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World Bicycle Relief: Microfinance Initiatives Introduction The Need for Microfinance The Power of Bicycles: Microfinance

Introduction

World Bicycle Relief has partnered with Zambian-based microfinance bank HARMOS to pilot a 1,000-bicycle loan program specifically aimed at offering bicycles with a 3-6 month payback period. When a person purchases a bicycle, it has the immediate impact of both making money and saving money. Riding vs. walking increases productivity, which enables them to have more time to work and reduces the amount of money they spend on transportation.

The Need for Microfinance

We know from our healthcare-focused initiatives and other programs that bicycle ownership has a positive effect on the financial health of a family. This program has helped us to see the immediate impact in creating economic development opportunities. The pilot we are conducting in Zambia was designed to take a full year to complete, but by April of 2008 (within 4 months), the bicycles were paid for and new and existing micro-loan clients requested additional bicycles to purchase. This happened because recipients of bicycles experienced such a productivity increase, especially vs. walking, and savings over previous transportation costs that they could pay off their loans and invest in additional bicycles for their families.

The Power of Bicycles: Microfinance

The people involved in implementing this program are Zambian bicycle assemblers employed in Lusaka who are trained to assemble bicycles, Zambian staff at HARMOS microlending bank, World Bicycle Relief staff in Zambia facilitating bicycle delivery and providing access to local mechanics. The community that is being affected by this program are first the people who receive loans to purchase bicycles. These loans are offered to current clients of HARMOS who have successfully paid back other small loans of approximately $100 or less. The bicycles benefit the families of each purchaser as well as the entire community because of the significant increase in productivity experienced by bicycle ownership.

The success of this phenomenon is that the microfinance pilot program -- which was to last a full year -- began in January 2008 and sold out by mid-April, with an over-97 percent payback rate. HARMOS has accelerated the program and placed a second order for 2,000 more bikes. This is how the microfinance sword's positive "edge" provides the spark for an economic engine.