The Economic Upliftment Loan scheme started in 2014, when The World Federation identified an opportunity to support working men and women living in impoverished cities looking for a way to boost their business sales. Working closely with Africa Federation (AFED) to identify deserving individuals, The World Federation sponsored USD $200,000 through the form of Economic Upliftment Loans over the course of 3 years. A total of USD $201,470 between AFED and The World Federation was provided, changing the lives of 23 individuals.
What is an Economic Upliftment Loan?
An Economic Upliftment Loan scheme looks at providing a capital investment to deserving individuals in order to create an income for them, with a special focus around the concept of saving. This allows the individual to have some form of money for the future, if they need it, and means they are less likely to rely on community institutions.
The idea behind this scheme and giving the deserving accessibility to save is due to the lack of current financial support in impoverished regions, especially for those on low incomes. This means the most poor, although able to work on small scale self employment, often cannot do so due to the lack of capital. In addition, provision of small loans with low (or no) interest allows hardworking community members to purchase the capital they need to begin earning e.g. purchase of Rickshaw, small scale production line or animals for farming. At present ¾ of all microfinance loans are given by NGOs and charitable institutions as a method of supporting individuals out of poverty.
There is a standard procedure the applicants are required to adhere to as follows:
How have the loans helped?
Economic Upliftment Loans have a great deal of benefits to those on low incomes. A study by a World Bank study revealed: ‘Microcredit programmes have produced a greater impact on extreme poverty than at moderate income levels. In addition, it is important to emphasis that microfinance institutions have concluded that the provision of financial capital should be coupled with relevant training and skills in order to build human capital. Both of these together will lead to sustained levels of economic upliftment.
The loans have been very helpful to community members, without it they would not be able to grow their business, ultimately improving their lives and that of their family. Those who have been granted the loans have been making timely repayments from the profits which they are easily able to acquire from their improved business outcome.
However, there have been times where some of the repayments were delayed or defaulted and AFED strictly monitors any such behavior by issuing them reminder letters followed by warning letters.
Below is practical evaluation of how the loans have helped some individuals who only needed the finance to demonstrate their true income generating potentials in the ever growing market.