Financial stimulus for Liberian loan, saving clubs

Liberia's Central Bank Governor Dr. Jones

Liberia’s Central Bank Governor Dr. Jones

The Central Bank of Liberia (CBL) recently announced stimulus package for financial institutions affected by the Ebola virus outbreak may seem to be a relief to several loans and village saving clubs.

CBL Governor Dr. Joseph Mills Jones said all sectors of the economy have been affected due to the outbreak, adding that the CBL is working with partners to mobilize financial support.

“We already have some progress with the IFC which has made some funding available for trade financing,” he noted.

Governor Jones acknowledged the difficulty credit unions and village savings organizations are going through in generating income due to the Ebola outbreak.

“Members of credit unions and VSLAs who took loans for business purposes are now generating income far below subsistence levels or are not generating income at all. Individuals who were previously engaged in some income generating activities are now unemployed and without a means of income,” Jones said. “The more people we have with income above the subsistence level the better it will be for our ability to generate and sustain economic growth from within; hence, the importance of access to finance for those outside the formal sector of the economy”.

Jones added that economic recovery must be an effort by all Liberians: “Our farmers, petty traders, transport union members, tailors, teachers, furniture makers, and marketers.”

The Ebola crisis, Governor Jones said, has had a dampening effect on the microfinance sector and those who live and work in rural Liberia.

“The health crisis has led to a loss of markets for goods and services arising from travel restrictions and quarantine measures. The microfinance institutions have been constrained to limit their operations. Loans have ceased, resulting in the inability of many Liberians to access capital,” Jones said. “Report from the field is indicating that in rural Liberia, many farms were not harvested. Farmers have missed out on their income from the harvest season and will likely not have the finances to prepare for a new farming season if nothing is done to remedy the situation.”

Marketers all over the country have experienced difficulties and “significant” loss of income, the CBL boss said. “Most cross-border traders have been unable to travel to obtain goods.”

The move by the CBL could be a relief to several loans and village saving clubs who are finding it difficult to collect money loan out.

One of such clubs is the Wada Women’s Village and Saving Club in Du-Port Road, outside, Monrovia, the Liberian capital. The head of the club Cecelia Varney wakes up every morning with a big black-and-red record book, flipping pages to remind herself about the money taken as loans from her saving club by women in her community to engage in trading.

Since the Ebola epidemic, getting back the money lent to these women seems to be a challenge for Varney’s village saving and loan club.

Wada (“We will make it) lends money to market women.

But due to the slow pace in repayment of the loans, Varney routinely picks up her phone to call those indebted and remind them to pay their loan.

March of this year could see Wada disbursing profits accumulated over the year to shareholders, but with the delay in repayment of money loaned out, the club might just not realize Varney’s 2015 dream.

A year ago, Wada could boast of over a million Liberian dollars as both its capital and profit, but today it is slowly draining down owing to the huge amount loaned out.

 “From zero we became hero and because of this Ebola, we left from been hero to zero,” Varney said.

Losses incurred by the women during the outbreak make the possibility slim for the repayment of debts owed, the Wada head said.

With the huge liabilities the club has, Varney is bent on finding ways to generate money to loan to struggling women in order to put them back on their feet.

Government involvement could play a pivotal role in getting women out of the huge debt owed, Varney said, adding that loaning money to saving clubs could be one of the solutions.

“These women never pray for Ebola and it came on all of us so I cannot push them to the wall. I’m begging the government and international partners to rescue us by loaning us money to put these women back on their feet,” Varney said.

Varney said that before the outbreak market women used to borrow more than $100,000LD to do business, and repay it in no time.

“I was giving money to these women and they were paying back on time but since this Ebola came, things became difficult for the women,” Varney said. “Women who used to travel could not do so due to Ebola. Women who took our money to buy dry meat were put out of business, those who used to sell cook bowl (local dish), people stop buying it because they were afraid.”

Varney said the saving and loan club was meant to empower women financially, but with current situation at hand, women’s condition has worsened.

“This Ebola really put the women behind,” Varney said.

Varney recalled that the opening of the Wada village saving and loan club took the commitment of a few women who sacrificed their all to get it started.

“One day a lady called Tetee met me and explained to me about this whole idea about village saving and from there I started mobilizing women and we started generating our own money and loaning it to each other,” Varney recounted.

The money was generated through the purchasing of shares by each member, Varney said. ”We are 25, $200 LD per share, the maximum is five share per person,” Varney said. “We were 25 in the group which is $25,000LD and we give it to one person to start business to repay it in three months. We will still be saving and buying shares at the end of the month. We give that money to the next person that was how we generated our money.”

Women started getting empowered, and some of them began engaging in cross border trade, Varney said.

“Our 25 women had business that we could boast of – in two months we were able to generate over $200,000LD.”

Wada member Helena Tisdell, who sells juice and cold water, said the outbreak makes the repayment of a loan an uphill task.

“It is difficult for me to pay back the money I took,” Tisdell said. “When this Ebola started spreading it became difficult for people buy our goods. Students who used to buy my juices and water were not going to school anymore.”

Tisdell said the government and NGOs should help women by working with saving clubs to find ways to solve the challenges women are facing in paying back loans.
Liberian Government