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The Finance Issue

A story is told of a small boy who was watching a butterfly trying to emerge from its chrysalis, struggling through a small hole against the cocoon which trapped it.  The boy had a kind heart, and rather than watch the butterfly lose its struggle, he went and found his mother’s nail scissors and very, very carefully snipped around the remaining cocoon and freed the butterfly.  But the butterfly was deformed, with weak wings and it slowly died. 

What the boy did not realise is that the struggle was the process which completed the final metamorphosis, and strengthened the wings of the butterfly; that the butterfly needed the experience of the struggle to give it strength to fly and to live. 

Tailoring SchoolSadly, transforming from a ‘charity case’ to a ‘business person’ involves similar struggles – the hard lessons of business are learned not from a book, but from crises, and disappointment.  Identity and dignity as a determined and disciplined business person is earned from dilemmas and difficult decisions with unpleasant consequences; they are the scars of sacrifice, not a jacket that we put on as a handout from well-meaning westerners. 

Making BiscuitsAnd the chrysalis that creates this struggle?  Well that is microfinance; a necessarily hardnosed, unsympathetic*, high interest source of funds to the very poor.  I do not mean any of these words unkindly – each of them we discovered to be essential if ‘the butterfly is to fly’.  We have our own experience of trying to set up a microfinance organisation which was sympathetic and pastoral, and at the end of three years we were down to 30% of the fund, with only one or two businesses to show for it.  Compare this with ‘more commercially minded’ funds which continue to grow, achieve 98% repayment, and spawn hundreds of successful, thriving businesses.  Which do you think is more likely to alleviate poverty and hardship on a sustainable basis? 

*Hardnosed microfinance organisations ‘care’, they just do it in a different and more-effective way. 

Our advice to anyone seeking to ‘fund’ the businesses they are helping to train, especially if they are trying to do it from a Christian perspective and at a distance, is wherever possible to use local microfinance organisations (e.g. Five Talents) who can effectively establish and reinforce the necessary, and sometimes harsh, disciplines of business finance.   Further advice on Microfinance can be found at Microfinance Gateway and other sites through Google - if you know one you would recommend, please let us know.

A viable, and often preferable, alternative to microfinance is a Village Savings and Loan scheme, where the community itself sources the funding, administers the disciplines and reaps the benefits.  Further information on these can be found via the Village Savings and Loans Association website or via Care International – the latter of which have been absolutely brilliant at training some of the people we have been working with in a scheme in Kampala. 

In Reconxile, it took us a while, but we finally learned to focus on making sure that people were equipped to make the best use of what they have got, and not to get involved directly in making financial decisions where we were too easily called to make commitments with little or no impartial information.