How POL Microloans Work

• Selection of the recipients – POL uses a community referral system and conducts in-person interviews with applicants. POL’s microfinance coordinator analyzes the need of the applicant and her family, her ability to learn and run a small business and her willingness to work hard and make it successful.
• Business training – POL’s microfinance coordinator works in conjunction with the team’s loans officer and other experts to train the loan recipient in accounting, sales, costing, marketing and basic business practices. On the last day of training, loan recipients provide a credible business plan and submit a request for a loan.
• Working as a team – Loan recipients are expected to work together with 3-4 other women as a group so that they can support each other in running their businesses. This is a critical component for success of the program.
• Loan capital – Once approved for the program, microloan participants receive approximately $145-150 to start their business. This loan capital is a revolving fund used to finance future program participants.
• Loan repayments and weekly support meetings – Loan recipients make 25 equal repayments at weekly loan/support meetings. These weekly meetings also provide them with the opportunity to ask questions and discuss topics that are relevant to their businesses and home.  Often, valuable partnerships are built in these meetings.
• Business mentorship meetings – Successful women entrepreneurs from the community, including our microloan program graduates, are invited to talk to the new participants about their own experiences in running a business.  They discuss how to overcome challenges, and other business-related issues like inventory management, store location, design and layout.
• Monitoring – The POL loan officer regularly visits the businesses to advise the women on business-related issues and to help provide workable solutions to any issues that they may encounter.  
• Assessment – At the end of the 25-week repayment schedule (the first loan cycle), the loan officer administers a questionnaire to the micro loan recipients and asks for feedback regarding the loan process.  The discussions include plans, if any, for expansion of the business, possibly moving to a new location (which may require rent payments for the first time), and increasing inventory and product variety.
• Refresher training – All participants receive refresher business training at the end of the first loan cycle.
• Additional loans – Micro loan recipients who have successfully repaid the first loan are then eligible to receive a second micro loan to expand or further develop their businesses. This process is repeated once the second loan debt has been repaid.  For example, a woman may rent a knitting machine in her first loan cycle, but by the end of her third loan cycle she may have accrued sufficient funds to purchase a used knitting machine.  

Profiles of POL Women Entrepreneurs

Microloan recipients range in age from 33 to 65 years old. Of these women, 70% are single or widowed. On average each woman cares for a total of 6 or more people, of which 5 are usually children. Prior to receiving a POL micro loan, fewer than 5% of these women had bank accounts.  The vast majority of the women use their micro loan to start new businesses and the rest use loan funds to expand existing businesses. Businesses started with these loans are diverse and range from selling bananas along the roadside to brick-and-mortar stores selling cell phone chargers and accessories. Most businesses sell groceries, used shoes, toys, clothing, dried fish, charcoal, popcorn, mealie meal (a Zambian staple) etc.  Many women distribute fish to local restaurants, fry donut-like snacks for stores, or make their own floor wax.

Measuring Success

Since 2005, POL has provided micro loans to over 600 women in the community of Matero in Lusaka, Zambia. Since then, over 380 women have graduated from the program.  Currently, there are 225 women running successful businesses in this community.  These women are providing for their families by feeding, clothing and educating them, as well as acting as role models for other women within the community.

Repayment Rates – POL has experienced repayment rates in the range of 85-90% over the last five years; extraordinary given the difficult circumstances of the women

Other Financial Stability Indicators – Loan repayment rates provide an overall indication of the success of the POL program, but they do not give a full picture.

Savings – Since most Zambians are not raised to have a savings habit, POL participants are educated in the benefits of saving a small amount each week and are encouraged to open bank accounts.

Bank Accounts – Typically, fewer than 5% of the women have a bank account before participating in the POL program; after receiving POL micro loans, however, over 40% of the loan recipients have bank savings accounts.  Bank accounts in Zambia are not free and the remainder of participants choose to save at home.

Asset Growth – POL micro loan recipients grow their inventory and capital asset base by purchasing, for example, a knitting or sewing machine.  In addition, some women pool their resources with other POL participants to buy and sell larger quantities, and to invest in higher value assets such as the addition of a room for rental income or purchase of a small plot of land.

Health and Education – All POL participant families are eating better, typically moving from eating one meal a day to three meals a day.  Most families are also able to pay for school expenses such as books, shoes, and uniforms.  And, finally, many women come forward for voluntary counseling and testing for HIV.