likely be very appreciative and try hard to pay back the loan part.

“It will not create a division in their minds between ‘good’ relief agencies and ‘bad’ microfinance institutions.”

2. Team up with other microfinance institutions and grant-giving agencies Microfinance organisations need to avoid duplication and find a common way of working. Clients need to be clear on what is a grant, and what is loan money.

If one villager gets a grant to buy a machine while their neighbour only gets a loan, this creates an unfair advantage and resentment.

Lalani sells fish direct

Hena Kapuge Lalani buys dried fish straight from the harbour and

sells it to grocers and neighbours,

helped by her son. Lalani 44, is on

her second loan cycle, this time for Rs25,000, allowing

her to cut out the middleman

TRINCOMALEE

INdIA

INdIAN OCEAN

SRI LANkACOLOMBO

picture: Paul Jeffrey/AC

T International


In 2007 some microfinance lenders in Sri Lanka gave up on recovering their loans. So some ECLOF clients may have expected us to turn our loans into grants too.

“We found it a difficult task, introducing a credit scheme to people who are used to relief donations and handouts.”

“Repayment rates decreased and some microlenders converted their loans into grants, increasing the pressure on ECLOF Sri Lanka who didn’t want to do that.”

3. Offer a long-term relationship – to encourage clients to repay their loan in full.

“We need to give them confidence that the first loan is only the beginning of a new partnership and we’ll continue to support them as they grow.”

4. Give upfront business training – including the basics of project management and book keeping.

Repayment rates suffered partly because some clients picked non-viable projects or struggled to manage their cash flow.Microfinance teams need to examine business projects to make sure they will bring in enough money to repay the loan.

“People appreciate and even become proud that they are receiving a loan on the strength of their project.”

“It is paramount that we tell people keen on getting a loan this is not a gift but a loan. And so every cent of it must be spent on the project you have visualised.”

Funders study: Microfinance and emergency aid

Two of the funders of ECLOF Lanka’s Tsunami programme have commissioned research into how best to do microfinance as part of emergency aid. Kerk in Actie and Church of Sweden are to report back in spring 2010 on how microfinance can work with emergency aid to support social structures, and become more sustainable.

Facts about ECLOF Lanka (as of December 2009)

• Number of staff: 21• Outstanding portfolio: US$ 0.973 million • Active clients: 7,817 • 95% of clients are women

How the Tsunami programme worked

Who got loans? People whose jobs were destroyed, eg fruitsellers to hotels or swimming costume makers. People who lived in Tsunami areas.

How many were helped By September 2009, the programme had helped 454 groups and societies. When the loanees’ families are counted, this makes for more than 7000 beneficiaries.

Business results About 90% of loanees have set themselves back up in business in farming, trading, dressmaking, selling foods and sweetmeats and in carpentry.

How groups were organised ECLOF set up small groups of 5-10 loanees. That’s because small groups were more feasible to manage than larger ones.

Loan terms 12 months to pay back. Waived the usual 10% mandatory savings. Interest rate was cut to 10% instead of the usual 22%. ECLOF Lanka lowered its rates to give clients the best chance of rebuilding their lives.

Total sum lent Over Rs80 million. Most of the money has been recycled – with previous repayments funding the next cycle of loans.

Repayment rates Of the original Rs38m starter fund, ECLOF has collected Rs 15 million, and the rest is in arrears. Repayment rates have fallen, mostly due to political turmoil in 2008 and 2009:

• 88% – at the end of 2007 • 71% – at the end of 2008 • 48% – at the end of June 2009.

Malani weaves for her retirement

Amarasinghe Adikarige Malani

weaves mats and bags, which she sells at a weekly

craft fair. Malani, 55, is a widow with two grown sons. Before her first ECLOF loan

of Rs 20,000, she had to borrow her

raw materials


Village woman turns around dairy co-op – with ECLOF’s helpA loyal ECLOF client has helped more than 20 of her neighbours in Southern India to earn a tidy profit from their milk.

When Malaikkal came to ECLOF India for advice in 2003, her dairy co-operative was losing money. Malaikkal, 55, had founded the co-op in 2000 out of good intentions, but expensive debts and underpricing were destroying profits.

“I now procure nearly 250 litres of milk every day from the members of the cooperative, to sell on. This has boosted my business,” says Malaikkal.

The cooperative, in Dindigul district in the state of Tamil Nadu, collects the milk from members’ farms – including Malaikkal’s own – and sells it on to shops.

