A Lending Tree

By Simon Robinson/Kampala

Getting ahead in Africa is tough. Banks lend money only to the middle class and the wealthy. Poor Africans--meaning most Africans--stay poor. It's even harder if you're sick. Without savings to fall back on, many HIV-positive parents pull their kids out of school. They can't afford the fees and end up selling their few possessions to feed the family. When they die, their kids are left with nothing.

Though not directly targeted at people with AIDS, microcredit schemes go some way toward fixing that problem. The schemes work like minibanks, lending small amounts--often as little as $100--to traders or farmers. Because they lack the infrastructure of banks and don't charge fees, most charge an interest rate of as much as 1% a week and repayment rates of over 99%--much better than that for banks in Africa, or in most places.

Many microcredit schemes encourage clients to set aside some of the extra income generated by the loan as savings. This can be used for medical bills or to pay school fees if the parents get sick. "Without the loans I would have had to look for another way to make money," says Florence Muriungi, 40, who sings in a Kampala jazz band and whose husband died of AIDS four years ago. Muriungi, who cares for eight children--five of her own and three her sister left when she too died of AIDS--uses the money to pay school fees in advance and fix her band's equipment. Her singing generates enough money for her to repay the loans and save a bit.

Seventeen of the 21 women at a weekly meeting of regular borrowers in Uganda care for AIDS orphans. Five are AIDS widows. "I used to buy just one or two bunches of bananas to sell. Now I buy 40, 50, 60," says Elizabeth Baluka, 47, the group's secretary. "Every week I put aside a little bit of money to help my children slowly by slowly."

--By Simon Robinson/Kampala