An Alidé client displays her inventory of shoes financed by Kiva lenders.
We've all been there: under-resourced, over-extended and in need of a hand. Whether you’re working on a tough project at work or need a friend to help you move, sometimes a little help from someone goes a long way.
Alidé, a Kiva Partner in Benin, recognizes this and offers assistance to its poorest borrowers by offering what they call “Prêt Coup de Pouce,” or “Ready Boost” loans. These Ready Boost loans are for amounts between 10,000 and 20,000 CFA (about $20 to $40 U.S.) and charge 0% interest.
Last month, I wrote about Kiva’s Anti-Poverty Focus badge and one of its main components, Targeting and Outreach. Another important element of the badge is an MFI’s Pro-poor Methodology. Having an effective pro-poor methodology means the MFI respects the fact that many of its borrowers, especially the poorest ones, have liquidity constraints and are not always able to generate cash fast enough to repay a loan with a normal interest rate.
Alidé’s Ready Boost loans are designed to address these constraints by offering small loans (less than 30% of GNI per capita) and accepting small repayment installments (less than 1% of GNI per capita). In Alidé’s case, Ready Boost loans can be repaid at a minimum rate of 3000 CFA per month, far less than 1% of GNI per capita. They are able to do this by subsidizing the cost of these loans with the revenue from larger, more profitable loans. This allows for wider access to credit at the bottom of the pyramid and greater financial inclusion in some of the poorest neighborhoods of Benin. Alidé’s virtuous pro-poor methodology helped it earn our Anti-Poverty Focus badge.
One of Alidé's offices in Cotonou, Benin's capital.
One of Alidé's offices in Cotonou, Benin's capital.
Free or cheap credit, however, is not necessarily enough, which is why Alidé allows clients to open savings accounts with less than US$8. As many of their poorest clients live in shantytown slums, borrowers often have little to no assets in their name, so a small loan will have a small effect.
Savings accounts are crucial because they give clients a safety cushion for them and their families to fall back on during hard times. It also lets them take their money out from under their mattresses and gives them a way to collect interest on it. Many of Alidé’s borrowers have graduated to larger loans after saving enough to meet the collateral requirements, allowing them to further develop their growing businesses.
For their effort to create a culture of saving within the communities they serve, Kiva awarded them with our Facilitation of Savings badge.
The Social Performance in Action blog series is designed to share stories from the field that demonstrate the amazing work our partners are doing to meet a range of client needs. Have questions? Send them our way at blog@kiva.org.
Photos courtesy of Kiva Fellow, Frederic Billou.