The members, mostly women, own 35 cows in total. The village council and the Department of Rural Development helped Malaikkal set up the co-op in 2000.

“Before I got the first loan from ECLOF”, says Malaikkal, “I had only one cow and I couldn’t grow my business because the money lenders I went to charged exorbitant rates,” – enough to eat up all her profits.

Four successive ECLOF loans have helped Malaikkal buy four more cows and pay for her son’s wedding. She has borrowed US$ 1057 since 2004.

With profits from her milk sales she has renovated

her and husband Muthan’s house and invested in gold jewellery, which holds its value well.

Malaikkal was so inspired by ECLOF’s help for her business, she decided to set up a group to help other poor women save and get loans. She founded Alukkuvarpatti Self Help Group in 2003.

“What makes Malaikkal so special,” says ECLOF branch manager Thanga Kumar ,”is not only has she lifted herself out of poverty, but she encourages others to do the same.”

MEET THE CL IENTS

Fast facts: India• Republic of India population: 1.2 billion (UN, 2009)• ECLOF staff - 37• Number of clients - 9739• Proportion in farming - 60%

(half of whom are dairy farmers)• Women clients 100 % • Total number of loans: 1675

(as of December 2009)

I buy nearly 250 litres of milk every day to sell on

From left to right: Malaikkal with another group

member, and ECLOF India staff, including regional manager Thanga

Kumar, and Executive Director

Vijay Jacobs

pictures: Christof Krackhardt/Brot für die Welt FEBRUARY 2010 | NEWHORIZONS Page 7

Some of Manila’s poorest women are funding their children through school and sprucing up their homes by making bags out of old magazines.

The women make the bags and jewellery for a church-led ecological co-operative near Manila Bay.

Since 1991 New Life Community Multipurpose Cooperative has been helping Manila’s poorest earn an income from reusing waste materials and

purifying water.Some 35 people

work for New Life, including 28 women in the bags section. The women also make paper mâché

jewellery from old magazines, newspapers and telephone directories (see photo, top).

New Life recovers waste materials from rubbish for reuse, purifies tap water for its members, runs a mini-grocer’s and sells clothes.

The co-op is on a cleared area of Manila’s biggest rubbish dump - Smokey Mountain.

So called because of the black smoke billowing from it, Smokey Mountain became a symbol of poverty in the Philippines. Shanty town dwellers living on the dump used to scrimp a living by scavenging items to sell at junk shops or recycle.

Now many poor people have relocated to cleared parts of the dump to live in solid Government houses with electricity and running water. The co-op’s catchment covers three neighbourhoods in Balut in Tondo district. The co-op was set up by the Parish of the Risen Christ and has 110 members

including employees and the board of directors. Before 2006, when ECLOF Philippines stepped in,

the co-op survived on grants and donations. Poor financial planning had left members at one point unable to pay the firm’s electricity and water bills.

Three ECLOF loans later, and the co-op has doubled its income and taken on two women to run a mini-grocery. The latest loan for PHP 350,000 (US $7,550) in January 2009 was used to buy waste plastic bottles from corporations, and to stock the mini-grocery.

The mini-store, next to the bags factory sells staples such as rice, cooking gas, coffee, milk, soap, noodles and coffee to local residents.

These eco-conscious bags are

selling well in the US – thanks to help from the Philippine

Department of Trade and Industry

(DTI). The DTI trains the women and

takes them to trade fairs in Manila to

show off their bags to potential clients.

The DTI also pays their trade fair fees.

Some 28 women work at the co-op, making bags from

old magazines

Old magazines pay for school fees


MEET THE CL IENTS

Three women from Armenia’s most isolated province are making a healthy profit from making and selling organic honey.

The trio, from a village in Vayotz Dzor, have borrowed from ECLOF to double their number of hives and more than double their profits to AMD1.2 million (nearly US$ 3,200) a year.

“Now we can afford to pay my daughter’s university fees, which was a real problem,” says Armanush Khachatryan, 57, and the eldest of the women. “We were oppressed, but now we are more self-reliant and we are more protected and resilient.”

Armanush runs Shatin 1 Solidarity Group with her daughter Hasmik Mkrtchyan, 21, and Melania Matevosyan, 46. Hasmik is studying literature with teaching at the local university, Gitelik.

Although the women have kept bees since 1998, the income barely supported them until they got help from ECLOF.

