Micro Loan's Ripple Effect
The MCI Micro-Loan Program is unique because it enriches the community, breaking the cycle of poverty, making the recipients entrepreneurs, and allowing the loan capital to remain in the community. When we provide a small loan, we want to make sure the loan recipients will have an impact on the community and will be able to multiply it and pay back the debt, so that the loan is available for future loans in an ongoing and sustainable way. Once a loan is repaid, the funds are used to help another hardworking entrepreneur in the same community where MCI has been working. For example, in the past MCI provided small loans to 24 to 30 Muslims families in the Southern Philippines, but after a study and evaluation the micro-loans were put on hold because most of the families receiving a loan were small store owners, and they did not know how to manage the loan or lacked the inventory or ability to keep pace with the rapid change taking place in the city. For example, if a person were selling bananas but ended up eating bananas themselves, it would not be deducted from the inventory, and consequently, they did not know what had sold and what the profit was.
Since MCI gives scholarships to underprivileged kids to go to college, we try to train our students for more than five years at the shop, where they can learn not just business ethics by attending forums, but also gain the tools they need to succeed. Also we build relationships and trust. Therefore, the program gives hardworking people like Anidah Macadato and her husband Fahad the opportunity to move from dependence on aid to financial independence and self-sustainability. It gives not just confidence and pride, but also a brighter future for their children, as the recipients repay the loan, break the cycle, and form a healthier community. This is how MCI can empower communities and break the cycle of poverty.
The key to success of the micro loans is finding trustworthy, reliable, and diligent recipients who understand the concept of a loan. For Fahad and Anidah the local bank rates are far too high, and if they want to apply, the bank would likely not give them money. Even if they were to get a loan, it often pushes a family farther into poverty and debt. Anidah was an MCI scholar, so that MCI helped her to go to college, and she also had worked and trained at the Turkish coffee shop and attended the MCI weekly Saturday forums, in addition to MCI-organized conferences. She graduated with a nursing degree and is a registered nurse, but she is working for MCI, and she and her husband have set up a small business called “Smart Money Padala Center and Cell Phone Accessories.”
Anidah told me the usage of technology is continuing to boom in every part of the world and in our lives. She wants to take advantage of technology to set up a money remittance business using online access or cell phones to remit money. But she and her husband did not have enough capital to do so. She prepared a viability study. In this kind of business, the more money available, the more the profit because with each transaction the businesses charges a certain fee. Anidah’s husband Fahad manages the shop and daily operations and Anidah is assisting him with the transactions such as completing the paper work. Smart Money Padala is a money remittance from a smart company that allows you to receive and send money as fast as text messages. This is the main focus of the business. As of now they particularly are targeting their community for their main clients and are transacting money in domestic and international remittances. They make profit on this by adding 2% charge on each P1000 transaction in sending and receiving money. Cell Phone Accessories is a business that loads for any network and sells sim cards of all kinds,, headphones, headsets, speakers, memory cards, card readers, etc. Cell Phone Accessories caters to customers who need cell phone gadgets. Regarding cell phone accessories, they do add up at to at least 50%-100% on each stock that they sell. The others pertain to supplies and little things such as printing and all kinds of editing that can add up to attract more customers.