Mandate eNewsletter, 2009 - Issue No. 1

Rebuilding Rwanda through Holistic Microfinance

Ever since Nobel Laureate Muhammad Yunus started the Grameen Bank of Bangladesh, the international development community has been understandably enamored by microfinance/microenterprise development. In the traditional, credit-led model, a Microfinance Institution (MFI) lends money from donors to very poor people and collects the money back with interest.¹ The poor borrowers are able to use their loans from the MFI to finance their microenterprises in order to earn income and to support their families. When the loans are repaid faithfully, the MFI is able to relend the money again and again, providing a never-ending source of capital to very poor people. Donors can give their money once, and it never gets used up!

One of the keys to making the entire system work is that the MFI has to be financially sustainable, i.e. its revenues need to cover its costs. The need for financial sustainability has caused many MFIs to reduce their costs by cutting out their non-financial services—e.g. counseling, training, or mentoring—in order to focus narrowly on lending money and collecting it back. This cost-cutting trend creates enormous challenges for the MFIs run by Christian organizations. Evangelism and discipleship activities require time and money. Hence, under the pressure to reduce costs, many Christian MFIs have struggled to maintain a spiritual emphasis in their programs.   

In this light, it is inspiring to see URWEGO Opportunity Bank, a Christian MFI in Rwanda, trying to keep a spiritual focus in its operations (www.uomb.org). URWEGO uses a full-time Transformation Coordinator, Daniel Ryumugabe, to promote a holistic, word and deed ministry to URWEGO’s 40,000 clients. In essence, Daniel’s job is to swim against the microfinance industry’s tides by complementing URWEGO’s financial services with holistic, gospel-focused ministries that include a strong evangelism and discipleship component.

Daniel is in the process of becoming a certified member of Chalmers’ Global Fellowship of Trainers (GFT). As part of the GFT, Daniel is working with the Chalmers Center on a major initiative to integrate biblical worldview messages into nine technical modules developed by Freedom from Hunger, a leading, non-sectarian, development organization (www.freedomfromhunger.org). These nine modules are designed to train poor people in principles of small business management, financial literacy, and a range of health prevention topics (HIV/AIDS, malaria, diarrhea, etc.). Daniel is helping Chalmers to test these curricula in the hope of using them to train URWEGO’s clients in highly relevant topics from a biblical worldview perspective.

The following video clip contains a recent interview that Bernie Alimonti, Chalmers’ Director of Marketing, conducted with Daniel concerning his efforts to use holistic microfinance to help rebuild Rwanda. In the video Daniel references “CEDI” by which he means the Chalmers Center’s Christian Economic Development Institute, a 5 ½ day training event that Chalmers offers at various locations around the world (http://chalmers.org/cedi/cedi.php)

¹The newer, savings-led model of microfinance relies on the savings of the poor themselves for loan capital. The savings-led model has some advantages over the credit-led model, including the ability to reach poorer people even in remote areas. See the article “The Economics of Reconciliation” in this issue of Mandate for a description of the savings-led approach being used by the Anglican Church of Rwanda. On the other hand, the credit-led model has the advantage of being able to inject larger amounts of capital more quickly than the savings-led model. 

For more information about the Chalmers Center, visit us at www.chalmers.org.

6/10/09