The trio are on their second loan, this time for AMD500,000 (US $1,330) to buy extra beehives, strings for honey-frames and beeswax layers.

“Banks treat us coldly and administratively,” says Armanush.

“At ECLOF we have free expertise and we know our payments contribute to other poor people.”

With their profits, the women have bought a fridge, a TV and a washing machine. They’ve also treated themselves to new clothes and nicer food. And the rest gets pumped back into the business.

Beekeeping in Armenia

For generations, Armenians living in the mountains have kept bees – for honey for their own breakfast tables. But when communism collapsed In 1991, so did the big state-owned bee farms. This left a gap in the market for local producers to fill.

Armenia’s best honey comes from the Armenian Plateau – where bees gather honeydew from more than 3500 species of organic Alpine flowers.

Armanush’s back garden is a hive

of activity. Since April 2008

the women have expanded from 28

to 60 hives

Bees make double the moneyBeekeeping profits fund Armenian woman through university

Fast facts: Armenia

• Republic of Armenia population: 3.1 million (UN, 2009)• ECLOF Armenia has up to 70 bee keepers on its books• Across Armenia the NEC lends to 2,400 farmers (figures

to end 2008)

From the left: Armanush and

Melania with Hasmik who is

checking the hive is healthy and that

the queen bee is in place


“Strive to Excel” – that’s Hady

Academy’s motto. And children start

young. They can board from age six

A Tanzanian primary school can educate more AIDS orphans and gifted children who live far away, thanks to a boarding facility, built with an ECLOF loan.

The Hady Academy upgraded from a day school to a boarding school in 2008. And its two new boarding wings, sleeping 120, were booked up from the day they opened.

Hady Academy in the northern city of Arusha has 50 staff and 700 pupils from all races and religions. Children range in age from 3 to 14, and can start boarding from age 6.

Pupils hail from as far afield as neighbouring countries Uganda, Kenya and Rwanda – up to 1000 miles and an 18 hour bus ride away. Before the new wings were built, many children had to stay with relatives locally.

The Munikos – a husband and wife team who run the school – wanted to save children the stress of long commutes. Accountant and school manager Ruth Muniko has found the boarders do better academically than they did as day pupils, and their parents feel relieved their children are in safe care.

“All my children are pursuing their education with relatively low pressure,” says Ruth. “The loan has helped parents who were worried where to send their children to a better school.”

Building work started on the new wings in 2006, and finished in 2008.

Hady Academy has already repaid most of the TSH40m (US $29,285) it borrowed from ECLOF.

With the extra revenue from the boarders the Munikos have bought some land. In the next phase of expansion, they want to build a medical dispensary and library.

Hady Academy is one of five Arusha primary schools that ECLOF Tanzania lends to.

Poor children and HIV orphans do well at boarding schoolA new boarding wing helps more poor children get a decent education

School manager Ruth Muniko takes in HIV orphans and

albinos. Albino children need

protecting, she says, since a wave

of killings in 2009


MEET THE CL IENTS

A mum of two disabled children is knitting her family a brighter future – thanks to two loans from ECLOF Peru.

Domitila Roca and her husband Felix have started building a new house from the proceeds of their knitwear business. The Rocas, from Northern Lima, Peru, have restarted physiotherapy for their daughter who has lost the use of her legs.

In the past six years the Rocas have sold about 2000 sweaters, ponchos, bonnets, scarves ad the like – mainly to the Italian market.

Their first loan was to buy Alpaca wool. And the second loan was for PEN 1300 (US $450) – to give working capital to increase production. The business sells about 30 sweaters a month, and in busy months Domitila contracts two women to knit for her.

“The years of suffering are over,” says Domitila, now that the business supports their three grown-up children who all live at home.

Their eldest daughter, Nelly, 29, has a learning disability similar to Downs Syndrome. The younger daughter, Lucy, 27, can no longer walk since she got untreated meningitis at 15. Lucy checks the knitwear for defects before it goes on sale. The Rocas’s son, Jesus, is 20.

The idea for the business came in 2004. Felix was working in Italy when he complained to Domitila about the cold. So she knitted him a sweater and sent it out to him. Felix’s colleagues liked his sweater so much they wanted ones too.

The Rocas sell most of their knitwear in Italy where they can earn five times the sales margin they would get for selling in Peru.

Domitila posts the knitwear or sends it abroad through her network of friends who take it with them on their travels. Besides Italy, her clothes have sold in the USA, Egypt and Australia.

