Community Banking... a basic group lending

Since people are asking about microfinance, I would like to share from time to time a little bit of the microfinance industry.

The microfinance has four components. They are loans, savings, insurnce and education/training. Out of these, the most fundamental component is loans. Among many types of loans, a group lending is the basic and the original form of micro loans available to the most vulnerable. In group lending, community banking is a form that is most prevalent at most traditional micro financial institutions or MFIs. The recent trend has been doing away with group lending primarily for an operating efficiency purpose, but it is believed to be still the most prevalent form of micro lending.

A group of 20 to 30 is formed. All are microbusiness owners. "What kinds of business?", you may ask. 70-80% of them are selling food stuffs at the market. Most of them carry fruits and vegetables to the market place for sale while some have small stores next to their tin-roofed or grass-thatched homes. Some more fortunate ones may even have stores in commercial districts. Some of them are farmers growing fruits, vegetables, coffee, tea or other cash crops while others may even manufacture products to be sold to wholesalers.

This group, called a trust group, elects its president and treasurer. If they are starting anew, they need to go through the basic training about how to run a business. It takes approximately four weeks. During this training, they also learn about how the loan program works. Individually, the members apply for their loan needs and the group members should agree on the legitimacy of the loan amount. There are other rules for the group to honor, such as loan term, payment frequency. These rules are established for the entire group members to follow because they all will cross-guarantee for each other in case any default occurs. This guarantee is called a social guarantee. No credit checked. No collateral required. No capital required or verified. No cash flow analyzed. Only character is screened through the group dynamics, but mostly it is for anybody who has the will and desire to graduate from poverty.

Initially, the loan payment frequency starts with a weekly schedule. As the loan cycles continues, the loan amount increases, the loan terms lengthens and the payment frequency becomes less frequent.

As times goes by, the profiles and borrowing needs of a group may change. Some members will do better than others and their borrowing needs increase while other members may continue to have the same borrowing needs. The group may be split into two groups with additional members of similar profiles.

As part of the program, members may be requires to set aside part of the money as savings. These savings are contingency funds for their emergency needs with their families or their cash flow for loan payments.

Some successful microbusiness owners graduate to Solidairy Group or even to individual loan program. Meanwhile, they may borrow other ancilary loans, such as village phones, cargo bikes, home improvement loans etc.

Also, the group continues to receive training on various topics during the group meetings. The training topics could be on how to increase sales, how to manage money, how to prepare for emergencies, how to make a business plan, how to prevent HIV/AIDS, how to apply biblical values to running a business etc.

The microfinance is not only a way to provide the poor with capital but also a platform to bring them various education/training programs to help them graduate from chronic poverty. It definitely brings the poor hope for transformation.

As a Christ-centered institution, many Christian MFIs, like UOB, also let the clients know that the microfinance and related training is provided to them 1) because of the call by Jesus Christ to seve the poor and thus 2) in a way to reflect the love of Jesus Christ. Christianity is intentional but not enforced. All poor people are welcome to the trust groups.

The microfinance definitely produces economic transformation in that the poor improve their economic life quality. It also produces social transformation in that people restore their dignity and hope to the original form that the Creator created in the beginning. It also produces spiritual transformation in that people get to know Jesus and commit to their faith in Him while others become more mature in their faith bearing the fruits of good deeds in their life styles.

I am so thankful that the Lord has led me to this wonderful opportunity to be part of the action on site for helping the poor. Thank you, Lord! - Jeffrey

Pasika Nziza!...Icyizere

Pasika Nziza! (Happy Easter!)

My belated celebration on the resurrection of the Lord!

The redemptive death of the Lord on Good Friday was the expression of God's mercy on His chosen people to forgo the penalty of sins, the removal of the negative aspect.

The resurrection of the Lord from the death was the expression of God's grace to His chosen people to give an additional bonus of new life and the promise of eternal life. It is the act of grace.

Together, it represents the love of God: passionate, unconditional, abundant love.

