Impact
Shared Interest’s guarantee fund has used money from U.S. lenders to transform the lives of some of the poorest families in South Africa, while strengthening the CDFIs that serve them and their communities. The guarantees have also begun to alter the lending practices of some South African bankers and their appreciation of the country’s majority market.
How Shared Interest makes an impact?
Borrowers
Low income South Africans of color launch very small businesses
- Supporting their families
- Creating jobs
Local agency partners
Community lending institutions build their capital
- Expanding to serve thousands of clients
- Strengthening their own operational and financial systems
- Increasing their own commercial viability
Banks
South African banks learn to lend to low-income communities previously considered “unbankable”. More than 200 individuals and institutions in the U.S. together have lent more than $9 million dollars.
- All investors requesting repayment were repaid with nominal interest.
- No investor has lost interest or principal as a result of a loan to Shared Interest.
Evaluation
To evaluate the impact of the first 10 years of guarantees extended by Shared Interest and implemented by its partner, the Thembani International Guarantee Fund (TIGF), the New School’s Graduate Program in International Affairs sent a team of researchers to South Africa in 2005. They found that Thembani had a significant impact on the banks and community development and micro-finance institutions (CDFIs and MFIs) with which they work. They found the fact that banks are offering “more flexible lending terms [demonstrates] that prior positive experiences in lending to MFIs can change banks’ attitudes and make them more receptive.” They also found that Thembani-backed loans increase “the capacity and sustainability of the MFIs and intermediaries that they work with… and that their loans provided the critical element of financial independence and flexibility.” Their evaluation also demonstrated “an improvement in many financial and social indicators” of the clients of the organizations receiving guarantees from Shared Interest.