Support for IGAs and agricultural activity is to be provided to small farmers and families in five rural villages in Sheikan Locality of North Kordofan State. Over 80 families (approx. 280 individuals) will have access to small loans averaging 300USD through an Islamic 'Musharaka' venture between the Savings and Social Development Bank and SUDIA. Musharaka being a form of Islamic finance in which SUDIA and SSDB will be sharing both risk and reward of the venture. The loans will be provided through SUDIA community-managed micro-credit model which not only provides access to micro-credit but also develops capacity and reinforces community cohesion and solidarity.
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Community-managed credit is a decentralized lending methodology that combines social targeting of needy clients with disciplined financial appraisal and services. Loan funds revolve to assist a growing client base.
Three fundamental beliefs around which community-based credit is based are –
• Local communities are ideally positioned to help the poor amongst them. This is so because of their shared community life.
• Assistance to poor families should strengthen rather than replace their strategies for self-reliance. Client families determine their own business ideas based on their existing skills and resources.
• Development assistance should aim at self-sustainability. Client fees and in-kind community efforts can maintain programs to bring about long-term positive change.
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SUDIA began activities in income-generation and revolving loans from as early as 2001. In 2001 the organization began implementing Community-managed credit in and around Khartoum state. Through this approach loan committees established within existing community-based organizations (CBOs) receive training to enable them to actively participate in the management and administration of the micro-credit capital. This approach not only greatly reduces the administrative costs associated with running a micro-credit program but also cuts down on the default rate. When communities are left to take responsibility and accountability for such funds they are less likely to falter when it comes to screening and assessing risk associated with loan applicants.
The capital raised from the Savings Bank will be used to provide capital finance for agricultural and income-generating activities to a population of over 80 families living in five communities in Sheikan Locality in North Kordofan State. Management of loan operations will be carried out by the five (5) CBOs in each of the villages of Mamsuka, Al-Shigela, Umm-Baouda, Umm-Sidir and Um Dereisa.
The addition of the five (5) village CBOs in Sheikan locality, North Kordofan to SUDIA micro-credit program brings the total number of CBOs enrolled in the program to nine (9). Through an earlier agreement signed in April 2009 with the mobile network MTN, SUDIA provided training to four (4) CBOs in Khartoum State in managing loan operations and injected a capital of 10,000 USD into each CBO.
Also instrumental in allowing these micro-credit services to reach the five (5) villages in Sheikan Locality, North Kordofan is the support to be extended to them through the German Development Services in Sudan (DED) which will enable them to receive the required training in preparation for the management of the loans that will be extended to their respective communities through this ‘Musharaka’ agreement.
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