Eritrea: Battling poverty through microcredit
BARENTU, 15 July (IRIN) - Under a patchwork roof made of food aid sacks, while flies drift lazily and the chatter of children mixes with a gentle breeze, women in brightly coloured shawls gather to talk.
The topic of conversation is money, because the women are members of a microcredit project supported by CARE International and two national NGOs - Haben and Vision Eritrea - with funding from USAID.
CARE lends cash to community-managed savings and credit associations (CSCAs), which in turn lend the cash to their members.
Each of the 21 women takes out her meagre weekly savings and tucks it into a padlocked box while they talk. "We get a lot from the CSCA. First, we save money. Secondly, we get easy access to loans," said Bottule Adem, secretary of the credit association in Akurdet, a few hours drive west of the capital, Asmara.
Every week CSCA members deposit cash with the association and receive regular interest payments in return. Members can also take loans from their associations in proportion to their savings.
"We are self-reliant; before, we were idle," Bottule added. "Some of us own a shop, most of us have goats and sheep and some of us are working on irrigation."
Her association is one of 88 established since August 2001. Officials said they had lent almost US $311,000 to around 2,000 members, of whom about 94 percent of were women.
"The women who form these associations have a tremendous sense of ownership and a strong sense of responsibility. We make a point of targeting the women, because there are a lot of destitute women in Eritrea," David Gilmour, country director for CARE International in Eritrea, said.
"The national average of women-headed households is about 37 percent - a result of war deaths and national service - and some villages don't have access to a normal banking system," he added.
Relations between Eritrea's nine ethnic groups are harmonious, and despite reports of repression of minority religious groups, the level of tolerance is generally high.
The credit association in Akurdet, for example, includes both Christian and Muslim women from the Tigrinya and Tigray ethnic groups.
"Under Shari'ah law, interest must not be charged - we call it a service fee and money is passed within the association; we have not taken or paid any interest to outsiders," Bottule explained.
So far, there has been a zero-default rate on loans between members and their associations, or between the associations and CARE International.
POOLING RESOURCES
Further west, on the outskirts of Barentu town, where the trees are turning a soft green after the recent rain, 16 members of the Barentu CSCA have pooled their money to set up a poultry project.
The women from the Nara ethnic group sell their chickens in town for almost 50 Nakfa each (about $3) or 1.90 Nakfa per egg (about $0.13), but obtaining chicken feed has been difficult in the past few months.
"If the prices keep going up, we will trade goats and sheep," Hawa Mohamed, secretary of the Barentu CSCA, commented as she described the importance of the project to the women.
"We are now covering our household expenses; we are able to send our kids to school; to pay for uniforms and the school fees," she said.
According to CARE International, the credit associations have invaluable social benefits too: building trust and social capital within the associations, and providing a valuable entry-point for other training, such as gender issues and health messages.
"This association has created a very good relationship between us. We contribute money and visit when people have good or bad life events," Bottule said.
The average per capita income in Eritrea is about $130 per year, the IMF reported in February. The country faces several obstacles to high economic growth including persistent drought, high defence spending, the collapse of trade with neighbouring Ethiopia and Sudan, and weaknesses in economic management and governance.
Despite Eritrea's stagnating economy, where rationing and shortages are widespread, the 21 members of the savings association in Akurdet are generating work and precious income for themselves.
"Ideally [what] we would like to see is that these associations get to a critical mass, want to generate more capital, and then are able to go to the village bank for further loans," Gilmour said.
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