WHY THE CAPACITY FOUNDATION IS DIFFERENT

The Capacity Foundation was set up to break the cycle of dependency on international aid so that the community of Malenga Mzoma can control its own destiny.

The Foundation started after discussions with a group of people in Chituka, a village in the Traditional Authority area of Malenga Mzoma in northern Malawi. The chronic challenges that were exposed – food and water insecurity, low educational attainment, poor health provision, low or no income – couldn’t be left for a hoped-for far-off day when poverty would be relieved.

What stood out most clearly and movingly was that people just wanted a means to improve their lot. Ways simply had to be found to tackle Malenga Mzoma’s problems at the grassroots – from the bottom up, not from the top down.

A baseline survey in 2016 provided the data that underpinned the discussion groups’ summary of their situation.

Under Eliminating dependence on aid you can read how the Foundation’s unique funding model is providing Malenga Mzoma the means to master its own destiny.

For another perspective on international aid, see this article in The Guardian in which Sabrina Dhowre Elba argues that the era of humanitarian aid is over and that people in Africa want real, sustainable investment, not handouts.

Malenga Mzoma benefits very little from international aid and not at all from poverty relief.

Our solutions to breaking the aid dependency cycle

The Foundation’s solutions to tackling the problem of dependency on international aid are to:

1 – Grow the local economy by investing in small start-ups and by running social enterprises to stimulate employment.

2 – Generate a form of localised tax revenue, devoted to a Social Action Fund, controlled by the community of Malenga Mzoma.

Growing the local economy will increase prosperity and generate the funding for desired local projects. This is the only reliable way to achieve sustainability. No other charity or NGO (non-governmental organisation) is set up to do this.

A new microloan model

Microloans have been around for at least 50 years, so the Foundation has learned from other organisations’ mistakes.

  • The Foundation’s loan repayments are structured over a much longer period.
  • While microloans are often restricted to mature women, the Foundation lends to men as well as women and to young people as well as the more mature.
  • We don’t foreclose on anyone should they run into difficulties with their repayments; it’s our job to see them through challenges.
  • Traditional microloan programmes rely on a never-ending flow of funds from a donor country. After early-years seed funding, the Foundation’s loans programme will be generated entirely within Malawi.

For more details about our microloans programme, see Eliminating dependence on aid.

It is often asked why banks in Malawi can’t provide loans. In a commercial environment where the national bank base rate is over 13%, banks won’t consider lending such small amounts, they don’t offer close training and mentoring, and foreclosure is used as a penalty should a borrower default.

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