The Community Centre Alliance in St. John’s is taking an innovative approach to reducing poverty in the community neighbourhoods in which it works. CCA has taken a globally known model of micro-lending, typically used to address poverty in some of the world’s poorest nations, and adapted it to the needs of low income residents of St. John’s. The original concept of providing micro-credit to the poor was developed by Muhammad Yunus and pioneered in Bangledesh. Yunus’ idea has garnered much attention and success in several countries battling extreme poverty. Here in Newfoundland and Labrador, the Federation of Co-operatives wondered how they might use micro-lending to foster social and economic development. Through funding from the provincial government and a partnership with the Community Centre Alliance, the model was adapted to address low income and poverty in St. John’s. The concept that the poor are credit worthy and that micro-credit can be self sustainable are not new ideas; Yunus’ program was started in 1976 and has been implemented successfully throughout the world. But how might an organization in Canada support entrepreneurship among Income Support recipients while sorting through the myriad government-sponsored Income Support and Social Housing regulations? The first step was to find partners, including those government departments that administer Income Support and Social Housing. The next step was to provide a supportive environment for participants and the necessary tools to achieve success.
Currently in its pilot phase, the program has financial support from the Government of Newfoundland and Labrador through Innovation Trade and Rural Development. Other partners include the NL Federation of Co-operatives, which acts as a delivery partner, and Metro Business Opportunities, which provides financial administration. The program operates three ‘lending circles’ at two sites – St. John’s and more recently, in the central region of the province in Grand Falls-Windsor.
The micro-business development group draws on the experiences of peers and is supported by a Facilitator who provides advice, assistance and skills development opportunities. Individuals must meet the basic eligibility criteria, which includes a good business idea supported by the group, a genuine desire to succeed and a willingness to work with others to help them be successful. Participants may apply to the group for a loan starting at $2,500 and once repaid, can access increasingly larger amounts up to $10,000. Good credit history is not a condition of the loan provided that participants disclose previous credit problems. Loans are approved by majority vote of the peers in the lending circle once certain conditions are fulfilled. Loans will not be “clawed back” for Income Support recipients and the Social Housing office will work with tenants to be flexible around restrictions on business activities. This direct support by government is a key feature. It lets participants know that they are being supported throughout the process and reduces some of the barriers they would otherwise face as they begin to formulate their business ideas and put them into action.
The program began in January 2009 and initial success led to the extension of the program. The Community Centre Alliance hopes to continue to work with government to provide opportunities for people with great ideas but limited resources. Yunus’ micro-credit started with a $27 loan so that a woman in Bangledesh could make and sell bamboo stools to support her family. More than 30 years later and a world away in St. John’s, an innovative nonprofit is adapting this idea and a single mother dependant on Income Support is working to support her family by starting a home-based hair salon using her first $2,500 loan.
For more information about the Micro-Business Program, contact:
Community Centre Alliance