Email to FINCA

FINCA is one of the micro finance institutions I'm trying to link with Educate!  They have a really great program supporting the poorest of the poor.  I had to do a lot of networking but finally I was able to get in touch with someone from their organization.

The email below is a 30,000 foot view of why I'm trying to develop a partnership (for those of you who are curious).

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Hi Scott,

 

Thanks for getting back to me.  I'd be happy to provide some more background on Educate! and specifically why we'd like to develop a partnership with FINCA.

 

Educate works with 415 S5 – S6 students in 24 different secondary schools across Uganda.  We teach a social entrepreneurship class that supplements our students regular school curriculum.  We teach this "social entrepreneurship" class once a week for two hours per class.

 

We also encourage the students to start Social Entrepreneurship Clubs (SEC) at their respective schools. In many ways our SEC clubs are structured like your Village Banking Groups – members elect their own leaders, design their own bylaws, manage their funds and are fully responsible for the success / failure of their ventures.  These SEC organizations are all economically autonomous, sustainable AND address problems that afflict the community.

 

Here is a for example:  The students of Light High School in Seguku had a problem getting haircuts.  The barber in town was far away, expensive (1,000 USH), and required the student be chaperoned by a teacher.  This wasted a lot of time, energy and money.  To rectify this problem the SEC held a small fundraiser, bought hair clippers with the proceeds, learned how to cut hair and now they cut all the students hair in Light HS.  The students are taking the proceeds of that venture and investing it into a poultry-rearing project.  The chickens they raise will be sold to the school to help improve the diet of the students.

 

This is one of many examples of our students being empowered to lead change within their school and community.  They leveraged the business + social responsibility skills we taught them and now they're making a difference.

 

But, the more these SEC clubs grow, the more they need access to capital.  Small fundraisers are no longer sufficient and they don’t teach students the principles of borrowing.  Educate! has selected the most talented students from each school, taught them business principles AND is willing to silently back their loans - we just need a lending partner willing to extend credit to our students.

 

(Educate! doesn’t want to lend to these students because we don’t want to mix tutelage with finance.  We strongly believe capital should come from a respected organization that is familiar with the logistics of lending money and already has the operations in place.)

 

Also, I know FINCA also accepts deposits.  We are trying to instill a culture of saving amongst our students.  If FINCA was willing to extend credit to our students we would mandate they all come up with the required money to open up a savings account.

 

During my research and meetings with other MFI experts - I ran into a few logistical issues.  Namely, most MFI organizations make individual loans (to members of a group) but we are asking for a business loan.  Furthermore, most MFI's and development banks only lend to registered groups of people (i.e. NGO's, community based groups, etcetera).

 

To get around this barrier I am going to register each SEC as a "community based group" - a legal entity with bylaws, specific members and a concrete mission.  We would ask that FINCA would make loans to these SEC community based groups and Educate! will silently back the loan.

 

A few other items:

 

- Most of our students loans would be between $50 - $100.

 

- Our average student age is between 18-19 years old.

 

- There are typically 15 students / SEC class

 

I think our SEC groups have a lot of similarities to the Village Banking Groups. I know that FINCA strives to be a “banker with soul” and I think this is an opportunity to empower the next generation of Ugandans with the skills, knowledge and capital to start socially conscious, financially sustainable companies that will help change the face of Uganda.

 

I believe in your organization and your mission and I hope we can develop a partnership.

 

I look forward to hearing from you.

 

Best Regards,

 

Joe Quaderer