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Microfinance
for Youth About
the GDCU |
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Microfinance
for Youth About
the GDCU |
The Global Democratic Citizen’s Union (GDCU) was founded in 2003 with the purpose of involving citizens in creating and building solutions to social problems through innovation and public education. In particular, we have developed a project, Microfinance for Youth, to have a significant, lasting impact on the lives of South African youth by addressing their health and economic well-being. We want to ensure that they have access to accurate information, but we also know they need hope for the future to be inspired to make positive choices. The United Nations estimates that one-third of African youth will have lost their mother by 2012. In South Africa, millions have already been orphaned. Orphans and vulnerable youth (those whose parents are unable to work and are dependent on their children) are more likely to drop out of school, suffer from chronic malnutrition, become homeless, be exploited by adults, and engage in crime. Young girls are particularly vulnerable to the risk-taking behavior poverty engenders and to sexual violence. Girls are frequently forced into sex with older men in exchange for food for their families or money for school. One in four South African women aged 20-24 is now HIV positive. This is a devastating cycle that must be broken. As orphaned and vulnerable children take on the responsibilities of their parents, it is critical to provide them with the tools they need. Business training and small loans give them skills and the opportunity for income to which they currently have no access. Microfinance - loaning tiny amounts of money to very poor people - is an economically sustainable method of fighting poverty. Repaid monies and interest are used for new loans, providing other poor individuals with credit. Eventually, well-run microenterprise organizations with large loan portfolios are able to sustain their operations through interest income. In addition, microfinance is transacted through banking clubs, in which a group of borrowers learn and work together. The clubs create solidarity amongst members and weekly loan payment meetings offer the opportunity to teach about nonviolence, health and HIV/AIDS prevention along with marketing and accounting. GDCU’s program, Microfinance for Youth, is the first microenterprise program of its kind for youth in South Africa. It was designed as an innovative pilot project to reach orphans and vulnerable young people in perhaps the most AIDS-impacted area of the world—Kwazulu Natal province, where HIV prevalence rates are over 40%. The program was launched in September 2004 at Sizathina High School. Thirty-nine youth are currently enrolled in our program—all have received marketing, business planning, accounting and AIDS prevention training. Five businesses are now making a profit since receiving their loans three and a half months ago. The youth and the three teachers who supervise the banking clubs hosted an HIV/AIDS Awareness Fair, which was attended by over 300 youth and adults. One of our teachers volunteered to be publicly tested for HIV to encourage others to do the same. Stigmatization is widely entrenched, even concerning testing, so this was a brave act on his part. The GDCU is now ready to launch phase two of Microfinance for Youth, for which we are requesting funding from the John M. Lloyd Foundation. This new program will reach nearly 60 youth at nearby Ngibongileni High School. Microfinance for Youth is based on well-established and highly successful microfinance models. The Ngibongileni High School program will also benefit from the successes and lessons of the Sizathina High School program. The program’s curriculum breaks economics down into practical applications while the structure of the banking clubs builds-in group incentives for success. Three teachers have been hired on a part-time basis to coordinate and manage three banking clubs of 20 students. The target population is rural youth, aged 14 to 20, who are acting as head of households or living in severe poverty because their parents or guardians have passed away or are incapacitated. The groups are gender specific and two-thirds are composed of girls. Students are trained during twice-weekly meetings:
A quarter of the interest from the loans stays in the banking clubs’ general savings fund. One-half goes to GDCU to cover banking fees, materials and teacher salaries, and the other fourth goes to the school for educational needs. After four years, the groups’ capital will be large enough that the banking clubs will be self-sufficient. Given the dire poverty and hunger in the area, one of the biggest problems students faced at Sizathina High School was theft of their loan money and business products. Our solution was to refurbish two empty classrooms for a commerce center with padlocked lockers. We will develop a similar commerce center at Ngibongileni High School. Microfinance for Youth brings young people together in ways that are motivating and practical. Our AIDS education program is integrated within this network. Each year our youth will host an AIDS Awareness Fair for the community. The slogan, “Be a HERO in the fight against AIDS,” is printed on T-Shirts and given as prizes to those who learn the facts about AIDS. To track the program’s economic progress we will monitor income levels of participants and do asset inventories at regular intervals. The inventory will also track such social indicators as nutrition spending levels, use of primary health resources and school enrollment. The youth and supervising teachers will participate in assessing and refining the program. The expected outcome of Microfinance for Youth is positive social, economic and political transformation as demonstrated by an increase in the income of participants and their families at the end of each year, an increase in the number of children attending school, a decrease in HIV/AIDS infection rates, and a reduction in incidents of violence against women. The estimated annual cost of the Ngibongileni program is $40,000 for four years. GDCU has received a grant from Rotary International to fully finance the students’ lending portfolios. A generous grant of $20,000 from the John M. Lloyd Foundation would support the salaries of three teachers and one supervisory staff and overhead, including transportation, local office rental and supplies, and program expenses (ledgers, calculators, etc.). We will also develop a school-based commerce center to ensure the students have a secure place to meet and transact business. Microfinance for Youth enables youngsters who are severely limited in educational and economic opportunities to participate meaningfully in the economy, while significantly increasing the likelihood that they will continue their education and avoid dangerous behaviors that spread HIV/AIDS. Their businesses will also help reseed local economies, which are collapsing due to AIDS. Complete with training in HIV prevention, family planning and Nonviolent Communication (a mediation and communication program), Microfinance for Youth is a leadership program of the highest order and necessity.
GLOBAL DEMOCRATIC CITIZENS’ UNION Officers Board
of Directors Advisory
Board
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