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MEDA - Mennonite Economic Development Associates
By Nicole Zummach
September 29, 2008
WATERLOO, ON // A lot of people in North America are thinking about their money these days. Stock markets are shaky, investment banks are failing, and the price of everything seems to be going up. A dollar just doesn't go as far as it used to. However, the same cannot be said in developing countries, where farmers, artisans and entrepreneurs are getting the chance to improve life for themselves, their families, and their communities through the help of very small business loans - often called microfinance. And MEDA - Mennonite Economic Development Associates has been at the forefront of this movement for more than 50 years. President Allan Sauder spoke with CharityVillage about the evolution of microfinance, the challenges facing his organization, and how clients around the world are benefiting from this innovative concept.
CharityVillage: Given that your organization has been in operation for more than 50 years, would you say you were a pioneer in the area of microfinance?
Allan Sauder: That's very true. Actually, when MEDA began in 1953, we began by investing and taking a risk with the poor. Our first project in Paraguay was investing in a dairy that served small farmers and gave them access to markets. We asked them to pay that loan back; it took them about 20 years, but they did pay it back. We're still using that capital. Really, it was in the early seventies that we started doing lending on a larger scale basis - what, today, would be called microfinance. We didn't actually call it microfinance until probably the mid-eighties, when we started scaling up those programs.
CV: Did you create your own model of microfinance or were you following someone else's? How did things evolve?

AS: I would say the models for all of us that work in microfinance kind of evolved over time. In some cases, we used a model similar to what the Grameen Bank uses in Bangladesh. In other cases, we developed an individual lending model that became, perhaps, more of our trademark.
CV: You work in countries all over the world and have several chapters of MEDA across North America. How does your program operate?

AS: The chapters have two purposes. First of all, they support MEDA's programs internationally. So, they become a conduit for taking donations and using resources of our members to leverage that with government contracts from the Canadian and US governments. This past year, we had over five-to-one matching of our members' contributions with other sources. That really helps us to grow.
Our chapters are also concerned with how they apply their own faith and values in their own business, in their own marketplace. So, much of their work is devoted to hearing from each other about how that happens, and accessing resources from what we call the member engagement side of our work.
CV: How does faith play a role within the work that you do?

AS: We believe that our faith calls us to serve the poor. And we believe that is best done through a business model - one that creates sustainable livelihoods. So faith is core to who we are. We also believe that it calls us to a higher ethic. Simply doing everything legally isn't enough. We need to be genuinely concerned about the welfare of the people we interact with, whether it is suppliers to our members' businesses, our staff, or our clients around the world.
CV: And how does the Mennonite aspect tie in?

AS: We're not formally part of the Mennonite church. We got our name originally because most of our members, then and now, are Mennonites. But we are a private association of Christians in business who support our mission.
CV: You work in many countries where war, strife and civil unrest are becoming the norm. How is that impacting your work?

AS: I think that's also connected to our faith. We believe that we have to take a risk with the poor and that often takes us to some of the riskier places. It does present challenges, but the reality is that people everywhere in the world, whether it's Afghanistan, or Bolivia, or any of the countries where we work, are somehow managing with great resilience to eke out a living from meagre resources. We believe that is where we should be. Now, when it comes to a place like Afghanistan, we have to be concerned about the security of our staff and take some extra measures to be always cognizant of the dangers and have preparations in place.
Of our 250 staff worldwide, we have 40 that are in North America, and on average, about ten expatriates working in our overseas settings. Many of our countries are fully staffed by locals of that country. People that know the language and situation, social and cultural norms, are always the best bet. We also work hard sharing throughout the world what we have learned in other settings. That often means people from one country travelling to another country and working there for a time, or doing some consulting or training.
CV: What would you say is the biggest challenge facing your organization right now?

AS: I would say perhaps the biggest challenge is that we've had some very successful programs and there is a call and a need to scale them up to reach many more thousands, and even millions of beneficiaries. And yet, as a small organization our forte has been on the innovative side, creating new ideas and spinning them off for others to take on. So, right now I would say we are facing some challenges about questions of how big we should become, and whether that's our role.
We've certainly grown a lot over the last five or six years. In fact, we've more than tripled in total budget in that time. Yet, personally, I do feel I would like to continue to push hard to spin off those things and have others pick them up, rather than us administering larger and larger programs. [Microfinance] is now reaching in the order of 150 million clients around the world, and there are probably 10,000 microfinance banks that are serving the poor around the world.
In the midst of that, our role has changed considerably. At one time, we were starting new programs and running them ourselves, then spinning them off. Now, our role has shifted primarily to investment. We are creating investment funds that invest in those banks, and we're also looking to provide governance and investment support to those who are in the process of moving from, perhaps, an NGO status into a more formal sector bank to serve the poor. Our work evolves as the industry evolves.
CV: How do you define success in the world of microfinance?

AS: Success comes in a couple of different ways. I believe that in order to be sustainable - and that's always a key word for us - microfinance needs to be profitable. It can't depend on charity; it needs to cover its own costs, and actually return some profit back to the investors that are willing to take a risk in microfinance. But at the client level, it needs to continue to very much serve the needs of the client, and those are changing too. As clients' businesses change, as microfinance goes into new settings, there has to be new products developed.
A lot of the work we are doing right now is in the youth sector, working with children and young people that are employed in microfinance, and helping them have safe working standards and also recognizing that many of those youths themselves will move into microbusinesses.
Anecdotally, I was just writing about a client I visited in Bolivia a number of years ago, a farmer. We had introduced edible beans as a new cash crop in that area and he had got access to credit he needed for the inputs. I went and visited with him and he had three hectares of beans. I asked him, 'What difference to these beans make in your life? You were a farmer before and you're still a farmer now. What's happened?' He talked about his seven children, and six of them had gone to university from the proceeds of those three hectares of beans. That was pretty dramatic. And I said, 'What about the seventh?" ...Well, he's running the farm now.
Allan Sauder joined MEDA in 1987, and has worked in various capacities within its international programs since that time. He currently serves as the organization's president. For more information about MEDA or to support their activities, visit: www.meda.org.
Would you like to see your organization in the Spotlight? E-mail Nicole at editor@charityvillage.com with your suggestions.