Domitila’s cheery knitwear goes

down a treat among fashion-

conscious Italians

Domitila’s ponchos pay for daughter’s physio

Domitila shows off a range of

ponchos knitted with wool bought

with a loan from ECLOF Peru


Five families with Charrúa Indian blood have put on a fashion show celebrating indigenous cultures, thanks to ECLOF.

The Choñik co-op in Uruguay’s capital Montevideo staged the show as part of the country’s biggest artisan trade fair – Rural del Prado.

The group borrowed UYU20,000 (about US $1,000) from FEDU (ECLOF Uruguay) in October 2008, repayable over 13 months.

“The ECLOF loan helped us buy organic suede and cotton, paint and machinery to produce this clothing line from scratch,” says Paula Hernandez, from Choñik. “We increased our production and improved our income too.”

The group, ranging in age from 33 to 69, include a knitter, a sculptor, a jewellery designer, a dollmaker and a musician. Choñik members make and sell clothes, jewellery and handicrafts based on Charrúa Indian designs.

And they give talks to educate modern Uruguayans about the value of traditional cultures – mostly around Montevideo, where a third of Uruguay’s 3.3 million people live. The organisers run free workshops to educate families about domestic violence, HIV and Aids. Any families in need get

referred to local non governmental organisations (NGOs) for help.

Choñik also visits schools giving talks to children about traditional folklore, language and music.

“As descendents from indigenous people it’s important for us to spread our ancestral culture,” says Paula. “This includes valuing the world, being in harmony with the environment and respect for women and the elderly.”

This striking shawl uses traditional

Amerindian motifs

Fashion show highlights indigenous culture

Choñik’s Charrúa-

inspired designs won them

a showcase at Uruguay’s

biggest trade fair. Some 8

per cent of Uruguayans

have Amerindian blood. And

the national football team is nicknamed the

Charrúas


ECLOF International’s strategy for the next five years has been launched under a new slogan: Financing Human Dignity. For many this might at first seem a striking contradiction in terms; “finance” and “dignity” – can these really go together? Have

we not just gone through a year during which the excesses of financial businesses – loans, investments – have led to a world-wide economic crisis?

In the gospel of Matthew we read: “No man can

serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon” (King James version, 6:24). Mammon – from the Hebrew word for money – is commonly understood as an idol of material wealth.

The finance industry, it seems, is as alien to the Christian ethos as can be. So how do we at ECLOF International reconcile finance with dignity?

A recent article in The Economist1 has pointed out that the currently popular view of businesses as vehicles of greed is severely skewed – they actually

When money is a force for goodHOT TOPICS

Katinka, what is faith consistent investment?Faith consistent investment ensures that faith institutions invest in line with the values and principles put forward by their scriptures. Different faiths share a lot of the same values and principles –for example that we are responsible for our actions or that we should take care of our environment.

Many faith institutions see investment as something technical and morally neutral. They are not aware that decisions on investments are not neutral; goods and activities that are financed by investments can contribute to social change but they can also do harm – and the investor might not even be aware of that!So what can a faith institution do in practice?We can distinguish three basic approaches:

Negative screening means faith institutions don’t Invest in goods or activities they object to, like gambling, tobacco or arms production.

Positive screening measures companies on their environmental, social and governance practices, benchmarks these companies on industry level and chooses the best out of each industry. On top

of this, active shareholders can achieve positive corporate change by engaging as responsible co-owners of a company.

Impact investing takes a more proactive approach by using funds to contribute to social or environmental change while generating returns. This could mean financing community development organisations, providing equity to companies that are active in affordable housing, clean water or health care or loan capital for microfinance institutions.

How far has faith consistent investment come?Many faith institutions, especially the smaller ones, are doing negative screening but they tend not to be proactive.

While the Methodist Church in the US and the Anglican Church, actively invest to support progression of their values and principles, thereby generating a positive impact.

Given the enormous number of faith institutions around the world though, faith consistent investment still has a lot of room to grow – and its potential impact is huge.

Finance and morals: a potent mixReligious groups are putting their money where their faith is,

says Katinka van Cranenburgh, General Secretary of 3iG.

Here we ask her how faith-consistent investment works.

Ethical finance can help poor people reclaim their dignity, says ECLOF International’s Executive Director Irene Banda Mutalima. Here she introduces the views of two leading experts on the new trend for faith-based finance.

