Lapologa! The Sotho sign on the otherwise bare walls of a tiny watering hole in the neighbourhood of East Orlando invites neighbors to one of a handful of plastic patio tables and ‘refresh themselves’ with a cold drink.
This backyard business offers Sydney and Maria Majodina minimal income to support three unemployed children, ages 29 to 37, and four grandchildren. The entire family shares a matchbox-size house next to the small pub in this Soweto neighbourhood.
Until recently, the family also generated additional income from renting several corrugated steel shacks cramped between the pub and their tiny bungalow. Mr. Majodina says, “Often there wasn’t enough food in the house.” He says he constantly worried about paying electricity and water bills.
Enter Blue Dot Housing, a microfinance organization based in Johannesburg and run by a group of young blacks dedicated to social change.
This spring, the Majodinas recognized opportunity when Blue Dot offered them an equity loan to replace their backyard shacks into a brick-and-mortar rental unit. Once completed, the new building is expected to generate sufficient income to start paying off the mortgage while also boosting family income.
After being turned down by commercial banks, Blue Dot recently inked a deal with Oikocredit to obtain start-up capital for the new equity loan program.
Oikocredit was founded in 1975 at the initiative of the World Council of Churches. The not-for-profit organization provides denominations, churches, and individuals with an opportunity to buy investment products which offer credit and capital to impoverished people in the developing world. Hundreds of churches and individuals, including many in Canada, have now invested more than $250 million around the world in projects such as Blue Dot Housing.
Jill Martin, finance team leader of the Primate’s World Relief and Development Fund (the development arm of the Anglican Church of Canada, which is also a member of the World Council of Churches), says PWRDF invested in Oikocredit in 1998 when it allocated 20 per cent of its reserve capital to socially responsible investments.
“The recent PWRDF board decision to incorporate the principles of mission-based investing into its operational policies makes the Oikocredit investment particularly relevant,” says Ms. Martin. She recently became president of the International Oikocredit board and attended its annual meeting in Johannesburg in June.
“I don’t think any one strategy or any one person will fix the problem and end poverty,” says Ms. Martin. She adds that individual Canadians can make a difference. “You can’t stop at writing a [donation] cheque,” she says. “When you plan your investments, you can do a good thing,” she adds. Ms. Martin says Anglican churches and church-goers across Canada have invested in Oikocredit, but the denomination is not involved at the national level.
Meantime, in East Orlando, the Majodinas have torn down the corrugated shacks in their backyard, and a construction crew has dug ditches for a foundation. Mr. Majodina says he is building a four-room rental unit with shared bathroom facilities.
“I plan to rent out three rooms [to migrant workers] and turn the fourth room into a tuck shop,” explains Mr. Majodina. “It’s a good change because our loan payments will be reasonable.” He adds, “Our future will be bright.”
Blue Dot ensures building projects are finished in about four weeks and can be paid off in about five to 10 years. Although extremely impoverished, many of Soweto’s original residents now own property titles to their land and can thus provide collateral for their loan. After apartheid ended in 1994, the South African government transferred property titles to township residents living in what used to be rental homes built by former governments.
Nandy Heule is a freelance writer and a volunteer for Oikocredit Canada. More information on microcredit can be found at www.microfinance.ca. Launched during the United Nations Year of Microcredit, this is the Canadian gateway to the sector and a joint project by not-for-profits, commercial banks and the Canadian government.