ELKHART, Ind. (Mennonite Mission Network) — Two grants totaling $60,000 will help existing small businesses in Afghanistan expand and prosper, aiding lower-income residents of Kabul in developing stability and helping them increase their sense of hope.
The Weyerhaeuser Family Foundation awarded $35,000 and a second grand from a foundation that wished to remain anonymous added $25,000 for microenterprise development loans through the nonprofit Hope for Life project in Kabul, a partner agency of Mennonite Mission Network.
All of the money from both grants will be used for low-interest loans to assist men and women with small family businesses. When loan principals are repaid, the returned money is then lent to others.
The small interest charged the clients covers the program’s operating costs; any surplus after operating costs are paid is returned to the loan pool.
Dan Obenschain, who started Hope for Life, said the agency exists because of Christians who want to demonstrate the love of God by helping Afghans live productively and with more dignity. Ten years ago, he said, many so-called relief programs treated only the symptoms of poverty but did not allow aid recipients to help themselves, creating dependencies on foreign nongovernmental organizations.
Obenschain said one client who both received a loan and took literacy classes told him that her world had opened up.
“She was no longer dependent on others to go to doctors. She could now read the signs. She could shop for herself,” Obenschain said. “The micro-credit loan enabled her to own her business and provide for her family. Her self-esteem has increased dramatically.”
While the ouster of the Taliban government in 2001 led to an improved economic and social situation in Afghanistan, the free-market economy many reformers envisioned has been slow to emerge. Microenterprise development projects offering loans to small business entrepreneurs have become more important in local economies, helping families rise from poverty by creating their own sustainable businesses.
Since 2004, Hope for Life has used group-guaranteed loans, where entrepreneurs apply together to guarantee each other’s loans. If any members of the group fail to repay their portion of the loan, other members commit to repaying the outstanding debt. This collaborative approach allows more borrowers to qualify for lower-interest loans since they, as a group, are seen as more reliable than lower-income individual borrowers.
Loan officers help assess and monitor businesses on site to encourage clients, who have assets, skills and experience but lack capital, to both strengthen and expand the businesses they operate.
Male recipients are usually small-shop retail merchants or offer commercial services like tailoring, carpentry or small-engine repair. Female recipients tend to use loans for home-based businesses, including weaving and carpet-making.
The organization also works with other organizations to help owners develop family-owned businesses or to offer literacy and business classes. For more than two years, the program has offered business training and marketing assistance for female clients, many of whom are entering the workplace for the first time.
As a partner agency with Hope for Life, the grants will be administered through Mennonite Mission Network. Mission Network staff members wrote and submitted the grant applications as part of their support for the work of Hope for Life.
As of May 2007, Hope for Life was working with more than 1,800 active microenterprise clients. The program is seeking to be self-sustaining by the end of 2008.
