Micro-Finance Schemes Work Wonders

Sara...one of the many beneficiaries of the Mark One Apparel micro-finance scheme

Volau is a supervisor at a leading garment manufacturer in Fiji. Over the past three years she's been sending her four children to school and successfully meeting all their school expenses.

Bereta, a single mother who works with Volau, has been doing the same thing too. She has three children at school.

In two separate secondary schools in a suburb of Fiji's capital, Suva, you will find Sara's children, all three of them.

Sara too works with Bereta and Volau at Mark One Apparel, a garment factory outside Suva.

The three women agree on one thing: they wouldn't be able to send their children to school, all ten of them, if it wasn't for the savings and loan scheme of Mark One Apparel. The scheme was conceived and introduced with support from the United Nations Development Programme."

The three, together with majority of the company's 550 employees, utilise the savings and loan scheme to meet educational expenses as well as family emergencies like funeral, bill repayments or weddings. This is crucial for Volau and Sara, whose husbands are bedridden due to illness leaving the burden of feeding the family squarely on their shoulders. For Sara who lives with her family in Lakena, a rural settlement near Nausori town north of Suva, the savings scheme is a lifesaver.

"I can vouch for the usefulness of the scheme because when my family had to move out after our lease expired, my savings helped in the construction of our new home," Sara explained.

"Now, the scheme is helping me send my three children to school." Volau couldn't agree more. Looking after her sick husband and sending her children to school, the scheme has been heaven-sent.

"I find the savings and loan scheme extremely beneficial, since it offers a lifeline to working mothers like me to continue working and caring for our family at the same time. I don't know where my family and I would be without the scheme."

Both were like Bereta, who was very emotional when asked about the usefulness of the savings and loan scheme. She believes she would not have been able to single-handedly look after her family without access to financial help offered by the scheme.

How the scheme works

Mark One's scheme is a two-phased one, the first being the savings scheme, where employees signed a form, authorising the automatic weekly deduction from their wages of an amount to go into their savings.

Once deduction starts, it cannot be terminated nor the funds accessed until the end of three months, where it attracts an interest of 5%.

"We told our employees that while we could not guarantee a certain percentage of interest, what we could guarantee is an interest rate that will be greater than those offered by commercial banks," said Bevine Severinsen, Mark One's Manager.

The scheme does not levy service fees, and at the end of the three months, members are given a window of three to four days to decide on the fate of their accumulated savings. They have the choice of either withdrawing all or part of their entire savings or reinvest them for the second three-month savings cycle.

Ulamila Natuituba, the company's human resources officer, is also the coordinator of the scheme.

"The trend is quite clear. You will see most Fijian workers withdrawing their savings at the end of the three months while most non-Fijians will reinvest."

To meet the interest component of the savings scheme, the company runs a loan scheme, whereby employees can loan up to twice their weekly wages. Interest is 5% or F$5 whichever is less and a base repayment of F$10. Since it follows a three-month cycle too, all loans must be paid off at the end of the three months. Books are then closed for a clean slate.

Severinsen said the loan component was initiated to protect employees from loan sharks who tend to impose a massive 20% interest.

"We did a survey among staff and discovered that everybody use these people and they do run a great business. We feel it was crazy for staff to be allowed to hold some savings with the company, only to pile up huge debts with outside loan sharks."

Successful scheme

So successful is the savings and loan scheme that Mark One is contemplating using money earned from the loan scheme to fund the workers' medical scheme. The idea is to bring a private practitioner into the factory so employees do not need to leave their desks for hours on end to seek a doctor outside the company's premises. The doctor will also be available to children of employees at the company's nearby day-care centre.

Severinsen believes the scheme's success lies in the fact that it is easy, simple, secure and full of integrity.

"We want a system that is fast, money is sought and paid out almost instantly, no questions asked."

The entire savings and loan scheme is run by a computer software with all the transactions done electronically, making redundant the need to queue up in foreign premises and being subjected to all sorts of personal questions from strangers.