ACCRA, Ghana — With the help of a new $300,000 grant from the Whole Planet Foundation, the nonprofit ID Ghana will be able to extend its innovations in microfinance to entrepreneurs in Accra, the West African nation’s capital. ID Ghana received the first tranche of funds in April.
ID Ghana will use the three-year grant to serve more than 1,400 new entrepreneurs. It has already provided small business loans to 9,300 people in the Accra area and aims to expand that number to 15,000 during the next three years.
Like all microfinance ventures, the ID Ghana program offers small, short-term loans to entrepreneurs who do not have collateral for conventional bank loans or otherwise would not qualify for them. The loans are intended to help lift these entrepreneurs out of poverty.
But ID Ghana does more than providing funds to its clients. It also helps them with innovative social services, including training in financial literacy, health and nutrition education, schooling, medical services, legal services and counseling for women who are victims of violence.
It was these innovations in microfinance that especially impressed the Whole Planet Foundation in making its grant. The foundation particularly cited ID Ghana’s “pro-poor innovations” in the following areas:
- Organizing clients into groups for training, transparency, and information sharing, while treating each client as an individual, subject to his or her own financial analysis and solely responsible for his or her loan.
- Using the Ghanaian state health insurance card for identification of its clients, ID Ghana helps clients enroll in the plan and pays half their annual dues for their first three years in the plan.
- Making a social worker available to clients at each of ID Ghana’s five branches in Accra. The social workers assist clients who are experiencing personal challenges that could impede their ability to repay their loans.
- Offering especially poor clients an interest-free loan, the “Kickstart Loan.”
- Requiring clients to maintain regular savings throughout the term of the loan so that they have funds to see them through an emergency without having to take out high-interest loans from commercial lenders.
In the view of some observers, innovations like these are critical to the sustainability of the microfinance movement and its role in eradicating poverty. Traditional banks getting into the microfinance business, an increase in the number of players in the industry and more complex demands for services from clients are cited as challenges to the microfinance movement. The clients demand lower rates and different types of financial services, such as new savings vehicles and insurance.
With the aid of the Whole Planet Foundation grant, ID Ghana is able to both be competitive in the changing microfinance industry and provide the kinds of new services its clients need. Its approach to innovations in microfinance is precisely the kind of thing the foundation was established to support. Whole Foods Market created the foundation in 2005. It’s mission: “to empower the world’s poorest people with microcredit and the chance to create or expand a home-based business and lift themselves and their families out of poverty.”
– Robert Cornet