The Project was established in 1999 with funding from some Canadian churches, charities and individuals with the objective of lending small amounts of money to both start-up and existing businesses operated by women in Mdantsane outside East London.

The project was originally initiated through the efforts of Martha Deacon (a Canadian entrepreneur, corporate lawyer and investment banker) who saw the need for such a program and the Rev. Lulama Ntshingwa, Chief Ecumenical Officer for the Eastern Cape Provincial Council of Churches (ECPCC) and has been operating under the ECPCC’s direction.

The Eastern Cape region of South Africa has the highest poverty rate in the country and Mdantsane (as a former black township under the Apartheid regime) has an even higher rate of poverty with 70% unemployed and a reported AIDS infection rate of around 30%. A recent survey published through the BBC of black townships around the more prosperous Cape Town area indicated 76% of households living below the Rand 352 poverty line (CDN $65) per month, with 36% of adults having paid work and average life expectancy projected to drop to 40 years from 55 years. South Africa has one of the highest HIV infection rates in the world with 11% of the TOTAL population infected.

The project targets the marginalized sector in South Africa. Many of our clients are grandmothers forced to support their grandchildren because both parents have either died or are infected with AIDS and unable to work (if work is available!!). There is no social “safety net” in South Africa.

Structure of the Project:

The Project’s loan program has been built on established micro-finance principles with the following specific elements:

· Initial loans of R600 repayable in 26 weekly instalments of principal and interest (current rate 5% per month);

· Once borrowers have repaid both principal and interest on their current loan, members are eligible for increased loans to support the growth of their businesses (R850, R1100, R1500, R2200 up to a limit of R2500);

· Weekly meetings are held to provide advice and support and as a vehicle to receive loan payments.

· The program aims to reach a level of activity where its operations become self-sustaining from interest payments and the loan base is expanded through repayment of existing loans and additional funds from Canadian donors. So far, it has only been able to recoup the loans themselves, with repayment rates being insufficient to cover any operating costs.

Accomplishments and Performance To-Date:

· A lending and loan administration infrastructure has been established in Mdantsane, with a Lending Officer recruited, trained and supplied with office space, computer and other office equipment. A current two person field staff assists with the organization of the weekly group meetings and loan administration.

· Funding to date has been supplied by Canadian donors (led by Canadian Memorial United Church of Vancouver, B.C.).

· The project recently received its own charitable donation tax number from Revenue Canada (CRA).

· A network of interested donor groups has been established across Canada with current capability to provide significant annual contributions to the project of at least R350,000. With the level of interest and enthusiasm that exists for the program, there is the potential to significantly increase this amount.

Summary of Performance to date (to October 15th 2004):

· First loans were made June 29, 1999;
· Total number of clients – 749;
· Total number of loans made to date – 1,072;
· Canadian funding to date R815,096 (Cdn $160,000);
· Total principal amount loaned to date R691,600;
· >95% of principal repaid;
· Number of individuals reaching lending level two (R850) – 203;
· Number of individuals reaching lending level three (R1100) – 81/ level 4 (R1500) – 5 /level 5 (R2200) 2;
· To date in 2004 42% of loans made we “step up” loans compared to 17% in 2003;

We are proud of our record of efficiency. With each client typically supporting 3-4 family members, The Project has positively impacted close to 3,000 people since its inception. We have achieved this with an investment to date of about R815,000 or roughly R270 per individual.

October, 2004