Moyiga Nduru
JOHANNESBURG, Nov 16 2005 (IPS) – The development of microcredit initiatives has proved a boon for thousands of the world s poor. But, even the most ardent supporters of these schemes acknowledge that disease may undermine the effectiveness of microcredit, by threatening the ability of people to repay their loans.
How then should microfinance projects be adapted in South Africa, which has a widespread prevalence of HIV (21.5 percent, according to the Joint United Nations Programme on HIV/AIDS, UNAIDS)? Is it possible to anticipate the effects of AIDS when planning a microcredit scheme, and to find ways of ensuring they do not bankrupt the initiative?
IPS set out to find answers to these questions, but discovered that a number of microfinance institutions were extremely reluctant to discuss them.
Five lending organisations were contacted, all of which refused to respond to queries. In one instance an official referred us to his head office, but insisted on anonymity: Don t tell them that I gave you the number, he said.
The fears surrounding AIDS in South Africa appear to have reached into certain parts of the microcredit industry although possibly not to the extent that HIV-positive persons have their requests for loans turned down.
There is a lot of discrimination against people living with HIV/AIDS, and there are instances where lenders insist on (clients) taking out a policy. But I haven t heard of people being turned down on account of their status, Frans Haupt of the Legal Aid Clinic at the University of Pretoria told IPS.
These words were echoed by Kammy Naidoo of the Johannesburg-based Micro Finance Regulatory Council (MFRC). I haven t seen any requirement, she told IPS. People may cede assets, but that s in a minority.
There is evidence to suggest that families affected by HIV take out fewer microloans, however. Affected households borrow 40 percent less than unaffected households due to financial pressure, said a 2003 report titled Effects of HIV/AIDS on the South African Micro Finance Sector .
Another report, The Evolution of the South African Microfinance Sector from 1992 to 2004: The Role of the Microfinance Regulatory Council , said some three million poor and low income persons had benefited from the small loans issued by microcredit institutions that give people a leg up the financial ladder.
The majority did not have access to formal finance before, noted the report, released Nov. 1 this year. According to the council, the worth of the industry has grown from 154 million dollars in 1992 to about 2.7 billion dollars to date.
But, certain campaigners claim this money hardly reaches the poorest of the poor.
People in extreme poverty, some living with HIV/AIDS, feel ashamed to come forward to access funding. They are completely locked away it s terrible, Marjorie Jobson, chairperson of the Johannesburg-based Khulumani Support Group, a non-governmental organisation, told IPS.
Recently a woman in a rural area got up and said, I m glad that I m not dirty like them , she added, describing the stigma attached to people living with HIV/AIDS.
Jobson is working with 22 women who are looking after AIDS orphans in the northern province of Gauteng, to help them become self-reliant. (A 2005 report from UNAIDS estimated that there are about one million AIDS orphans in South Africa.)
The women, mostly grandmothers, make fabric handbags. Last week they made 5,500 rand (about 850 dollars). The handbags cost 75 rand (about 12 dollars) each, said Jobson. The women share the money among themselves. They use part of it to buy more fabric, and take some home to buy food with. The women also make cushion covers.
According to Naidoo, South Africa s microfinance institutions are only allowed to give out loans of about 1,500 dollars per client.
The repayment could range from one day to 36 months. Some of the loans are for paying school fees and purchasing furniture, she said.
The MFRC is working to iron out abuses within the microfinance system.
On its website, the council notes that between January and September 2004 it received 409 complaints relating to excessive interest charges, 69 about illegal collection methods and 159 for concerns over deduction of repayment instalments.
