Microfinance for Poverty Reduction Project, Zambia

The Microfinance for Poverty Reduction Project (MPRP) in Zambia is a collaborative project of UNDP, UNV, the Government of Japan and the Government of Zambia, which is being implemented with the technical assistance from Grameen Trust, Bangladesh since 2004. The project became operational in January 2005. The project aims at strengthening the capacity of the two participating microfinance institutions, Micro Bankers Trust (MBT) and Institute of Cultural Affairs Zambia (ICAZ) in order to provide sustainable microfinance services to the poor, especially to women in Zambia.

The first phase of the project was set for a period of three years from July 2004 to July 2007. At the end of 2007, the project was extended for one more year in order to build up the capacity of the host organization further. In 2008, the Microfinance for Poverty Reduction Project has been successfully handed over to Micro Bankers Trust. Observing the successful operation of Lusaka and Chongwe branches of MPRP, the management has taken the decision of following the Grameen Bank approach in Kafue and Kabwe branches of Micro Bankers Trust, which were performing very poorly. Under this arrangement, the activities of these two branches will be monitored and supervised by the ex - Project Director of MPRP, who is now serving MBT as Technical Advisor. It is worth noting that, after the take over of the responsibilities, significant positive changes have taken place in both these branches, especially in terms of member outreach and record keeping system.

The staff of MPRP has been facing serious challenges such as high drop out rates, high death rates, lack of proper savings mobilization policy at the government level etc. The drop out rate is high because most of the clients are not permanent residents and they have the tendency to move from one place to another. The reason of high death rate is the high prevalence of HIV/AIDS amongst the clients. The limited scope of business in the area of operation has been another problem for the members of MPRP. In 2008, the challenges took a different form than the previous years. These were mainly related to the expansion of program as well as provision of loan products to its clientele.

The members were asking for higher loan sizes. In this response, the management designed "Higher Investment Loan" product which would be launched in the next year. The management has also started the procedure of introducing voluntary savings packages, which would allow even non members to save.

The performance of MPRP was evaluated by independent consultants in March 2008. According to the review report, MPRP was the only microfinance program in Zambia, which had consistently recorded 100% repayment rates. Following the review, the General Manager of Grameen Trust went to Zambia for monitoring visit to MPRP. During his visit, he held meetings with the management of MBT, officiated a workshop and attended an exhibition of the borrowers' loan activities. He was also interviewed by Radio Phonix during his visit.

The transfer of MPRP to the Micro Bankers Trust in 2008 involved lot of challenges and excitements. Despite that the project performance in this year still remained satisfactory. In 2008, the project increased its outreach by 1,033 members and loan disbursement by US$ 1,271,681. It has achieved 104% of operational sustainability in this year.