Financing human dignity: a faith perspective


When money is a force for good

Microfinance offers a lot of opportunities to faith investors, says Rupert. However, with the entrance of commercial investors the market is also becoming more competitive. And for good reason, as global demand for microfinance far outstrips supply – even by conservative estimates.

Rupert sees different ways for faith investors to become involved in microfinance. Most commonly,

investors are loaning their money – either directly to microfinance

institutions (MFIs) or indirectly through microfinance funds, so-called Microfinance Investment Vehicles.

The economic downturn has resulted in many MFIs finding it

more difficult to access funding. Faith institutions with long term capital resources should take advantage of the situation for the benefit

of local communities and their own investment returns.

As the market matures, faith institutions should also consider providing equity to MFIs which will give them ownership of the operations. This might help protect MFI clients’ interests – not necessarily a priority of commercial investors who are acquiring well-performing MFIs to increase their retail distribution in emerging markets.

Another benefit of controlling MFIs, Rupert points out, is that they are among the few actors in emerging markets that have information about credit histories and purchasing patterns. Investors can cross-sell this information to other financial service providers. Again, faith institutions can ensure that clients’ interests are protected.

The International Interfaith Investment group (3iG) is building a network of ‘active capitalists’ from faith

institutions willing to invest in a socially responsible way. 3iG’s General Secretariat is based in Barcelona, Spain.

For more information on 3iG see www.3ignet.org.

Microfinance: opportunities for faith institutionsA 3iG study reveals how religious groups are investing in microfinance.

Here researcher Rupert Melsom previews some trends he’s uncovered

thrive on things that are positive from a moral point of view: co-operation, creativity and an aversion to monopolies of power. What is still lacking here though is the use of these positives to a good end.

Our end at ECLOF is to enable our clients to do well economically, which is one condition for living a life of dignity. Poverty robs people of their dignity by disempowering them, taking away their autonomy and their ability to plan ahead. They are exposed to the vagaries of life without defences. Financial services are our means to make sure that our clients can keep their dignity by creating enough wealth to pay their children through school and be able to afford health care and decent housing.

As a microfinance organisation dedicated to combating poverty we need to work to the same professional standards as any finance provider while never forgetting to what end we do what we do. This is a continuing challenge for ECLOF staff and Board members around the world.

In the end it comes down to this: It is indeed right to serve God and refuse to idolise mammon. But there is nothing wrong with letting money work for the good of impoverished people. 1 The silence of Mammon, The Economist, 17 December 2009


BOLIVIA Bishop Javier Rojas Terán

ECLOF Bolivia (ANED) has chosen a methodist bishop from one of its member churches as the new chairperson. Rev Javier Rojas Terán is a bishop at the Evangelical Methodist Church of Bolivia. He holds degrees in Business Administration and Higher Education.

dOMINICAN REPUBLIC Freddy de los Santos

“What we see as difficulties are really opportunities that God provides us with. In my new role I would like to see us to do great things no matter what problems we might encounter.”

Freddy is a finance expert at one of the world’s largest microfinance organisations – Opportunity International. He is Finance and Administration Manager at the subsidiary: Association for Investment and Employment (ASPIRE). Freddy has worked in accounting and finance and has taught finance at a university.

PERU Elizabeth Arbe

“I would like ECLOF Peru to be financially strong with a human face; living up to established standards and uncovering the hidden potential of its clients.”

Elizabeth is a lay pastor at the Methodist Church in Peru, where she has been National Treasurer since 2001. She is director of an import company, where she has worked for 18 years. She has degrees in economics and business administration.

INdIA Bishop Taranath S. Sagar

“ECLOF is transforming the lives of the poorest of the poor in India. As the Chairperson of ECLOF India I want to enable us to do this even more effectively.”

A Bangalore bishop joins ECLOF India as chair person. Rev Taranath S Sagar has been General Secretary of the Methodist Church of India for five years. He is Bishop of the Bangalore Episcopal Area. And he holds degrees in divinity and political science.

Four new chairsTwo Methodist bishops, a lay Pastor and a microfinance expert are the new chairpersons at national ECLOFs.

PEOPLE & PARTNERSHIPS


ROSE COMES TOPA National ECLOF leader has graduated top of her class in a masters degree for Africa’s senior managers. Rose Wanjohi, Executive Director of ECLOF Kenya is now an Executive Master of Science in Organisation Development.

