Registered Charity
Charities Commission
Legal name of the charity: Aotearoa Development Cooperative
Registration number: CC26792
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Microcredit has revolutionized banking by making it possible for
the very poor to take out small loans without collateral
- Jeffrey Sachs, Earth Institute
Principles
ADC has four operating principles that govern our development work.
About our Principles
Community
ADC aims to foster highly cohesive communities among both the poor in Myanmar and funding members in New Zealand. For the New Zealand community, ADC encourages a collective sense of ownership and widespread engagement among its members and associates. ADC aims to connect its community in New Zealand with the communities we are working with overseas.
Sustainability
ADC is committed to sustainability, both in the relationships we establish with overseas communities and in the functioning of microfinance institutions. A sustainable project empowers local communities to take control of their own future and importantly, to avoid on-going financial dependence and consequent power imbalances.
Autonomy
Any microfinance bank established by ADC is owned and administered by the community it serves rather than ADC itself. Although our organisation seeks to work in partnership with a given community to establish a microfinance scheme, it is important that a great degree of the ultimate decision-making authority rest with the community. ADC seeks to empower the communities it works with to take control and ownership of their own development.
Partnership
ADC’s projects are built on strong, established partnerships with local community groups. ADC recognizes the importance of investing time and care into the development of these partnerships and is committed to working with communities in the long-term. ADC aims to minimise power imbalances within its relationships with project partners.
The ZMF Project
An Investment in Small Business
ZMF offers several prescribed loan packages to groups of five clients. The client may nominate the term of the loan as either 25 or 50 weeks. The size of the loan available to individuals, and guaranteed by the group, increases each time a loan is successfully repaid.
ADC is a non-profit organisation, as are its partners in Myanmar. ADC and ZMF set interest rates at a level that will enable the bank to cover its overhead costs and be sustainable in the long-run. The ZMF bank interest rates are considerably lower than informal moneylenders in the area, some of which charge up to four times the ZMF rate. Accordingly, ZMF is classified as a ‘poverty-focused microcredit program’.
Group Lending: the Cornerstone of ZMF
Loans are disbursed to individuals in groups of five, and group members act as co-guarantors for the loans of each person in the group. Group lending encourages clients to monitor the businesses of their fellow group members and act as business mentors and advocates for each other, which in turn fosters cooperation and results in high repayment rates.
Eligibility: Working for the Poor
ADC works to improve opportunities for the poor in Myanmar. As such, clients of the ZMF bank must be amongst the poorest in the community. This requirement is largely achieved by the size of the loans offered by ZMF; such small loans are of little interest to more wealthy individuals. To ensure the bank's services are particularly accessible to woman, there is a requirement that at least two-thirds of the clients of the ZMF bank are women. ZMF also holds regular client training sessions prior to loan disbursement, which is designed to educate individuals about loan terms and conditions as well as overcome literacy and numeracy barriers.
Repayment: Keeping the Bank Strong
Repayments are made at weekly meetings according to the terms of group loans. A repayment discipline program is in place, which uses access to future loans as a mechanism to incentivise repayment of a current loan. For instance, if weekly payments are missed, or if members do not attend the weekly meetings without a good reason, the value of the next loan for all group members is reduced by a fixed amount. In extreme circumstance, loan terms can be restructured based on the needs of individual clients.
Business development
Developing Businesses: Workshops and Weekly Meetings
ZMF specializes in small business development amongst the poor. An important part of this is helping clients to develop relationships with other business owners so that information can be shared. ZMF does this in two ways. First, ZMF holds weekly meetings, where clients come together to make repayments and discuss their businesses with each other. Second, ZMF administers three client workshops per year, which aim to educate and inspire business development among clients through highlighting successful business achievements in the community. Attendance at each of these meetings is a compulsory component of accessing a loan.
Savings
Savings Products: Safeguarding the Future
ADC recognizes the value of savings for the poor according to best practice established by microfinance institutions. Incentivizing savings helps to smooth consumption in an environment where incomes are often extremely volatile. ZMF offers a range of savings facilities to service the needs of the poor through both market mechanisms and institutional policies. This includes a term deposit facility and a call account designed for small deposits and withdrawals.
Women's Empowerment
Women Leading the Way
ADC and ZMF recognize that women make up a disproportionate share of the poor in Myanmar. We also recognize that creating opportunities for women to develop and improve their situation is synonymous with the development of entire communities. ADC empowers women by reserving places for women on the oversight committee of ZMF, which is responsible for developing the policies of the bank. ADC also actively encourages women to take up positions of employment within ZMF. Further to this, the ZMF bank is required to enusre at least two-thirds of its clients are women. In practice, the proportion of women clients is much higher at around 90% in 2010.
Health Interventions
Health Option: Overcoming Malaria
Clients can opt in to this scheme by nominating a proportion of their compulsory savings to be spent on anti-malaria medication. ZMF purchases the medication in bulk during the low season, and when the rainy season begins, those clients who have opted into the scheme are given anti-malaria medication at weekly meetings over a six-month period. The scheme is cost neutral to ZMF and ensures anti-malaria medication is available to the poor.
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