How Mothers Clubs Works
Mothers Clubs loan funds are raised in the United States and are provided to Mothers Clubs members as an opportunity to make a profit and improve their lives. Most of these women have dreamed about what they would do if they ever had this opportunity. Groups of 10 are formed, trained in the principles of the program, and given loans of approximately $65 USD each. A minimal interest rate is charged, with the interest funds going to the in-country administration of the program.
Sadly, most poor Mothers Clubs members do not qualify for a commercial bank loan because they have no collateral. In fact, they probably have never even stepped through the doors of a commercial bank. Instead, they must borrow from traditional village moneylenders, whose exorbitant interest rates, often 20% per month, devour most of their profits. With their Mothers Clubs loan, members can pay cash for the product they need for resale, thus greatly increasing their profit.
Each Mothers Club offers its members:
- Access to small self-employment loans with no collateral required and a reasonable rate of interest.
- Group support for personal empowerment.
- Literacy, health, and nutrition education.
Mothers Club members then use their loans to start businesses in order to develop a sustainable source of revenue and improve their lives. Businesses may be as simple as buying products at a large market and selling them at local markets for a small profit, or as complex as opening a bakery. Often Club members work together and combine loans, opening a restaurant or renting irrigated land for crop production and sales.
Microcredit loan funds are raised through the generosity of supporters in the United States. The women receiving the loans form Clubs in groups of ten individuals. A Mothers Clubs loan of $65 USD is provided to each Club member for one year. All group loans must be repaid before the next loan is provided. This way, Mothers Clubs promotes support, teamwork, and accountability among its members. If a member does not repay her loan, the other members must repay the loan for her and she leaves the group. All are highly motivated toward success.
The women receiving the loans understand that they must develop a business and make a profit. They may start a new business or expand an already functioning business. Some of these revenue-generating activities may include raising chickens, guinea fowl or turkeys, or cows and goats for milk and meat. They may also rent irrigated land for growing vegetables. They may sell their crops from kiosks on the road or at the many local markets. Or, they may open a restaurant to accommodate workers who may not have someone to cook for them. These small businesses provide a sustainable source of revenue for the women and help them to dramatically improve the lives of their families. Mothers Clubs members are able to do things they were formerly unable to do, such as purchase nutritious food for their children, send their children to school, and employ other members of the family.
Club members are selected by their peers, with no two members being from the same family. The only criteria is that the women must be very poor and highly motivated to work hard to succeed.