On this day, all Christ-followers celebrate the resurrection of the Lord and praise Him for His goodness.

On this joyous day, however, Rwandan Christians were in a solemn mood. The celebration was toned down and the songs sung were less joyful. It is all because this day fell into the middle of the week of mourning on the genocide.

At many places, people were gathering to rebury the remains of the genocide victims. Among them were two of the bank employees. This is how the cemoney went. After the service, many people shared their testimonials of the lawlessness, cruety, horror and fear during the genocide. Other people remembered their past traumas and started wailing. The entire people soon joined them, weeping, crying and wailing together. The ceremony could not continue and so it was finished earlier than scheduled, but after 3-4 hours of sorrowful remembrance of the tragedy. Poeple went home with one phrase deeply inscribed into their minds. "Never, ever, ever again!"

Many wonder why the government has to bring up the horrible memory every year and scratch the healing wounds of peple again and again. Others argue that we should never forget the tragedy by remembering the horror. I don't know which argument is more valid, but the ultimate destination of all these that the government hopes to see is hope. There are gigantic bill boards all over the city, reading "Icyizere (Hope)."

I was sad on the Resurrection Celebration Day. Because many Christians could not celebrate the resurrection of the Lord fully and joyously. I am sure the Lord understands. But I was sad.

On the other hand, however, I realized that the ultimate outcome that the Rwandans desire to see in painful remembrance of the genocide is icyizere. Yes, indeed. Rwandans hope to see complete reconciliation among people and perfect harmony of people in unity. It is hope.

But, the genuine hope is the hope of bodily resurrection of all dead in faith and of the hope of eternal life in Christ. It is a blessing to many Rwandans who know it and pray for the real "Icyizere." Praise the Lord!

"Pasika Nziza! He is risen! He gave us the hope of our bodily resurrection by becoming the first fruit of the resurrection! He has given us the hope of eternal life! Icyizere! Thank you, Lord! I am looking forward to my bodily resurrection to be like your glorified body! Imana ishimiye! (Praise God!) Amen! Amen! Amen!" - Jeffrey

Good Friday...

Today is Good Friday. Today is the day to commemorate the death of Jesus on the cross.

Death of Jesus...Why is it called Good Friday? The most common answer I hear is that even though it was physical death to Jesus, it was good for us because we were able to receive salvation through His redemptive death on the cross. Maybe... Even if so, is that all to it?

If it is all there is to name this special day Good Friday, it is such a selfish naming of the holy day in human's self-centered eyes.

I believe it is called good because the redemptive work of Jesus was in line with and in obedience to God's will to save His chosen people. The word "good" has "god" in it. If you take "o" out from the word "good" then you have "god." On the other hand, if you take "god" out of "good" then you have only "o." O. Zero. Nothing. Nada. No matter how good we think anything is, if there is no God in it, then it is nothing. We love to use the word "good" for almost everything. Good car, good house, good job, good food, good girl, good guy, good cloth, good weather, and even good weapon. No matter how god it is, if it does not have God in it, it means nothing.

Good Friday. The Creator God in human flesh bore my sin and the sins of all others and died on the cross, sinlessly and willingly though with lots of pain, agony and humiliation. He said, "It is finished." He meant that all the wages of sins have been paid off. Once and for all. What a grace I cannot bear! What a love I do not deserve! Nonetheless, He redeemed us all who come forth in faith that His redemptive blood cleans us who confess that He is the Savior. He also offers to be the Master of those who surrender their lives to Him and accept Him as the Lord.

In His awesome grace, I shiver and kneel down. Humbly but gratefully.

