Economic
empowerment is a critical step in helping women to take charge of their
lives. By increasing opportunities for income and enhancing their
knowledge and skills, women gain the necessary means to improve their
status.
The Program:
When ADEW began its work in the mid eighties, research found that most
Egyptian credit programs required a male guarantor or requested
collateral. Thus, low-income female heads of households were excluded from
obtaining loans. ADEW developed an alternative credit model that accounted
for these constraints. ADEW's credit program centers on the concept of "peer lending" instead of
traditional notions of collateral. Credit groups, normally ranging between
three to five women, guarantee each other's loans thereby freeing women
from the need for a male signatory or owning expensive assets.
The system is successful for four reasons:
- The credit system is built on a traditional savings model long used in
Egyptian society, the "Gameya." Women with little experience in financial
matters can understand and relate to this particular concept.
- The successful repayment of loans by each individual group member is a
requirement for being eligible for additional loans as a group, meaning
that the social pressure to repay loans is high.
- Credit groups
require that women themselves screen potential applicants. This is
significant because 1) women take responsibility for who they allow to
join and 2) group members have a much better idea of who is a credit risk
than NGO staff.
- Credit groups
provide a support mechanism for women and a forum for women with similar
challenges to share their experiences. Credit groups also encourage group
solutions to problems and increase cooperation among women.
Saving Scheme:
While the provision of loans is vital, so is encouraging women to save
their existing money as insurance for a "rainy day." ADEW's saving scheme
helps women understand the benefits of collective savings and the
importance of having a cushion for sudden, one-time expenses like the
sickness of a family member, a wedding, a death, etc.
Since 1996, ADEW has encouraged women to save at least one percent of
their loan and leave it with ADEW in the name of the credit group. How the
group then uses that money is up to the group to decide. However, if women
save more than one percent, the money is put in a separate account in
their own names.
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