CHAPTER 6: PRESENTATION OF FINDINGS
6.1.1 Loan Application and Repayment Procedures
The majority of participants encountered difficulties in obtaining loans. Loan application procedures were time-consuming and can be viewed as a barrier to small and medium-sized businesses obtaining microcredit. A few women expressed dissatisfaction with having to rely on their husbands as sureties. These experiences caused the women to be hesitant to apply for a loan, which reflects Hannan and Ashta’s (2017) suggestion that the loan application process be made more flexible for clients. The fund's goal was to provide credit to vulnerable groups as long as they repay the loan. The women’s experiences varied across chiefdoms, usually requiring another person to stand in as a surety, and some women were not given the option of providing their own surety, but instead were told to request their husband to be sureties.
These processes were created by the community leaders as strategies to help ensure that all members repay their fund loans. The traditional leadership, on the other hand, was being trained in the fund's operation and expectations; they then devised their own payment enforcement strategies, which differed between chiefdoms. The Inner Council
(Bandlancane), also known as traditional leadership, is in charge of the fund application process.
Ngabisa’s experience with accessing the credit from the Inhlanyelo fund illustrates the ordeal faced by the women. She said:
What I can say is that the application process for the loan wasn’t easy as there was a lot of running up and down (Primary Data, 2020).
Sometimes these procedures could lead to a delay in paying out the amount and this could have a negative impact on the business of the beneficiaries. This was the case of Lindiwe, who noted:
The way the Inner Council conducted the process of acquiring the loan was very unprofessional (Primary Data, 2020).
Merriam, one of the participants, claimed that access to a loan was contingent on the recommendations of the Chiefdom Inner Council, the bandlancane.
138 She said:
As it is in this network one has to have a good reputation as a community member because the community leadership have to recommend you to access the loan (Primary Data, 2020).
The potential problem with giving the Inner Council members power over the loan process was that they could use personal vendettas against applicants as a means of delaying the applicant's payment process or, worse, they could deny the applicant access to credit.
In contrast Merriam saw this process as a form of community network while Lindiwe saw it as an avenue through which unequal power relations were enacted through the institution of the Chiefdom. She said:
I feel like the fund affords the community elders too much power in determining who or who is not eligible to be a beneficiary. This doesn’t sit well with me or my business because like I explained earlier the piggery project is my passion and business. The community elders want to involve my husband as a witness or surety which also delays the process of acquiring the loan (Primary Data, 2020).
Lindiwe explained why she felts having to go through this process of accessing the loan was a problem. She explained:
The application process requires an interview with your husband when you borrow the loan as he is made to be a surety. Actually, I don’t think it is the fund but the community leadership [the Inner Council] who want to make sure everyone pays back the money. If he does not act as a surety, he would never know that I have received a loan from the fund. This really doesn’t sit well with me because you end up misusing the loan and investing it in other things other than that which it is intended for.
As also observed by Lindiwe, this was a strategy by the chiefdom to ensure that repayment of the loan was made whether or not the beneficiary was alive or dead, not necessarily to ensure the growth of their businesses after receiving the credit.
Furthermore, participants revealed that the peer pressure lending model of the fund was sometimes used to take away this opportunity to obtain loans, since it forced them to pay off the debts of other recipients before they could benefit. Mthethwa (2009) argues that the fund’s use of the peer pressure method in disbursing funds is counter developmental. A new
139
applicant's loan cannot be processed until the loans owed by other participants have been paid in full (i.e. a peer pressure model).
According to Thoko:
The community leadership is used to select beneficiaries because you must be a person who respects the chiefdom leadership, you must be able to live in harmony with other people, they must trust you, and you must be humane so that they are sure you can respect that you have borrowed money and pay back the loan. Borrowing a loan is a collaborative process because if one does not pay, the community members will be unable to access loans from the fund. (Photovoice interviewee, 2020).
While this peer pressure method may seem like a collective good, it could be detrimental to an applicant as it was a barrier to their accessing credit on time. This was due to the fact that they had to wait till another group member could clear the debt of another member, or until the applicants themselves could gather money to pay off the debt. In Nonhlanhla’s case, she said:
We discovered that, when we went to the fund for financial assistance, at Mahlanya Inkundla which had a bad reputation with the fund as people from the area had not paid back their loans, the fund insisted we pay back the loan of some of the other people who had defaulted on payments before we could be eligible to borrow money from the fund. We paid back the debt and the fund allowed us to borrow money from them (Primary Data, 2020).
Mthethwa (2009) notes microfinance institutions are interested in making money rather than benefiting its clients. He, however, proposes that each application must be considered in its particular perspective. Another experience my research participants had with the Inhlanyelo fund, with regards to payment procedures was the fact that the fund demanded quotations for business purchases that the loan would be used for. According to Margaret:
The fund looked at that quotation and the quotation encompassed everything I needed for the successful production of whatever I wanted to plough or farm. Even the
amount of labour you will need. Even the cost of the tractor you will need to hire. It is that quotation which includes all these things that the financial assistance from the fund relies on (Primary Data, 2020).
140
The process of understanding what quotations entailed and being able to draft one, could be very challenging and almost impossible for people with low education levels residing in the rural communities which the fund targeted.
The fund requested quotations from participants in order to verify their loan applications for that specific type of business. This was a general requirement of the fund for all chiefdoms, and it was submitted along with the loan application. It is also worth noting that requesting a quote is not necessarily a bad thing. It ensures that people are realistic about the resources required to run a business. When applying for credit from traditional banks, one must provide business plans, cash flow projections, and other information that will help the banker
determine the appropriate loan amount. However, the majority of the fund beneficiaries lacked the necessary knowledge or, in some cases, numeracy levels to meet these standards.
Nevertheless, most retail shops where participants needed inputs provided a preliminary quotation that the fund could use to align the loan amount required and the nature of the enterprise.
Microfinance institutions in Eswatini operate within political structures in order to be legal, and they target creditworthy beneficiaries to ensure repayment. According to the evidence, social institutions continue to oppress women because they have patriarchal norms that maintain the culture of how they view women in a household. Also, the requirement of a husband’s permission could create vulnerability for some households which reported abuse, alcoholism and polygamy. Garikipati (2013) observes that this has the potential to exacerbate pre-existing power and inequalities between women and men by utilizing their social
positions in loan applications. However, it is worth noting that not all women were married and they had different lived experiences regarding the loan processes.