- Ecumenical Church Loan Fund (ECLOF), Lima, Huancavelica, Peru
- Anglican Diocese of Peru
Program Type and Services:
- Christian Microfinance Institution: “Credit-Led”
ECLOF has focused on providing credit services using group-based methodologies through two models, namely Community Banks and Solidarity Groups (see “Group Loans” below).
Group Loans: These loans are based on a group-lending model. Entrepreneurs self-organize themselves into groups with other entrepreneurs that they trust and with whom they share common business goals. Each entrepreneur is given their own loan, but the re-payment of the loan is guaranteed by the group. These loans have short re-payment cycles. The entrepreneurs can incrementally increase the size of their loans and incorporate savings into their business practices. ‘Solidarity Groups’ have 3 to 7 members, and ‘Community Banks’ have 10 to 20 members.
Individual Loans: These loans provide working capital and fixed assets to individual entrepreneurs. The credits allow them to invest in their microenterprises and generate income that enables them to make their loan payments and improve the lives of their families and beneficiaries.
Training and resource examples:
- Business management: budgeting, marketing, skills-based training
- Leadership and personal development
- Pastoral care
- Product development
- Values training
The population of San Juan de Miraflores consists largely of people who have migrated from rural areas with very low educational levels. Eight out of 10 heads of homes do not have a primary level of education. The lack of education prevents many people from obtaining sustainable employment and generating income to afford housing. These circumstances, along with the lack of basic services, such as water and drainage, demonstrate the necessity of a microcredit program.
The microcredit program will be developed in the district of San Juan de Miraflores (covered by ECLOF Peru’s Lima South office), which has an estimated population density of 15,310 inhabitants per square kilometer. Of the residents, 6.3% are suffering from chronic malnutrition. The women represent a particularly vulnerable group. Unemployment and sub-employment affects at least 50% of the population nationally.
In the Lima South region there are other microfinance providers, as well as moneylenders charging excessive interest rates. ECLOF distinguishes itself from the other microfinance institutions (MFIs) through the provision of ongoing training and support to clients, including support in the area of product development and diversification (such as training workshops in jewelry-making, etc.).
The region of Huancavelica, where an office was opened in 2009, is the poorest in Peru, and is underserved by MFIs and other financial service providers. ECLOF has decided to work with financially excluded communities, and will be providing both financial and non-financial services in this region as well.
Five Talents is currently raising funds to help ECLOF open a new branch office in the town of Huancayo that will serve the surrounding rural region.
A group lending strategy is used in this program, and women entrepreneurs identified as having the lowest income levels, derived from small business activities, are given priority in membership selection for solidarity groups. Group members receive training before loan distribution and while the loan is in effect. Loans are disbursed in the form of “credit steps,” which begin with $300 and, as the business expands, loans increase over time.
The Ecumenical Church Loan Fund (ECLOF) of Peru is an ecumenical organization working in partnership with Christian Churches, including the Anglican Church, to support human development and self-sufficiency as vehicles for alleviating poverty. The Diocese has chosen the area in which the loan program will operate and will assist in identifying loan recipients and providing spiritual development.
In FY2012, the offices in Lima and Huancavelica reached a total of 2,604 clients. In FY2013, Five Talents hopes to raise enough additional funds to open a new branch office south of Huancavelica in Huancayo.
The program will also offer clients business advice and management, pastoral care training, and capacity-building in leadership and self-esteem for women.
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Updated December 2012