From a small business loan to a happier future – how communities in Sierra Leone are overcoming COVID-19 challenges
Marie is a widow with four children from a poor rural community in Moyamba district, southern Sierra Leone. With no other relatives living nearby to support her, it was a struggle for Marie to feed and clothe her family. Marie had no choice but to work on nearby farms in exchange for a small amount of food. She and her children had become used to only eating one meal a day at most.
Marie has been able to turn a corner in her life since joining our project with MAPCO. She has completed a training course in small business management and accessed a loan from her local community-based organisation (CBO) to start up her own business. Having developed the skills and confidence to assess market demand and market her products, Marie decided to set up her own business selling rice and palm oil in the community. Her business has gone from strength to strength and Marie has since paid back her loan. She says, “I now provide three meals a day for my children and they all go to school happy”. For women like Marie, the impact of being able to independently earn an income cannot be understated, as it empowers them to gain status and respect within the household and the wider community.
Marie and many other people benefitting from this project have taken out loans to invest in their businesses and repaid them in full, despite experiencing a tough period with COVID-19 restrictions, travel bans and market closures.
What has contributed to their success in this challenging climate?
Why our approach works
With MAPCO, our local partner in Sierra Leone, we have been working with local community-based organisations (CBOs) to set up micro-loan schemes for many years. These loan programmes enable anyone who is a member of the CBO to access a loan for business purposes. It can provide them with the capital to purchase cooking supplies such as oil and salt at the market to trade in their community, or to buy the ingredients needed to make soap. Combined with business skills training provided by the project, it gives people the boost they need to start enterprise activities of their own.
The loan schemes are managed and owned by the community-based organisation (CBO), with initial support from Action on Poverty and MAPCO in the form of start-up funding and materials. For example, each CBO receives a loan book to maintain clear and transparent records of the loans paid out and repayments. An independent loan committee, elected by CBO members, is responsible for managing and distributing the loans. MAPCO also works with the community leadership to create their own by-laws – a set of rules enforced within the community to help the loan scheme run smoothly – such as fines for late repayments.
Crucially, this ownership of the loan scheme by the communities themselves creates a strong sense of ownership amongst members. As each loan is repaid with interest, the loan funds gradually grow and become a valued community asset which is theirs to protect for the future. Unlike many other micro-finance programmes, the loan funds will not be taken away from the CBOs once the project ends, so community members and leaders have a strong incentive to safeguard their loan funds.
Adapting flexibly to a crisis
When COVID-19 first hit Sierra Leone, the restrictions imposed by the government to control the spread of the virus hit rural communities particularly hard. There was a ban on travel between districts, weekly markets were closed and food prices started to soar.
With MAPCO, we took quick action to prevent small businesses from collapsing by providing community organisations with their next instalment of loan funds earlier than planned. Normally each CBO would collect repayments and make the next round of loan disbursements on the same day, but with the uncertainty created by the pandemic, some people wanted to re-pay their loans early. To respond to this and avoid having to keep hold of cash, all of the CBOs in the project quickly opened their own bank accounts with support from MAPCO. CBOs also offered smaller loans to people who had less certainty about their ability to re-pay. This flexibility was crucial to keep the loan scheme running at the peak of the crisis.
The relationships that MAPCO project staff have built with the CBOs and community members have also contributed to the success of the loan schemes, as there is a great deal of trust between them which enables them to work together to solve problems during a crisis. Other project activities that we are delivering with MAPCO have also helped to build the resilience of families when combined with accessing loans – including business mentoring, community-owned seed banks and literacy training.
But we didn’t stop there. Recognising that with markets closed many businesses would struggle to survive, MAPCO also supported people to explore alternative means to earn an income. They worked with community members to grow fast-maturing local vegetables for their families’ own consumption and to sell locally. Homegrown vegetables were essential to ensure people had access to sufficient sources of nutritious food whilst the prices of basic food items were rapidly increasing. This new business venture has not only helped people to navigate the challenges of lockdown, but has also created new opportunities. Many women have found that their new vegetable businesses are more profitable than their previous incomes from petty trading, so they now plan to expand their vegetable growing.