To Reduce Poverty in Africa, Charities Must Make Tough Choices

How to End Poverty in Africa charity impact

The following blog post has been compiled from a series of interviews with our programme coordinators in Uganda. We asked our collegues about the difficult decisions their local branches have to make as a charity in order to keep fighting poverty in Africa.

Running like a business to end poverty?

Running a charity is not exactly the same as running a private business. However, we still have to be as professional and efficient, especially when running not-for-profit microfinance programmes, which offer no-interest microloans even for the poorest.

This is often a key challenge for charities looking for reliable models on how to reduce poverty worldwide.

 

When dealing with extreme poverty and offering financial solutions to tackle it, the hardest thing to remember, is that in order to keep doing so you need to have a working business model that is financially viable. If you lose sight of this, you'll have to close up shop and you can’t help anyone anymore.

African poverty reduction: interview in Uganda
The below is the transcript of our interview with Habitat for Humanity staff in Uganda.

Understanding poverty in Uganda

Anyone who has an understanding of Uganda will know that there are two worlds. The western part is economically active, they haven't suffered a lot in terms of war, so it has been relatively stable. But, it is the exact opposite with the eastern side of Uganda:

  • Enormous instability
  • Drought
  • War and conflict situations
  • Lots of orphans and abandoned children as a result
  • High HIV/AIDS prevalence

Because of these factors, most of the humanitarian aid goes into reducing poverty in Uganda, especially in rural areas.

Stopping the poverty cycle with microfinance

Our housing microfinance programme in Uganda, is a business transaction where the families seek out loans and then repay them over time. Almost like creating a spark to spur on a local market or treating people respectfully, like free, independent individuals. Then later on, if they want to take out another loan, they can come back to us and then repay us once again. 

The most rewarding part is that these families become totally independent. When they come to us, it’s the same as walking into a bank. They have individual goals and dreams, and we can help make them a reality.

Tell me about your hopes and dreams

When you ask them “what do you hope to do with this loan?”, they will tell you “I hope to plaster my house, I want to do this and that”. With or without Habitat for Humanity, those are their dreams.

Each time I visit these families, I see a part of me in their struggles. I’ve been through it, lived through it.

Always believe in the investment you’ve made in them. It’s a story of success.

And now I’m proud that I’m an advocate for people who are actually in the same place in life that I was in. And that for me is a real success story. Going out to those families, listening to their stories, it’s something I identify with. It’s something that I believe in, that they’re actually going to make it.

All over Africa, and in Uganda, there are so many families that are definitely doing something to get out of poverty, working with us to find ways to end poverty.

reducing poverty in uganda smile

These families we help are not victims, they’re strong survivors

We definitely need to influence people’s thinking about these families.  We need to let them know that we are talking about giving a hand up and not a handout.

That is what housing microfinance is set to achieve. We know for fact that it works. It’s one of the best ways to stop poverty from spreading further, and to create wealth and opportunity.

Each time I visit these families, I have a lot of respect for them because they could turn out to be anything. The home construction process in Uganda takes a lot of resilience. I do not in any way despise them. I know that a few years down the road I will meet somebody totally different.

It’s the same thing I see in each family that we currently serve. I respect them because it’s not like they are getting handouts. They’re actually blessed to have partners who are supporting their home construction process.

The real story in Africa: don't believe the clichés.

The story in Africa is different than what  we see in the news and how it can be stereotyped. Children in secondary schools in urban areas in Africa do have access to the Internet.

They’re on Facebook, on Twitter, they can Google things and explain what is happening in the world and in Africa. Talking about reducing poverty in Africa as a whole is misleading, like saying that the UK and Ukraine are the same. 

We're talking about an entire continent with many countries developing extremely fast, with modern cities and a vibrant start-up scene while other countries are indeed suffering from extreme poverty. And even within these poorer African countries, it's far from being all black and white. 

Monitoring our impact: a key to poverty reduction

It’s one thing for an organisation to say it’s taking action and it’s another to actually go out and witness that impact first hand.

We’ve now reached the stage where the last time we visited those families, they had completely moved on, their situation is just not the same.

That is very encouraging, it gives me pride. It inspires me more in what I do, to look out even more for the families that we support and work with.

