Microfinance Savings Strategy Grows Small Business

Abaynesh Legasse pours a thin stream of injera batter on to the sizzling metal disk. Her wrist circles gently as she forms the large fermented flatbread. The Ethiopian staple is stacked like hotcakes beside her on a large plate 2 ½ feet wide. Over the course of four hours Abaynesh will prepare 100 injera along with a variety of spicy sauces for sale in her small restaurant. In the past year, Abaynesh has seen her business grow five-fold thanks to a small-loan and the business skills she's acquired through the Savings and Internal Lending Community (SILC) she joined.

Like most village entrepreneurs, Abaynesh, had no shortage of willing clients, what she lacked was capital to grow her business. Previously, Abaynesh could only afford to purchase enough teff, the main ingredient in injera, to prepare 20 injera a day for sale. Her earnings were just enough to keep the business afloat. All that changed when Abaynesh took out a $50 loan from her Gudina Tokuchuma (Unity is Development) SILC group and purchased a 160-pound sack of teff flour.

 

No access to money before SILC microfinance

SILC is a Catholic Relief Services approach to microfinance that teaches people financial literacy and shows them how to pool their money and how to make funds available in the form of small loans to group members. SILC was first introduced in Beben Village by CRS partner Meki Catholic Secratariat with generous funding from the American people through the U.S. Agency for International Development's Food For Peace program. Abaynesh joined the group in March of 2013 and immediately began saving $1-$2.50 a week. With 18 other SILC participants in her group the savings quickly added up and were made available as small loans to group members.

Abaynesh took out her first loan three months after joining SILC. "Previously I had no idea how to save money," says Abaynesh. "Now I know how to save. Ho

w to take out loans… I am expanding my business because of SILC. I had no access to money before the program."

Understanding money empowers women

It's almost noon and Abaynesh's daughter Tarikua, 8, busies herself washing glasses and taking a wet rag to the vinyl tablecloths in restaurant's dining room. Music from the nearby market plays loudly as Tarkiua works. As the mother of four daughters, Abaynesh worries about their future. She was forced to marry young and abandon her studies. She wants more for her daughters. "I tell my daughters to get an education," says Abaynesh. "Women are vulnerable to forced marriage and early pregnancies. When you learn, you will change your thinking. You protect yourself with learning."

Learning how money works has given Abaynesh more of a voice in her marriage. Her husband appreciates the money that she brings to the family. She's used her earnings to help purchase an additional 100 pounds of fertilizer to use on the family farm and is now saving for Tarikua's schooling. "Previously women had no ability to speak up," says Abaynesh of being financially dependent on her spouse. "We were just at home. But now we have a voice and we can explain how we are feeling. We can make decisions in our group."

SILC microfinance earn macro benefits

When the afternoon rush hits, the tables at Abaynesh's restaurant quickly fill up. Repeat customers line the wooden benches and ask Tarikua to add another spoonful of her mother's spicy shiro (chickpea stew) on to their portion of injera. There is never an empty space at her table. As one customer leaves, another quickly takes his place. In a few months time Abaynesh will get her SILC savings back in a lump sum complete with the interest she's earned from making her savings available to others in the form of loans. She has big plans for her restaurant.

"I want to expand this business more," Abaynesh says. "I want to add to my menu, maybe hire another worker and have a staff. I will begin selling meat. People ask me to add to my menu. There is a demand. I sell out every day. I never have leftovers."

 

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