A microloan is not always “just” about increasing income and being lifted out of poverty. For some borrowers the loan is also a boost of confidence and a way to become independent and free.
This is especially true for the sub-group of borrowers that have been rescued from debt bondage. Debt bondage has been described by the United Nations as a form of “modern day slavery”.*
One of the team leaders in the Sunna Program runs a rehabilitation center for people that have been rescued from such a situation. The rehabilitation program includes providing basic needs like temporary food and shelter, rebuilding self-confidence and training up skills to work on something new. Once the training program ends the individuals get assistant finding a job or make the necessary investments to become self-employed. This is where the Sunna loans come into the picture as many of these borrowers manage to buy a sewing machine or rope making machine and this way become self-sufficient and independent for the first time in their lives.
It might sound contradictory that micro finance is a way out for someone that has such terrible experience from bad debt. However, if done in a responsible, fair and transparent way a loan can have very positive effects on the borrower’s life. This is way we keep the interest rates very low and the loan terms ultra simple to make sure the borrowers can easily understand how it works: You get 10,000rs and repay 1,050rs per month for the next 10 months. This means you repay a total of 10,500rs and are debt free again within one year. The team leaders also provide support and advise to the borrowers to help them invest the money in a way that creates enough cash flow in order to repay on time without any problems.
As part of the impact assessment we collect feedback from the borrowers and it is very encouraging to read all the positive comments about improved livelihood, peace of mind, increased confidence and ability to meet unexpected medical bills. This supports what the numbers indicate and suggests that the impact is positive on some many levels!
* Debt bondage is defined on Wikipedia as “the pledge of a person’s services as security for the repayment for a debt or other obligation, where the terms of the repayment are not clearly or reasonably stated, and the person who is holding the debt and thus has some control over the laborer, does not intend to ever admit that the debt has been repaid. The services required to repay the debt may be undefined, and the services’ duration may be undefined, thus allowing the person supposedly owed the debt to demand services indefinitely. Debt bondage can be passed on from generation to generation.”