How it works
South Pacific Business Development Foundation (SPBD) Fights Poverty by Empowering Women and providing credit to those who need it most.
Philosophy
SPBD’s philosophy of lending is based on a respect for each individual’s innate human ingenuity, drive and self-esteem. It’s these qualities that make people creditworthy, not the collateral which traditional banks demand. By providing access to capital, SPBD allows women and their families to pursue their dreams and achieve their full potential. We provide the opportunities to empower the poorest members of society to make significant improvements in their lives.
Methodology
Micro-enterprise Development
SPBD provides small, unsecured loans of around US$400 to groups of rural women, who invest these loans into businesses based on their existing livelihood skills. They are given training, ongoing guidance and motivation for the purpose of helping them to grow these small income generating endeavors so that they can work their way out of poverty. This is a very structured program with clear rules.
Childhood Education
From the second loan onwards, members are also and encouraged to invest the proceeds of their loans for basic housing improvement and childhood education. SPBD helps to ensure the children of all our members receive a proper education by providing financing to pay for school fees, school uniforms, and textbooks.
Housing Improvements
SPBD helps to improve the healthiness and resilience of our members' homes by providing financing for basic housing improvements such as obtaining access to electricity, running piped water, proper sanitation, building a secure foundation for their home (instead of a dirt floor) and installing a tin roof on their home (instead of a grass roof).
Savings
It is expensive and difficult for the poor to open bank accounts at traditional commercial banks. SPBD helps our members save for a rainy day and to develop good financial habits by providing a basic savings service. By saving with SPBD, members have a safe and convenient place to make small and regular savings deposits.
Death Benefits and Loan Insurance
SPBD offers a death benefit and a loan insurance product to all of its members. In the event of a member’s death, her family receives a benefit. This assurance of no hardship on the remaining family is something that many of our members greatly value.
Peer Group Support
All SPBD members are part of a self-chosen group of four to seven women. In each village there might be two to five SPBD groups. The members of the peer groups support and guarantee one another. They are the first line of approval on all new business plans and loan applications of their group members. They act as weekly guarantors on all loan repayments and they play a vital role in the ongoing guidance and motivation of each SPBD micro-entrepreneur. For example, if a client falls ill, her circle helps with her business until she is well. If a client gets discouraged, the support group pulls her through. This contributes substantially to the extremely high repayment rate of loans made to microfinance entrepreneurs.
Weekly Meetings
SPBD has weekly meetings in the local villages with all its members. At these meetings all SPBD related business takes place, including business training modules, review of business plans, loan applications and approvals, weekly loan repayments, savings deposits, and ongoing business mentoring and coaching.
Competition
SPBD faces limited direct competition as the commercial- and Development Banks each require collateral or a steady income for micro/small business financing. SPBD is one of the only financial institutions able to deliver credit in Samoa, Tonga, or Fiji individually and to provide on a large scale completely unsecured credit to the poor.
Clients
SPBD serves women living in both rural and peri-urban areas who are vulnerable to the consequences of poverty. These include single mothers, the unemployed, minorities, the poor in health, the disabled, the unbanked, and potential victims of domestic violence. Of the total number of loans distributed:
- 99% go to women
- 80% go to clients living in rural areas
- 40% go to single mothers
SPBD expects to see a positive ripple-effect flowing through to the formal economy and society at large as more micro-businesses are started and more individuals gain access to work in the formal economy.
