The particular part with the Credit Union will work thusly: For a handful of farmers we know and trust (say up to about 30) we are going to offer the chance to become members of the local Cooperative Credit Union. The support we get through IndieGoGo will cover the cost of membership fees for these individuals and allow us to open a savings account with something between $100 and $200. This money will not be immediately available to the farmer, but will act as collateral for the farmer to borrow against.
Bam. We just knocked out two huge barriers to access to formal credit markets: Entrance fees and collateral requirements.
If that were all, this would be a terrible plan. People would borrow the money, never pay it back, the collateral would be lost. Thankfully, this ain’t the first rodeo our Credit Union partners have been to. The managers and loan officers work with members in the same position as our farmer-partners every day. They work with them to create financial calendars so that they know when money comes in and goes out of their households, develop saving strategies together, and follow-up with anyone who takes out a loan. In fact, they follow up to a degree that I would definitely find annoying but is considered neighborly here in Oku. With this additional support, on top of what Mocha Joe's already provides, it should be a snap for our cherry picked farmers to keep good on their financial obligations.
I keep saying Credit Union, but I should maybe say Unions, because we are going to partner with two: one in Oku, one in Mbessa. For the most part their policies are the same, but there are a few key differences and those differences will be reflected in our strategies in the two villages. For example, the Mbessa Credit Union has a pretty exceptional interest rate for savings accounts, 0.5% per month. That’s right, Per Month. When I heard that I seriously considered moving my paltry 401k to the Mbessa Credit Union. Meanwhile, their interest rates on outstanding loans is higher than in Oku, so for our Mbessa members we are going to encourage more savings and downplay the loans. We’re adaptable and on the ground, we can do that kind of thing.
Time is getting short for our campaign and we’re pretty close to hitting our goal, but not quite. I encourage anyone to check out our page and if you have contributed already, thank you so much. We’re going to do the absolute best we can with the money and faith you’ve given us. If you haven’t contributed but are considering it, go ahead and do it now. Any amount will help. Thanks in advance.