Today is Good Friday. Holy Day. God's good purpose for His people has been finished. Once and for all. Thus, it is good. Today is Good Friday. - Jeffrey

A thought on the Genocide Memorial Day

April 7th is one of Rwanda's national holidays. It is the Genocide Memorial Day. This year, they commemorated the 15th anniversary. The entire nation goes into a solemn state of emotion and mind. There is no one who has not been affected by the genocide. Some people do not want to use the term, genocide. Instead, they use terms like "war" or "conflict." But clearly it was a genocide and is known to be the worst genocide in the human history, not based on the number of people killed but based on the cruelty and the pace of killing in light of the time period that the genocide occurred. Approximately one million people were killed over a 100-day period. It goes ahead of the Natzi's gas chamber and the Khmer Rouge's Killing Field.

During April, I was advised to avoid meeting with clients in group. I was told that even some employees may react sensitively to certain remarks. Totally understandable. "How should I behave?", I asked. I was advised to only refer to the scriptures.

I grew up in Korea right after the Korean War. The War involved battles between two Koreas: South and North. Korea is a homogeneous nation with one race, one language and one culture. Yet, two Koreas fought for ideology, killing each other. My generation did not see and feel the chill of the war firsthand, but we have seen and felt enough indirectly through movies and classroom lectures. Basically, it was against communism, but the tone of the slogan has changed over time from "Destroy Communism" to "Oppose Communism" to "Win over Communism." Yes, it has been toned down. Lately, they are not even talking about communism any more. But the division is a reality and the gap is getting wider after 55 years of separation. South Korea is one of the top ten largest economies in the world and North Korea is one of the poorest countries in the world. I do not foresee the unification of two Koreas in the near future. If somehow the unificaiton is forced, both Koreas will collapse together because S. Korea will not be able to bridge the wide gap existing between two Koreas. I hope and believe, sooner or later it will happen, though.

In Rwanda, ironically, the two tribes or groups of peope (Tutsis and Hutus) involved in the genocide are co-existing. Yes, there have been some indictments over the perpetrators and many are still in jail. But many have been paroled by the current president Paul Kagame and they are actively involved in the social activities without restriction or discrimination. Even the genocide prisoners wearning pink uniforms can be seen in the community working in community projects, without any binding.

Many people still suffer from the pains and sorrows. But they overcome them internally, many with their Christian faith in the healing, forgiveness and reconciliation power of the love. As Bishop John Rucyahana wrote in his book titled "The Bishop of Rwanda", "... we preach the gospel of hope on the piles of bones..." I am amazed by the power that Rwandans live with. I have spoken with several genocide survivors. Some lost all their children and her husband, but have adopted several orphans and are living a life that inspires others. But they never boast about themselves. They simply take it as a natural duty. What an example of self-less dignity and self-esteem in comparison to the selfish greed that is rampant in the modern society.

Rwanda was the only country in East Africa which said "No" to the slave traders. The Rwandan kings refused to sell their poor while all other kings did. Rwanda was the center of the East Africa spiritual revival that swept the region in 1930's and 40's. Every spiritual root in East Africa's Christianity somehow comes back to Rwanda. Rwanda is a deeply rooted nation with principles and dignity.

Thus, I find hope in this country. The hope for the first "African Tiger" nation. The hope for the gospel-based, gospel-propelled and gospel-spreading nation. The hope for an exemplary African nation that refuses foreign aid and instead offers aid to other nations. Oh Lord, may your blessing of hope be poured into this tiny nation to be a blessing of hope to many others! Amen! Amen! Amen! - Jeffrey

Musanze and Gisenyi...

[<= Musanze Office staff => Gisenyi Office staff]

On April 1, we traveled to the north, Musanze, where Virunga National Park is located. In this National Park, people trek to see the rare mountain gorillas. There are volcanoes, some of which are dormant. Then, we further traveled to Gisenyi, the northern tip of the Lake Kivu and very close to the DR Congo border. This time, my wife Kristin traveled toghether.

On the way to Ruhengeri, the capital of Musanze District, the roads had a lot of pot holes. It was probably the worst main road that we have traveled so far. If Musanze is one of the main travel attractions, the government should make extra efforts to improve the main road, I felt. The road was pretty winding, but not as bad as the one to Karongi. It took us still approximately two hours to get there. One amazing scenery about Rwandan agriculture is that people have cultivated all pieces of land even up to the top of the mountains and hills. I wonder how they physically plow the soil on such steep slopes.

