For the final paper in my International Development class this semester for the Virginia Tech Planning, Governance and Globalization PhD program, I took on the topic of microfinance in developing countries. I explored the case of South Africa’s Women’s Development Businesses (WDB) Group to determine whether microcredit empowers or exploits the poorest of the poor. I was awed and humbled by the pioneering work of WDB founder Zanele Mbeki and her colleagues, who refused to stand by and watch their young nation leave behind a significant segment of the population — specifically the impoverished women in rural Mpumalanga, South Africa.
I want to pass on a tidbit of what I learned in writing this paper as my gift of hope, encouragement, and inspiration during this Christmas season.
Much may be wrong in this world, but this is a story of what women can do to help one another.
The financial landscape for women in South Africa, an emerging economy in development terms, mirrors much of what female entrepreneurs face around the world. Studies sponsored by the International Finance Corporation point to unequal access to finance, defined by race and gender.
- Black African women remain on the edge of economic activities.
- Women comprise 52% of the South African population, of which 91% of white women are banked, as opposed to 38% of black women.
- 42% of black women have no access to financial assets, with the remaining 20% resorting to informal financial products, including savings clubs, retail credit, insurance, or burial societies.
- Despite the fact that women traditionally repay loans at a higher rate than men, women entrepreneurs face prejudice and barriers to access to abundant private and public sector financial resources.
- Black women comprise the largest self-employed segment of the population, with the majority of their businesses in the informal sector.
- Only one of every four banks considered engaging in more women-owned enterprise programs, and only two microenterprise lenders exist to serve 56,000 primarily female microentrepreneurs.
- Rural areas remain disadvantaged and neglected.
South Africa’s Women’s Development Businesses fills the gap in microcredit and financial services for impoverished women in rural areas, and promotes social and economic empowerment.
Following the fall of apartheid and encouraged by the Grameen Bank microcredit strategies, Zanele Mbeki started WDB in 1991 to alleviate poverty and empower the marginalized rural poor. Starting with R20,000, which is the equivalent of little more than $2000, Mbeki gathered together female colleagues with business, financial, and banking skills set out to change the world, starting with a pilot program to meet the needs of 50 unschooled rural women in Acornhoek, Mpumalanga. The first WDB clients received R300 or $34 for their initial loans – a huge sum for women who had rarely had access to more than R10 ($1.10). After three months, the woman repaid 100% of their loans, launching WDB into its current operation with three divisions: WDB Microfinance, WDB Trust, and WDB Investment Holdings. Since its inception, WDB disbursed R36 million (over $4 million) to 35,000 women, meaning 150,000 benefitted – assuming an average five-member household.
The initial 50 women formed lending groups that were accountable for the collective repayment of the loans. No additional loans would be disbursed until all the initial loans in the group have been repaid. The women worked together to reach success. WDB taught them basic literacy, book-keeping skills and computer training. The women improved their lives as a collective unit rather than as individuals. The Mpumalanga women weren’t content with just one or two loans to get by, they took out larger loans, diversified, pooled their resources, and built business together – recruiting their children, husbands, and neighbors.
WDB gave these women access to microcredit, training, and education, and broke the cycle of poverty. Women who participated in their microcredit programs gained self-esteem, respect and improved status in the family, better access to nutrition and education for their children, improved home life and lower morbidity rates.
Their story speaks of faith, perseverance, and fierce determination NOT to accept the status quo.
Bravo to the women of WDB and their clients who proved microcredit can unlock entrepreneurship, as well as new avenues for confidence, self-worth, and hope for a bright future.
This is the season of giving. If you’re looking for last minute gifts, consider microloan gift cards from Kiva. It’s the gift that keeps on giving. As each loan is paid off, you can lend again and again.
Merry Christmas. Peace on Earth to all mankind.
May the favor of the Lord our God rest upon us; establish the work of our hands for us — yes, establish the work of our hands. Psalm 90:17
Full text posted on my Virginia Tech blog: “Women Microentrepreneurs: Fuel for Neoliberal Growth Engine.”
International Finance Corporation. 2011. “Woman and Business: Drivers of Development.” Telling Our Story, Vol. 5 (2).
Kiva. 2012. “Womens Development Businesses (WDB) Partner profile.” Fundraising information page. http://www.kiva.org/partners/178
Naidoo, Sharda, Anne Hilton and Illana Melzer. 2006. “Access to Finance for Women Entrepreneurs in South Africa: Challenges and Opportunities.” Study by Gender Entrepreneurship Markets (GEM) program on behalf of South Africa’s Gender and Women’s Economic Empowerment Unit of the Department of Trade and Industry (DTI) and FinMark Trust.
United Nations. 2011. “Microfinance in Africa: Overview and Suggestions for Action by Stakeholders.” Report by the United Nations Office of Special Advisor on Africa.
Westoll, Hendrina. 2010. Velvet Gloves and Iron Fists. South Africa: Business Century Publishing.
Women’s Development Bank Group of South Africa website. 2012. http://www.wdb.co.za/index.html
World Bank. 2012. “World Development Report 2012: Gender Equality and Development.” Report for World Bank. http://www.worldbank.org/wdr2012