CHAPTER 6: PRESENTATION OF FINDINGS
6.1.4 Loan Repayment Timelines
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off the loan she received and also invested in her farm. So, the question is, would it still be the case for Margaret if she wasn't employed by the government and earning a salary?
Lindiwe complained that one businessman who owned a butchery took her pigs on credit and was not able to pay her, while blaming the COVID-19 situation for losing customers.
In her case, the extra support she received from her husband for feed filled in the gap of repaying her loan, leaving some money to sustain the business. However, Alice’s situation was different and hinged more on the insufficiency of the credit.
Nonhlanhla, on the other hand, had a different story about her loan, which she used to increase the business stock and not for anything else. She said:
I used the money I received from the fund to help my business. I had borrowed money from the fund to reinvest in my business in order for it to perform well again (Primary Data, 2020).
The question this raises is whether the participants' businesses' sustainability was dependent on other sources of income. Or was it determined by the type of business a beneficiary was currently engaged in? Should a business be considered sustainable when it can generate enough income on its own, where the capital can be reinvested and the beneficiary can live comfortably with the profit from the business rather than the capital, thus draining the business? Or, does the profit gained from the business need to be banked or saved for future use in the business? Businesses generally build up reserves for sustainability, but this seems to have not been possible in this case study. In reality, the participants' businesses were not solely dependent on business income, but also on other sources of income. It is observed by Henriksson and Karlsson (2008) that in developing countries, family members helping to start a business can be important.
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participants are able to repay their loans in full but late, while others do not repay at all, and some pay with borrowed money, remittances, or other sources. Others pay in part but have to be reminded by the Inner Council.
Some of the participants, such as Thoko, were able to repay their loans on time. Doreen and Lindiwe were unable to do so due to difficulties in their businesses. When asked if she could repay her loan, Thoko said:
Yes, I have been able to pay back the money. I have never been called and reminded that repayment is due. You can even go to Inhlanyelo Fund and ask them to show you my record, I have borrowed money numerous times and I have been able to pay back that money (Primary Data, 2020).
Margaret said:
Yes, I was able to pay back the money to the fund. I think I was able to pay back the money because my maize production business was doing very well. I was able to get maize bags to package the maize and was also able to get more bags (greater quantity) and some were put in maize tanks…. However, there is one year where I did not do well due to drought and I had to borrow money elsewhere to pay back the loan. My businesses did not have insurance for such circumstances (Primary Data, 2020).
Margaret was able to repay her loans even though on one occasion she had to borrow money elsewhere to repay the loan.
Sonto said:
I was able to pay back both the loans I took from the fund honestly. I would find that if this month I was not able to pay the fund, the next month I would pay back the instalment in double (Primary Data, 2020).
When Sonto said both loans, she meant that she borrowed twice from the fund and was able to pay them off in full. From this finding it seems that any profits are simply used to repay loans so that the business cannot expand.
Merriam was also able to repay the loan, and she recalled that with the money from the fund, she purchased more stock, and with the profit, she was able to repay the loan instalments.
Margaret worked as a secretary in one of the government offices. This gave her an advantage
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because it allowed her to repay the loan with her monthly salary even when her maize
farming business was not producing enough income due to the drought. Doreen was unable to repay the loan, and when she did, it was usually late. She explained that the fund made
provisions for defaulters who missed the initial deadline to repay their loan at a later date.
She said:
Since I started supplying food to Inyatsi [construction company]) I haven’t been able to pay back the loan I took from Inhlanyelo fund. And it has come to the point that when I eventually do get the opportunity to repay the loans I will need to repay back the full amount. And that alone will require that my business will need to start from scratch (Primary Data, 2020).
Doreen, found herself in a complex situation where the repayment of the loan meant shutting down her business, as there was no money left to buy stock for her restaurant. Lindiwe, who was unable to repay her loan, said:
I sold pigs to one butchery owner who usually pays me after two weeks but because of the COVID-19 pandemic his business has not been doing well and this resulted [in] not getting my payment from him… I have a passion for the piggery project but because I do not remember receiving any training on how to take care of the piglets so that they don’t fail and die and it is this loss that does not make you able to pay back the loan properly. Even the situation at home changes because you end up taking the money that was meant to buy food for the children and you end up using that money to pay back Inhlanyelo Fund (Primary Data, 2020).
Doreen and Lindiwe, defaulted involuntarily. They did not foresee the circumstances that befell them, making them unable to repay their loans in full, and this would in turn delay others from borrowing. This model needs urgent attention, since such circumstances are very disempowering for women.
The Inhlanyelo Fund uses peer pressure to ensure that loans are paid, whether by the
borrower or her guarantor, or by the group paying for a specific borrower, and even potential applicants are required to pay for a defaulter before they can access their own loan. In this case, the fund is less likely to be impacted by a specific borrower's inability to repay due to the insensitive structures in place to ensure the money is paid. Fund sustainability is
prioristed over people and their business sustainability.
148 According to Margaret:
What I learnt was that because I borrowed money from Inhlanyelo Fund you have to try by all means to pay back the loan. Because if you don’t pay back the loan, other members of the community would be unable to borrow money from the fund because of you. I felt as if it was not right and it shouldn’t be me who causes other members of the community not to be able to benefit from the fund when these people could do with the fund’s assistance (Primary Data, 2020).
As previously stated, the peer pressure method appeals to women in terms of collectiveness and humanness, in that they see it as doing others a favour by paying off their loan so that it does not discourage others from borrowing. They do not realize, however, that it is a strategy of the financial institution to ensure that it does not lose any money in the business.
According to research, women who receive loans from microfinance institutions typically use them to solve other problems, particularly to meet the needs of their households (ILO,2007;
Banerjee et al., 2017). This is entirely due to their poverty and inability to provide basic necessities such as food, shelter, and clothing for themselves and their families. As a result, Inhlanyelo Funds are frequently used to meet these needs.