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

June04 Sept04 Dec04 March05

800 1638 2881 3405

Girls 494-30% 724-25% 892-26%

Boys 1144 2157 2513

Doubled 2 ½ times three times

(Source: CDB Annual Report (2005))

The total membership status is illustrated in the following figure:

	Members		Age		Total	Percentage %
	Girls	Boys	Girls	Boys		Girls	Boys
Afghanistan	212	123	8-18	9-18	335	63	37
Bangladesh	157	429	9-18	9-18	586	27	73
Chennai	41	34	9-18	9-18	75	55	45
Delhi	99	1395	8-17	8-17	1494	7	93
Kolkata	143	188	8-16	8-16	331	43	57
Muzaffarpur	119	124	9-18	9-18	243	49	51
Nepal	121	220	10-15	10-15	341	35	65
TOTAL	892	2513	8-18	8-18	3405	22	78

Source: CDB annual report (2005)

Finally, we must note that the «children's development bank» is a project initiated by Butterflies but which relies on local youth organisations in order to implement it. As pointed in their international training report (2004),

«Butterflies» identifies NGOs working with street and working children who should necessarily have participation and involvement of children as a core value.

Regarding the effectiveness of their programs, no comprehensive impact assessment has yet been undertaken. However, through the collection of some case studies, the organisation is pointing out that children value a lot those services. Indeed, the increase of the members is one of the core indicators. Moreover, some individual case studies indicate that many children have been empowered thanks to their new business activities started thanks to their credit. Finally, the children's development bank core emphasize is on participation; and it says to bring considerable added value to the children as it enables them to learn the principles of democracy and solidarity.

b. AFRICA - Street Kids International (SKI)^73(*)

SKI initiated, in 1996, a joint program with the Zambia Red Cross Society and the YWCA Council of Zambia called the Youth Skills Enterprise Initiative (YSEI). By targeting street youth in Zambia aged between 14 and 22, this program had two core objectives: to earn increased daily income and to learn useful business and life skills. The goal was therefore to encourage economic empowerment of the youth, by listening to what street children have to say and do express as their needs, considering their actual capabilities. Indeed, as pointed by SKI, this is a particularly new approach in working with street children, which is mainly built on a new paradigm: rather than using the paradigm of absence - in which children and youth are «absent» without a voice and without recognition of their experience - SKI uses the (new) paradigm of the child as a person» (Sauvé, 2003). This leads therefore to see street youth as capable human beings, who have something to offer rather than «empty vessels needed to be filled and helped» (ibid). They can therefore not benefit from financial services.

SKI has therefore developed a Street Business Toolkit, aimed at helping street based working children to develop a viable business plan for a street-enterprise initiative, prior to loan distribution.

Four program elements are part of the foundation of this program.

These are:

§ Accompaniment : Youth workers support participants while they establish their business within the larger context of their life

§ Skills training: access to business planning and management.

§ Credit and Savings : each participant is encouraged to save and can access a total of three loans (the 2^nd and 3^rd are larger)

§ Peer Support Networking : as participants' share skills and opinions, they mutually reinforce each other's efforts towards positive change in their lives

The SKI approach is more based on a general intervention aimed at stimulating enterprise creation among street based working children and «credit and savings» is one of the components of this program.

Concerning the effectiveness of such intervention, SKI is pointing out several positive impacts:

Box. 3.4.: Impacts of SKI microfinance program

Impact on Street Children

· Greater financial resources to buy food, clothes and household essentials.

· The ability to identify goals for themselves and for their business.

· Reduced involvement in high-risk behaviour.

· Greater understanding of how HIV/AIDS is transmitted and prevented.

· Friendship and support from other participants.

· Improved relationship with their family.

· Sense of pride, self-identity, and purpose.

Impact on Families

· Meals and household supplies supplemented through the participants' contributions.

· In several cases, the participants subsidized siblings' school fees.

· Parents/guardians feel proud of their child's productive use of time.

· The participant is much less dependent on family resources and financial support.

Impact on Communities

· Participants are staying in the community and off of the streets.

· Participants are becoming positive role models for their peers.

· More products are accessible in the communities, and are often available on credit.

From Street Kids International (2002 : 37)

c. LATIN AMERICA: Pronats^74(*)

Pronats is based in Peru and has been implemented in 1994 by Manthoc, a famous working children's organisation, and by various other partner organisations. Their approach is based on the paradigm of children «as subject» with its own desires and needs. The organisation is particularly renown for its successful struggle to

Pronats microfinance program is mainly based on an integration of the informal microfinance practices. Indeed, street working children of Lima and Cajamarca are provided loans (up to a maximum of US $188) on a system of rotating funds and invest it in different activities. «Children use these loans to initiate their business or supplement their savings to start up businesses (...) and has registered a return rate of 50 to 70 %» (SKI, 2002). In order to get this loan, the child put forward a proposal and is then interviewed to discuss it. The repayment schedule is quite flexible and Pronats has penalties in case of arrears.

«It helps us to develop a business. When a person wants to get funding, they have to talk to the coordinator who talks to the fund and they give you an interview...you say how much you need and how much you will earn. The fund aks you what you will do with that money,...if you can pay the loan. The rotating fund lends you up to 500 soles (about US $188) and asks you how much you can pay...I used to pay every 15 days.»

A girl from Pronats - Tolfree (1998)

include the recognition of children's right to work in Peru's national children's code, and working children covered under the same medical plan as adult workers (Moore, 1999)^75(*).

One particularly important aspect is that street children are involved in different workshops for discussing themes such as «how to use loans», business administration, the principles of selling, working conditions, managing money, etc.

Another interesting point is that the organisation is pushing street children to change activity regularly in order to find what suits them the best and the work which would offer better financial rewards.

I was selling sweets in the middle of the streets and was always facing the dangers of being hit by cars. Now, thanks to a credit received from Pronats, I was able to change activity and to sell cassettes in front of a school, a safer place!

A girl from Pronats

Adapted from Tolfree (1998)

d. Learning points : Demand and supply

Those three case studies highlight three important elements:

· Subject oriented approach: the three projects are built on the new approach which has been highlighted in our chapter 1, which perceives non hazardous work as an essential vehicle of juvenile socialization, training and self-esteem and which highlights the necessity to listen to the street children, and to consider them as capable human beings which know about their affaires and are supported in this.

· Demand for financial services: Our chapter 2 highlighted how the street children who took part in our research do need financial services for various reasons. The three programs outlined before extend our findings and tend to show that street children in other Asian countries, as well as in Africa and Latin America do need financial services and this demand can not be argued to be «supply-driven» (in other words that the organisations did create the demand by supplying their services) as those organisations are built on a subject-oriented approach.

· Holistic approach: All those programs do offer more than traditional savings and credit products. They do argue that street children do need additional services, such as training and life skills, and that microfinance intervention should be sequenced with those services in order to have a positive impact on street children.

* ⁷³ This part is based on the reports published by SKI and the article of Stephanie Sauvé (2003)

* ⁷⁴ The program outline is based on the excellent book of David Tolfree (1998), outlining and analysing several programs addressing working children around the world.

* ⁷⁵ Quoted in Foy (2001)