The main problem for small entrepreneurs in Fiji is affordable access to finances. The government runs a number of microfinance schemes but seems to be backing out and expecting them to be self-sustainable, which is a tough challenge. In successful cases, small businesses mean that children can continue their education. We support MFW with some suggestions and a donation.
Microfinance Unit West, Lautoka
“To be the driving corporate force behind the uplifting of SMEs (Small and micro-enterprises) in Fiji and a role model for Pacific Island nations through a sustained and bold search for excellence and creativity.”
“To provide effective and efficient financial services to the poor and low income-earners and their enterprises.”
Since 2000 Aglou, a microfinance NGO, taken over by government in december 2005. Currently under National Centre for Small and Micro Enterprises Development (set up 2002), National Microfinance Unit (NMFU). MFW covers the western division of Viti Levu.
Upon asking my Fijian friends what charitable initiatives the could think of to support, they suggest a small microfinance unit in Lautoka. We think this is a good idea, and take a bus to that town, Viti Levu’s second most important port and trade center after the capital Suva. The office is located in a large commercial building on the main street, and makes a sober, sincere impression. Dorinda, a friendly Fijian lady, invites me in conference room and explains what her centre does.
The governments supervises the centre by means of random audits and the generation of monthly reports. However, from 2010, government funding of this Microfinance Unit has stopped. Currently, they are not allowed to use savings or get a commercial loan to finance fresh microloans, yet operating costs are high and the return barely suffices to pay the salaries. The government expects the centre to attract alternative sources of finance or become self-sustained.
A typical loan from MFW is about 200-500 F$ (loans range from 100F$ to 5,000F$) and is given for a period of 26 weeks with a flat one-off 25% interest rate. Pay-back is in weekly installments and the money is collected by the field officers. Examples of small businesses that has been established successfully using microloans are canteens, small retail, agriculture and fishery, handicraft manufacturing and selling, horticulture, backpacker resorts. The majority of borrowing clients are market salespeople and don’t have the kind of assets that commercial banks require for providing loans. Hence, one of the goals of supplying microloans is for the clients to generate sufficient assets in order for them to graduate clients to the commercial banks. This happens in only a few exceptional cases; a typical client will however be able to pay for their children’s tertiary education, and this is perhaps the most significatn social impact of the centre. Seeing the child of a market saleswoman attending university because of money saved with MFW is one is simply a very rewarding experience, Dorinda says. Apart from business loans, MFW also supplies personal loans, mostly for covering education fees.
Savings and Training
Apart from loans, MFW offers a regulated savings scheme for their clients, which has proven effective for many clients to put aside enough to pay for their children’s education. There is no interest paid on the accounts, and the savings accounts goal is to educate financial literacy and change the general mindset away from complacency. The centre also offers several training units in order to spread awareness of the possibility of microfinance. Basic financial literacy, concepts like keeping a checkbook, saving a certain amount on a regular basis and setting financial goals are subject of another free course. There is also a one day business course, covering subjects like making a business plan, customer service, marketing, management and financing.
Into the field
I am lucky enough to be here on a Wednesday, when the field officers travel to the villages to collect payback and assess the clients. They offer me a ride with the centre’s vehicle, and during the day, I operate as an embedded reporter. From 9am to 5pm we visit different villages and families in the red 4WD pickup with the keen Indian driver.
The smile of the “salt lady”
Our first stop is the business of the famous “salt lady”, Mrs. Merewarita in Lomowai. The microfinance field workers and me, embedded charity traveler, are received by a lovely old lady with the most enchanting smile you could imagine. She is a client of MFW too, and her microbusiness is a very interesting enterprise keeping touch with local traditions, conserving valuable ecosystems and producing a really healthy product. Every day, she scoops up salty water from brine pools in a coastal area that fill up during high tide. Following a traditional local practice, the water is then cooked for twenty-four hours in a big pot on an open fire, until the water is evaporated and a mineral residue remains. According to a laboratory test, this salt contains much more important minerals than the iodized industrial salt that is sold in supermarkets. She sells the resulting salt locally but also receives orders. It is quite literally a healthy business.
A saltwater pool
She borrows money in portions of 200-300$ to gradually grow her business, and today she pays back a portion of that loan. It is used to buy the pots and packing material for the salt. I suggest to connect her business (and that of similar clients) directly to high-end hotels and restaurants, as we have seen in Bali. In co-operation with handicraft makers, a beautiful decorated salt package could be produced and offered in gift stores or put on hotel tables. This way, more poor families could benefit from this idea and turn it into a sustainable income generation for a larger area.
We take some photos of Mrs. Merewairita at the saltwater pools and the salt boiling installations that are located in tradtional thatched houses. It is a beautiful day, and I somehow see a symbolic meaning of salt harvesting, borrowing these minerals from the earth and becoming part of her cycle.
the roadside fruit stall
Mrs. Acenava Raivoli in Volivoli started her business as a roadside fruit vendor back in 2007 and has used about eight loans since. Today, she is paying back a portion of a 700F$ loan she used to maintain her business and pay for her children’s school fees. As the payback is collected, I take some photos of the stall with all the colorful pawpaws (papaya), oranges, bananas, mangos. Her husband receives a pension and the business just makes the difference for this family, enabling the young children to continue school, and eventually attend university. The rest of the field trip takes me all around the beautiful green hills of Western Fiji, to Nadi, Ba and Sigatoka and several rural villages along the way. The scenery is very beautiful and I am extremely grateful for this informative excursion to the microfinance clients.
in the office of MFW
One of the current problems is the lack of efficient backoffice software that would enable the centre to keep track of client’s lending history and generate more detailed reports visualising the role of different demographic factors. This would in turn enable them to make more accurate decisions about personalized loan conditions and in which direction to extend their operations. We are trying to help on this front, and I suggest to use a free, open-source accounting software custom-made for NGOs that should be available given the large numer of good-hearted programmers.
During my flight back, I read an article about the “salt lady” in the “Air Pacific” in-flight magazine and recognized her face. The article provided some background information about the tradition of salt making and the positive impact on mangrove preservation that the WWF is working on. Once again, everything felt just right.
I can recommend Microfinance West to every visitor of Fiji that wants to give something back to the poor communites living in this amazing country. They are very open to new creative ideas that their clients could implement in order to gain just the financial independence they need to give their children a brighter future.