'Giving' to 'Grow' the Angolan Economy

In this age of integrating micro-financing into third-world countriesto help bolster struggling economies, Angola has its own system named, KixiCrédito.  KixiCrédito was the first microcredit system to offer small low-cost loans to people in Angola and has since grown from a charity to a self-funding microfinance business operating in six provinces with a loan portfolio of over $9 million. The finance system has been quite successful to date, helping many people change their lives for the better. It is not considered aid, but about giving people access to services so they can make their own way.

In the Kimbundu language, one of two Bantu languages, kixi means “giving”. In the old tradition of kixiquila, people would lend each other money or labour, knowing the favour would be repaid to them.

This principle still runs at the heart of KixiCrédito, with two-thirds of loans given out through solidarity groups of up to 15 people from a local area. “Lending to groups works well because there is trust and honour in communities,” said Joaquim Catinda, executive director of KixiCrédito, which has a default rate of only 6 per cent, much lower than the banks.

“If one person can’t make their repayment, the others have to step in. Each week every member pays a fee of, say, 200 kwanzas [about $2] on top of their repayment and this money is kept and used in case someone defaults. We have rules that people from the same family can’t be in the same loan group because if there is a death or difficulty in that family, it means two people might default and that impacts heavily on the group.”

KixiCrédito borrows money from commercial banks and then offers its clients loans ranging from $100 to $10,000, with typical monthly interest at around 3 per cent. The average loan is $900, and most people use this money to fund retail stalls at markets or service businesses such as clothes repairers or small restaurants.

“We see many people who used to sell things in their homes getting credit and being able to open small shops and restaurants,” said Catinda. “There is a real entrepreneurial spirit in Angola because people have needed to make their own way and earn a living.”

As with many other microfinance schemes, business plans are at the heart of the loan to make sure people are not overstretching themselves or without a clear plan for the money. Catinda explained: “We have to be careful about how the money is used. For instance, selling pirate CDs or electrical items on the street is illegal, so we don’t give loans for people to do that. Also, people always ask for more money than they can afford, so we go through their accounts each time and work out what is a suitable amount.”

KixiCrédito credit is currently utilizing over the counter bank loans, but Catinda said the plan was to make direct transfers into clients’ bank accounts. “We need people to learn to use banks in order to manage their money. Because people aren’t used to banks, they go there and withdraw all the credit at once. The same happens with their salaries each month, but we are trying to change this attitude.” (Sonangol Universo Magazine,  Sept 2010)