Sometimes You Need a New Roof: Why Household Microloans Work
This piece was written in 2021 by Anne Marie Gattari, a cherished volunteer. Some details reflect that time.
For years, microloans were sold as the way to end poverty: lend a woman money, she starts a business, and everything changes. Then economists took a closer look, and the results were disappointing. Many of those small businesses didn't succeed.
But that's not the whole story. Sometimes a woman doesn't need a business. Sometimes she just needs a new roof.
The short version: Zawadisha provides no-collateral, no-interest loans for household goods to women in rural Kenya. Research suggests microloans for household items, rather than small businesses, can make a real difference in women's lives. Every purchase from our shop funds these loans.
What do the loans pay for?
In sub-Saharan Africa, where poverty rates are among the highest in the world, small household loans are a powerful tool for change, not charity. Zawadisha's loans buy safe, eco-friendly appliances and home repair materials that make women's daily lives healthier and more efficient. They can also help fund small income-generating businesses. Often, they cover a mix of both.
- Clean cookstoves and solar lamps replace wood fires and kerosene lamps, which contribute to household air pollution.
- Rainwater tanks save women up to 20 hours a week of walking to collect water.
- Iron sheets repair leaky roofs and walls with holes.
How does a woman get a loan?
Zawadisha is a women-led nonprofit headquartered in Maungu, in southeastern Kenya, about 77 miles (124 km) from the Indian Ocean. Zawadisha means "to give a gift" in Swahili. Jen Gurecki of Reno, Nevada, founded it while researching women and poverty for her master's thesis.
At the time of writing, Monica Makori led the operation, assisted by Margaret Mtuku and a team of 10 peer educators who ran free monthly training, on everything from permaculture and soap-making to financial literacy, for rural women across a three-county area.
The process to get a loan is designed to take time, Monica explained. Women must agree to the terms and have the capacity to repay.
"In our first orientation meeting, we talk to the ladies and tell them about Zawadisha and our rules," she said. "There is no loan right away. We tell them talk to your families and let them know what we are offering. Then we wait for them to call us."
The women who borrow from Zawadisha belong to local women's finance groups, and that's where our strongest relationships are built.
"I'm proud that we've been able to help thousands of women in rural Kenya trade in toxic kerosene lamps for solar lamps, eliminate hours of walking to wells to fetch water because they now have rainwater tanks, and learn how to grow kitchen gardens and start micro-businesses because of the training we provide," Jen said.
Why do household loans work when business loans often don't?
Research by U.S. economists raised doubts about microloans because it focused on loans for small businesses, which too often failed. Later research found more promising results when loans go toward household needs, like Zawadisha's.
Simone Schaner, an economics professor at the University of Southern California, co-authored the report "Understanding Impacts of Financial Services on Women's Lives: A Mixed Methods Approach in Kenya." As she told National Public Radio: "Entrepreneurship is a great avenue for some people in some contexts. But not everyone is best served by having their own small business."
Sometimes you just need a new roof.