Where We Work : Sierra Leone : Microfinance

Across Sierra Leone, every week, more than 13,000 women attend their local BRAC microfinance meetings to repay their weekly loan instalments, apply for new loans, buy health products from their Community Health Volunteer (CHV) and receive additional support for their varied small businesses.

BRAC began working in Africa in 2006. Drawing upon experiences from Uganda, Southern Sudan and Tanzania, BRAC was encouraged to work in Sierra Leone and sent a team to West Africa in early 2008. Operations in Sierra Leone were also launched that year. The BRAC MicroFinance (SL) Limited was incorporated in January 2009 and disbursed its first loans in June of the same year.

Programme Description

BRAC’s microfinance programme has been designed to provide reliable access to cost effective financial services to poor and marginalised women.

Programme Components

Women’s groups: Community partnerships and institution building are essential for poor people if they are to change their economic, social and political conditions. We deliver our microfinance and other programmes through organising groups of poor women who come together to improve their socioeconomic position.

BRAC microfinance branch offices conduct area surveys and consult with community leaders and local elders to select the 30-40 members of each group. The group is then sub-divided into smaller groups of five, each with their own elected leader.

The members of the small groups take co-responsibility to solve peer repayment problems. New borrower groups meet four times before any loan disbursement takes place. After that, they meet weekly to discuss credit decisions with their dedicated BRAC credit officer and make their loan repayments. BRAC provides training and technical assistance to its members and others in the community, empowering them to earn more income from existing activities and start new ones.

Microloans

At the core of the programme are microloans, which are exclusively for the women participating in the group process. Borrowers range in age from 18-50 with little or no education. BRAC lends to women who are not served by other microfinance institutions.

Borrowers typically operate businesses that provide products or services to their local communities. Women with seasonal businesses, such as farming related activities, may also be eligible for shorter term loans.

Key Features of a Microloan

• Loan repayments in small weekly instalments
• No physical collateral needed
• Loan range: USD 100-300
• Competitive interest rates
• Death benefit provided
• Services delivered to member’s village
• Available in rural and urban areas

Small Enterprise Loans

BRAC offers small enterprise loans to entrepreneurs seeking to expand small businesses. The loans enable owners to create new employment opportunities and provide new services. Typically, loans are given for trading, agriculture, poultry and livestock, fruit production and other types of small enterprises. These small entrepreneurs would otherwise have limited access to the formal financial system – too large for microloans but with insufficient collateral for commercial banks. The small enterprise loan is offered to an individual rather than to a group, and is available for both male and female entrepreneurs.

Some members of the microloan scheme become eligible for a small enterprise loan as their businesses grow and expand and their investment needs change.

Key Features of a Small Enterprise Loan

• Available to both male and female entrepreneurs
• Loan range: USD 1,000-3,000
• Competitively low interest rates
• Repayment mode: equal monthly instalments

Most popular loan uses

• Selling dried/smoked fish
• Selling second hand clothes/shoes
• Running a restaurant
• Selling palm oil
• Selling charcoal
• Selling rice
• Hairdressing business
• Selling kitchenware
• Selling soft drinks/water
• Selling seasonal fruits
• Selling plantain chips