“It was challenging to combine my family, work and school obligations but with focus and hard work I did it,” says Rose.

“I feel my new skills will enable me to lead better in the face of higher work demands and a changing finance environment.”

Typhoon Ondoy: ECLOF and NCCP deliver food parcels

ECLOF Armenia picks up a ‘Heiferyan’ Forget the Oscars – ECLOF Armenia has won a ‘Heiferyan’. The award from Heifer Armenia honours five years of close partnership work. The lighthearted ‘Heiferyan’ is named to sound like Armenian family names, many of which end in ‘yan’.

Heifer staff presented the award at a conference in September, to celebrate Heifer’s tenth anniversary of working in Armenia. The conference brought together more than 150 people from Heifer-funded organisations as well as the Republic of Armenia and the Armenian Apostolic Church.

Edina Santos cried with joy when she received an emergency food package after a typhoon destroyed her market stall.

When Typhoon Ondoy hit Edina’s clothing stall in Manila last September, the floods washed away everything but the mannequins.

“We felt alone when nobody, not even the local government, was helping us. But then ECLOF was there for us, showing itself to be an organisation with a true Christian heart,” says Edina.

The Greater Manila branch of ECLOF Philippines delivered emergency rations to 136 out of 220 clients directly affected by the typhoon.

Manila received the highest rainfall in history during the typhoon. The storm and heavy flooding swept away small businesses, cut off transport routes, interrupted telephone networks and killed several hundred people.

Basic food items were hard to get in Manila because the storm destroyed stocks in nearby

markets and groceries. And panic buyers had emptied the shelves of shops further afield.

The relief scheme was a joint effort between ECLOF Philippines and the National Council of Churches in the Philippines (NCCP).

The packages contained staple foods: 5kg of rice, 500g of sugar and mongo beans, 250g of salt and dried fish and 500ml of cooking oil.

ECLOF Philippines delivered the packages to clients’ doorsteps while NCCP paid for the goods.

Minnie Anne Calub, Program Secretary for Relief and Rehabilitation at the NCCP, adds that the food packages lightened the burden on people struggling after just losing their homes, their livelihoods or family members.

Manila Branch Manager Jennie

Garin with vegetable seller Emma Arevalo

from Marakina Public Market.

Emma has been an ECLOF client since 2009. The market is within walking

distance of ECLOF offices.

ECLOF client Edina Santos receives her

relief package from Manila

Branch Manager Jennie Garin

Naa Asante, Executive Director of ECLOF Ghana, presented her team’s marketing and outreach strategy. ECLOF Ghana is setting up lots of local units. The team defines collateral flexibly, gives loans without charging upfront, and approves loans in a way that’s clear for clients to understand.

Naate Masangazira, Executive Director of ECLOF Uganda, reported how lending to churches and church-based organisations has worked well. He thinks this is because both are non-profit, socially conscious and faith-based.

Roy Ngure, Finance and Administration Manager at Kenya ECLOF gave a detailed account of how Kenya ECLOF had migrated to a new management information system (MIS) and could share some valuable lessons they had learned along the way.

Cheryl Frankiewicz, an International Labor Organisation consultant led a session on managing risk in microfinance. Cheryl who works for the ILO’s International Training Center (ITCILO), stressed that microfinance is inherently risky. So you need to be clear who manages which risks across the whole organisation.

Martin kyndt, ECLOF International’s Chairperson outlined the emerging Strategic Framework for 2010-2014. There are four strategic focuses: quality of service, expanding partnerships, diversifying resources and strengthening ECLOF International’.

Irene Banda Mutalima, Executive Director of ECLOF International, said it’s important that partners can trust ECLOF International to look after their money well. For that ECLOF International needs effective management and governance and needs to track its performance better.

African National ECLOFs share experiences and look aheadIn June National ECLOFs from all over the continent have shared experiences and discussed strategies for growth at the African Regional Workshop in Moshi, Tanzania

Felistine Natai, Kaanaeli Ulomi and Anna Rabi Munuo are on the Executive Committee of Nure Women’s Dairy Cooperative Society in Ng’uni village. They have borrowed almost US$ 20,000 to buy a van to deliver morning milk from almost 200 members to the nearby town of Moshi.

ECLOF INTERNATIONAL150 route de Ferney, 1211 Geneva 2, Switzerland

Tel: +41 22 791 6312 Fax: +41 22 710 2005 Email: [email protected]

Documents

new-horizons-feb2010-eng