John de Wit

Ashoka Fellow
South Africa,
Fellow Since 1993


This profile was prepared when John de Wit was elected to the Ashoka Fellowship in 1993.
The New Idea
John has adapted ideas associated with the Grameen Bank (founded in Bangladesh, but now well established in many parts of the developing world) to the needs of small-business men and women in rural South Africa. The Small Enterprise Foundation will use a group-based methodology adapted to the traditional rotating savings associations prevalent in South Africa called "magodisano" or "umgalelo" to provide rural micro-entrepreneurs with access to credit. The Foundation will demonstrate a new model of group-based savings and loans that is responsive to the largest problem facing micro-enterprise programs everywhere: expansion. The program is structured, from inception, towards long-term, low-cost expansion and will make affordable credit available to as many as 70,000 businesses in the first eight years of operation. Further, the Foundation will institute a savings component, or reserve fund, to increase participants' savings capital and sense of security. How does it work? A small business operator who requires a loan for his or her business initially invites four other people to form a group or "stokvel"; all of these people operate small enterprises and want loans for their businesses. The group begins to hold weekly meetings, first participating in three induction and training sessions. After successfully completing the training, all of the group members may obtain loans.
Borrowers use their loans individually, but they guarantee each other's loans, and are all held responsible if one member defaults. First time borrowers are restricted to loans of $100 and qualify for future loans of $200, $350, or more.
John's experience with micro-enterprise credit has demonstrated that the provision of credit alone is not sufficient to ensure the stability and success of businesses owned by the poor. Without additional resources, the poor are particularly vulnerable in the face of mishaps and calamities. Hence the Small Enterprise Foundation has introduced a mandatory "reserves" component. In order to receive loans, participants must actively build up a small reserve or "emergency" fund. Applicant groups open savings accounts at a local bank and maintain full control over their accounts. Members contribute towards their collective reserve fund at each meeting.
After completing the induction and training sessions, the group joins other successful groups to form a "Center" of five or six groups from the same area. The Center then becomes the focal point of group activities. Each group elects its own chairperson to serve on the Center's executive committee. This committee, in turn, runs the Center meetings and approves new loan applications. The Centers are in a unique position to tackle daily problems encountered by members, and to serve more broadly their communities.
The Centers' chairpersons also meet annually to evaluate the Foundation's policies and pass their recommendations to the Board of Directors of the Small Enterprise Foundation. In this way, the program participants have a direct say in the Foundation's policies and process.
The group-based method will enable each of the Foundation's field workers to work continually with more than 480 borrowers, and to maintain high recovery rates. John projects that, in about five years time, the Foundation will achieve self-sufficiency.
The Problem
The Strategy
The Person

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