In the Musanze Office, there are one Loan Officer Supervisor and nine loan officers. As usual, I introduced myself and met them individually by listening to them. After I shared with them the vision for the bank's future and listened to their issues, transformation stories and suggestions. Many of them are pretty similar, but I was hoping to catch something new. I continue to take notes and collect all feedback until all my tour is over. After all tours, I intend to summarize them and take corrective actions collectively, particularly on those of common themes.

We traveled further to Gisenyi for another one hour and fifteen minutes. There was a road expansion construction under way so we had to stop a couple of times to wait for the opposite traffice to pass by on one way road sections. Gisenyi is right at the border with DR Congo. The closest town of DR Congo is Goma. Until recently, there were battles going on between the joint forces of DR Congo's government troops and Rwandan army, and the DR Congo's rebels. It ended up with a victory for the joint forces, but a lot of refugees resulted from the conflict. The Gisenyi had some nice hotels, including Serena Lake Kivu right at the beach.

The bank's Gisenyi Office has only three staff members, one supervisor and two lenders. It is a small operation and I felt strongly that we either have to expand our presence or to withdraw. There is no economy of scale and no significant impact on the target client base. After discussion, I felt that the market still has potential for growth and the need for microfinance is growing, particularly now the military battle is over. We have decided to strategize further.

The scenery was beautiful and I felt like sitting down at the beach to have some reflection time, but we had to hurry to get back to Kigali not to be too late. We had to travel for another three and half hours. As expected, the road condition was pretty bad and my butt was hurting, but my heart was content with meeting my colleagues serving the poor all over Rwanda.

Lord, please grant me your divine wisdom so that I may make right judgment on many situations. It is my desire that this ministry may move to the next step in tune with your will and in step with the Holy Spirit. Oh, Lord, may I seek your guidance in every step of the way... - Jeffrey

Lake Kivu... Karongi

On March 25th, I visited the Karongi Office close to the Lake Kivu. Lake Kivu is a long lake bordering DR Congo and the entire west side of Rwanda (Gisenyi from the north through Karongi in the middle and to Cangugu in the south.) This lake is sitting on a dormant volcano and known to have a lot of methanol gas captured in the lake due to the weight of the water. When the balance of the lake is broken, this gas could be pushed out, potentially dangerous to people living by the lake.

It took us two and a half hours to get to the Karongi Office, located at the center of a local market, 15 minutes from the lake. The road is paved, but it is winding all the way to the office crossing over a tall mountain, approximately 4,500 feet high. The scenery was panoramic and spectacular from the top. What a beautiful creation that the Lord has done! But people suffer because of the car sickness. Thanks to the grace of God, we all made it safe.

There are only four members of the staff, with a small exposure. The purpose of the visit was to listen to a group of clients the majority of whom were trying to leave the bank (16 out of 20). Their departure may not have been significant financially, but I needed to know the reasons of their departure to continue to push the Christ-centered, Client-focused service culture bankwide.

I did not want to bore you with a long story. In a nutshell, they all appreciated UOB for giving them assistance when they needed it most, and they did not want to leave, but our products were inflexible to accommodate their needs and they could not afford to make timely payment. So they wanted to leave. It is hard to believe in the U.S. context, but these innocent people did not want to create a commotion by making an appeal. May God bless their hearts!

After a lengthy meeting, they all decided to stay with the bank. Praise the Lord! From the process, all staff learned a great lesson of the importance of listening to the clients. Many of the issues could have been taken care of by the supervisor and the lending staff.

Oh Lord, thank you for the opportunity to learn how important it is to listen to our clients to be able to serve them better. May we all be able to learn from this incident and apply the client-focused service spirit to the entire bank! Amen. - Jeffrey