In 2005, Habitat Uganda wasn’t doing very well. The international network was on the verge of closing it and in the end about 70-80% of the staff had to be laid off. I was lucky enough to be among the staff that remained.

Habitat for Humanity Uganda micro-loans

One month to turn things around

We were given a period of one month to turn the organisation around. The expectation for Habitat for Humanity International to operate in a country is that your repayment rate [for the micro-loans programme enabling people to build their homes] is at 70 or 80%. But we were at 20%. 

When that ultimatum came, the staff who remained sat down toegther and said “look, we will either have to turn this around or fail those families. if we don't they’ll never have any hope of getting into new houses, having a decent life in this country.”

So everyone, whether they were in accounts, programmes, resource development or communications ended up being a loan collector. To actually go out and ensure that families that were being supported paid back the funding that they received.

In that one month we went from a 20% repayment rate for our micro-loans to over 80%.

Running like a business: making charities more efficient

When I go back now to the communities that we’ve been helping and I see that Habitat is still building, not for a hundred families but for thousands of them, it gives me pride. It was worth all the challenges. 

When the entire organisation went to collect those repayments, we talked to the local leaders to tell them what was at stake. That if the families we supported did not pay, they would not have Habitat for Humanity to help reduce poverty in Uganda anymore.

So we asked them to walk with us and to support us in ensuring that everyone who was receiving support could pay us back.

How to reduce poverty in Uganda

Making sacrifices to keep serving communities

I think for every success there have to be some sacrifices made. And in this particular situation we sacrificed quite a number of houses for us to be to have Habitat [in Uganda] now.

During that time when we had the MicroBuild revolving fund, one family’s repayment meant a loan for another family. And when one family says they can’t or won’t pay, that means another family can’t get a house.

How the whole process works is that Habitat will give you the loan in the form of construction materials. And so if you fail to pay back, we take back our materials. That means taking back the materials that were put into your house.

During that time, we definitely took back quite a lot of materials. We could not really take back the exact amount we gave because when you take back bricks or iron sheets, you don’t get the same amount of money for it [as when you bought new]. But we got the message across.

When we did that, most of the families we were working with were saying “Habitat is serious now”, you know?

“Look, I do not care about my neighbour.”

When we told one particular gentleman, the reason why we needed him to repay, “if you don’t pay back this loan, your neighbour will not have the chance to live in the house that you currently live in. He told us "look, I do not care about my neighbour".

That was something we didn’t want to hear.

If you don’t care about your neighbour, then our programme probably isn't for you. If you want to be part of our network and our mission, if you want to receive a loan, you need to care about your neighbour. We rely on people caring about one another to make this work and to offer micro-loans to the next family.

So we took away the materials that had been put into the construction of his house. First and foremost, the community has to buy into what we are doing. The local leadership has to buy into how we run our projects, and with their help we can change things for good.

They help us put pressure on people who do not see the long term goal, and do not see past their own interest.

Building water wells in Uganda

We work with everyone within the community, so long as the need is there.

The leaders of these communities, some of whom are beneficiaries themselves, act as speakers for their community and they have repeatedly told us “Habitat has made a difference in our lives”.  

But beyond this, they say, it’s the way we connect with them that is very different from the way the banks do. Our approach is humane, and if they ask for more money but can’t get it yet, we do our best to explain why.

And by doing so we want them to understand how our model works and why it’s important that it is financially viable.

Teaching financial literacy

Also, it’s crucial that we help them understand why they shouldn’t receive a loan that they won’t be able to pay back (which would turn us into enemies rather than friends and partners).

They aren’t used to dealing with financial services, so this type of informative, educational approach is extremely important to the population. That's why we also offer workshops in financial literacy to help them manage their money and loans.

By not yielding to the pressure of loaning them more money, we maintain this friendly, working relationship with the population. It would be a disservice to the families that we serve to do otherwise.

It’s only after they’ve paid back each micro-loan that we can then move onto the next item: whether it’s adding windows, a water well, a secure door, a concrete slab for the floor etc. In Africa, most of the housing works like this, it’s all incremental building. Improving their homes bit by bit.

 

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