By Yolande Hendler (on behalf of CORC)
As Bulelwa Msila arranges vegetables on a small vending stand on New Brighton’s busy Ferguson Road, a chilly gust of wind ushers passers-by into nearby homes. Due to Port Elizabeth’s winter weather, her mother is not braaiing (grilling) fish that day:
“Actually my mom sells fish but today it’s too cold. This is just a small business that I started with my mom, just to survive. I buy the vegetables from the fresh produce market. There is a lot of junk food that people eat, so we decided to sell vegetables because they are affordable and healthy. People buy from us because we are cheaper than supermarkets. Many come at the end of the month [after pay-day]. I also have another job but this one helps us to earn more. We use the money for our day-to-day expenses like electricity and school fees for my daughter.”
(Bulelwa Msila, Federation Income Generation Program)
Linda Mpako, who oversees FEDUPs income generation program (FIGP) in Port Elizabeth, explains that the program provides tangible access to financial assistance through small-scale loans. In particular it supports people who are not formally employed nor earn a regular income.
FEDUP’s Income Generation Program in Port Elizabeth
FEDUP has registered the FIGP as a micro-finance institution that draws its loans from FEDUPs National Urban Poor Fund (UPF). The UPF is built up through the payment of a once-off membership fee of R750 that is asked of each new FEDUP savings group member. In order to access loans in consecutive tranches, an individual needs to become part of a loan group (of 5 members), be an active saver and member of a savings group. Each province is guided by a FEDUP appointed loan facilitator like Linda, who provides support around loan group formation, loan disbursements, repayment cycles and other needs. Read more background here.
In the Eastern Cape, the FIGP has mostly attracted people who are not yet members of FEDUP-based savings schemes.
“People are interested to find out about us because most people already have businesses but they don’t have finances to sustain them. The FIGP interest is very low – we are the best on the ground. We don’t just issue money to anyone. People need to become part of a savings scheme. The repayment is manageable when over four months you are paying back R 276,67 per month”
(Linda Mpako, Eastern Cape, Loan Facilitator)
Motherwell: Income and Strong Savings go hand in hand
Further outside Port Elizabeth, Vivian Gulwa welcomes Linda into her home in Motherwell. She is on her third loan cycle, making a success of her beading business.
“I usually buy coffee mugs [ traditional metal mugs] in a pack of 6, decorate them with beads and sell them for R150. You will find that most people love to put them into their display units. Many of us make necklaces and traditional artwork so I had to shift and make something different. As long as you start with a small thing and have the spirit to grow, you can think of anything. I thank God for what I learnt from FEDUP: in savings groups we buy groceries in bulk. We will never go hungry in this programme, we are building each other and encouraging each other”.
(Vivian Gulwa, FEDUP member in Motherwell, Port Elizabeth)
Nomsa Dyalom and Busisiwe Tekane are very recent FEDUP members. Both are seamstresses using FIGP to become more independent in running their business:
“We are a group of 5 women in Motherwell community who make beadwork and sew clothes. We have been working in this field for 5-6 years but only came together as a loan group recently when we heard about FIGP. We are not yet members of FEDUP but we are in the pipeline. The loan group will assist us in getting additional money to make our business more successful – especially since some of us are pensioners. The loan will help us spend our money independently – we will no longer quarrel with our husbands to convince them that we want to use some of the pension money for our business.”
Building business strategy to build long term livelihood
In terms of business strategy Linda advises that new loan groups should use the example of people from outside South Africa. Through working together, it becomes possible to buy products and stock the spaza shop [corner shop] more cheaply. Unsurprisingly, one of the main challenges is competition: if potatoes are in season, you will find people selling potatoes in the same street – or sweets and fat cakes. Linda expresses the necessity for training so that people start checking with their community what people need. Overall, she shares:
“In my experience the FIGP is delivering what people need. It helps with unemployment and growing the FEDUP membership. We are seeing how families that have never worked can make money. Because of savings and small business, FIGP is like a survival skill. It shows when poor people use their own skills they can make money without being employed.”
(Linda Mpako, FIGP Loan Facilitator, Port Elizabeth)