Microfinance and street children: is microfinance an appropriate tool to address the street children issue ?

4.4. Why do street children need credit?

4.4.1. For their income generating activities45(*)

Two profiles of demand emerged among the street children interviewed

The most vulnerable street children (i.e. category 1) who did not finish their vocational training^46(*) and were involved in wage related activities pointed out their desire to get occasionally access to credit in order to start some seasonal businesses, which was perceived as an opportunity to increase their income, or some temporary businesses whenever they loose their jobs.

Most of them were buying mineral water, food and chocolate in order to sell them and to earn a profit on that. Usually, this happened during special periods (i.e. New Year, Ramadan, etc). For example, during Ramadan, some street children were buying food and preparing a meal, selling it to the people on the street for «iftar» (i.e. sunset meal). These seasonal businesses were generally combined with their actual work, and provided additional sources of income.

For others, it was a mean to get some money whenever they loose their jobs. Indeed, the probability to loose their jobs is very high, and relying on savings whenever this happened was effective for short-term period. So, in case street children stay without a job for a quite long period, a credit enabled them to get some sources of income for their survival.

However, whenever talking about their future, many wanted to leave their actual jobs and to start their own income generating activity, after their vocational training being finished.

The second profile of street children needed credit in order to start their desired businesses, as their preference for self-employment was also very high.

The business investments were generally related to the vocational training that was provided to them (e.g.: if the child received some training in tailoring, he desired to invest in a tailoring machine) and were usually expressed as their main point of interest: purchase a tailoring machine, create a tea stall, expanding or creating a grocery shop, buy electrical goods or cycle rickshaw^47(*) servicing materials, etc.

When asking the children whether they got some access to credit before joining Padakhep, all pointed out that «nobody wants to give us a credit because they think we will fly with the money; but we are not like that; we are responsible!». Moreover, some children highlighted that some people sometimes give them credit, but they charge very high interest rates - about 10% a month.

«Before Padakhep, I was working as a Ferry Wallah, carrying and selling some goods from one shop to another. To do so, I was buying some goods in credits. After selling it, I was returning the money with a high interest rate to the MOHAJAN (i.e. the money lender)

A study of the ILO (2003) underscored that the main source of credit for street children in Bangladesh are their friends, who lend them some money, mainly for consumption purposes. Iglebaeck and Hassan (2005) findings indicate that, as it was the case for savings, urban poor children have less access to credit facilities than their rural counterparts, but the few access they get is from people whom they had working relationships with.^48(*)

We must note that the root cause of doing such a business is closely related to the reasons mentioned below when discussing their spending needs: the objective is to guarantee a source of income to the children, in order to afford their present and future expenditures.

* ⁴⁵ This was only the case for children aged more than 12 years old.

* ⁴⁶ Vocational training is a professional training provided by the NGO to the street children in order to get professional skills which were valued on the labour market.

* ⁴⁷ Cycle rickshaws are small bicycles which serve as a «taxi» in the streets of Dhaka.

* ⁴⁸ Rural children tend to have a larger social network, which not only provides stimuli, but also takes the child through a socialisation process of financial behaviours, which urban children lack due to weak social networks in urban areas (Iglebaeck and Hassan, 2005).