We from Global Micro Initiative help people who would never be able to receive a loan from a profit-oriented bank. Due to this fact there´s a coherently high default risk. Participants who receive a microloan are predominantly able to redeem it. But in some cases, it happens that the participants aren´t able to pay it back partly or even worse, default on the whole sum. Of course, it depends on each individual situation how we´re going to deal with it. Undoubtedly, we´re not going to charge excessive fees or exorbitant interests – Global Micro Initiative´s approach is to enable people living a better and independent life.
Even if it takes longer than expected to redeem a microloan, we´ll still be satisfied with the outcome. Sunariyah from Indonesia took twice as long as agreed to redeem her loan for a sewing machine. At the end she was able to run a successful tailoring shop.
In cases where the participant never had the intention to create his own business we´re left to only visit them and remind them of their duties. Some comply and pay back a part of it but more important is the lesson to choose the right candidate.
On the contrary to a tragic circumstance as it was for Nur Walidaya. She was close to redeem the microloan completely until a family member passed away. Following to this she had to give up her bakery, leave Denpasar and take care of her parents. Due to this situation we haven´t forced her to pay back the remaining few Euros.
Angelo had to experience the destruction of his barber shop with which he earned his daily living. He showed his own initiative and called us while we agreed to respite for payment. He adapted to his situation and visited his clients at home. Even members of our partner organization Project Life Subic made use of it.
After an Employee left the job it came to light that he/she just created perfect candidates and wrote the business plans himself. The candidates never created a business and about € 180 couldn´t be paid back. Our partner organization in the Philippines learned a big lesson: ever since, the team around Anthony Agones is very throughout in terms of assessing potential candidates in order to ensure that the recipients of our loans also benefit from them in the long run.
Author: Tobias Schüßler
Translation: Mustafa Pamuk