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Accessible Micro-Loans Help Poor Women in Rural South Africa

JOHANNESBURG, Sep 19 2011 - While women still lag grossly behind men in terms of bringing home the bacon, a new entrepreneurship organisation, Financial Independence Through Entrepreneurship (FITE), is working to swing the balance of economic power in South Africa by providing micro-loans to hard-up women.

According to a 2010 Job Crystal survey, white men earn 53 percent more than white women in South Africa and 116 percent more than black women. The same survey suggests that overall men earn 41 percent more than women.

And South Africa is not alone in having lopsided scales of economic balance between the sexes.

According to Financial Independence Through Entrepreneurship (FITE), women perform 66 percent of the world’s work, produce 50 percent of the world’s food and invest 90 percent of their income in their families. However, women account for 70 percent of the world’s poverty, earn only 10 percent of the world’s income and own only one percent of the world’s land.

Powered by global non-profit micro-lending organisation KIVA, FITE aims to empower women in developed and developing countries worldwide through the provision of micro-loans. Since its official launch in South Africa in February, 30 South African women have been recipients of loans through FITE.

Skincare brand Dermalogica is the founding partner of FITE. “Through the FITE initiative, Dermalogica aims to empower over 25,000 women in business around the world in developing and developed countries in the next two years,” said Lauren Michlo, general manager of Dermalogica South Africa.

Each time a consumer buys a specially marked Dermalogica product and enters the code supplied on the packaging into the FITE website, the company makes a one-dollar donation towards the global FITE fund.

The initiative also enables consumers to become direct lenders by making donations in increments of 25 dollars through the FITE website. And the lenders have the power to choose which projects they would like to support by selecting from a list of candidates.

Once the loan has been awarded, lenders are kept up to date on the recipient’s progress via e-mails from KIVA. Once a loan has been paid back, that money is put towards a loan for a new recipient. Loan amounts and repayment schedules vary depending on the business plan of individual candidates.

Loan recipients

Michlo said FITE aims to make micro-loans accessible to South African women who would ordinarily not qualify for a loan, especially those living in poorer, rural areas, many of whom have dropped out of school at a young age to work and help support their families.

One South African FITE loan recipient used her loan to build a more secure chicken coop and to buy more chicks for her chicken-rearing business. Another recipient used her loan to buy stock for her spaza shop – informal convenience stores, usually run from home, while yet another used the money to buy materials for her business producing traditional costumes and bead work.

“It empowers women [and enables] them to become self-sufficient in their own businesses, which is sustainable and gives them opportunity,” said Michlo.

“Microfinance is a major tool for poverty alleviation,” agreed Fikile Kuhlase, senior general manager of the Socio-Economic Growth and Development Division of the Banking Association South Africa.

Kuhlase added that focusing on empowering women can have a trickle- down effect for an entire family and even a community.

“A woman entrepreneur is the gateway to household stability,” she explained. “Women are the ones who are responsible for making sure that the household income services the needs of that family.”

*Published under an agreement with Street News Service

The issue of microcredit will be discussed at the Microcredit Summit Nov. 14-17 Valladolid, Spain.

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