GD : What are the reasons for the success of microcredit and KGMAMF in Kosovo?
HK : If you look at all the MFIs working in Kosovo, KGMAMF is actually the leading microcredit organization there. Why? Well, the major reason for KGMAMF’s success is that we are the only organization that went directly to the village level, and targeted the most vulnerable women who fell victims to the war.
KGMAMF is also the only organization that has 100% women members. In Kosovo, much like elsewhere in Eastern Europe, women play an important role in the family, and felt the ravages of war the most. So, appropriate targeting is a key success factor of KGMAMF.
Before KGMAMF was established in Kosovo, women were not viewed as equal to men. They did nothing but housework. When our colleagues first went to the village women and explained the Grameen system, they showed no interest. Their sentiment was that “we are women, what will we do with credit?” They now know that not only will their family income increase, they will also have a better role in the family decision making. So, helping women empower themselves is an important element of our success.
Access to KGMAMF microcredit has led to small enterprise development at the village level in Kosovo. The members are not only generating income for their family, some have employed others as well, thus benefiting other families. So microcredit has a multiplier effect in that through one member, we have benefited many.
Another important success factor is that following the Grameen philosophy, KGMAMF goes to the client, instead of the client coming to us. If you look at other MFIs in Kosovo, the clients go to the office, and the procedure is very cumbersome. So following the Grameen model is key to our success.
GD : Can you give us an example of one extraordinary member?
HK : I have worked for more than one year in the project, and have visited many homes and businesses. As I recollect, we have given a microenterprise loan to a member of the Prizren branch, Ms. Florije Hodaj, for her carpentry shop. Before she joined us, her condition was very bad. Her husband used to work as a day laborer, and everyday he went to the market to stand for hours without anyone hiring him. But he had experience in carpentry. When she joined KGMAMF, she initially used the credit to buy a milch cow, and then gradually built a carpentry factory. She now has a small shop where she and her husband work together to make tables, chairs, sofas, kitchen cabinets and all types of household goods. And when she took the microenterprise loan of €4,000 in September 2004, her factory already had equipment worth more than €30,000! On average, her monthly net income is €400 – €500. If you see this in the context of the Kosovo economy, it is a large amount, as even a doctor there earns only €220 per month.
This is only one story of success; there are many more from among our 5,000 borrowers.
GD : What, in your opinion, is the greatest challenge for microfinance in such a difficult setting as Kosovo?
HK : Since Kosovo is still recuperating from the devastating effects of war, there are a lot of challenges for the microfinance sector. The first challenge is the fund problem, not only for KGMAMF, but also all other MFIs in Kosovo. Since it is still under UNMIK rule, no donor or financial institution is coming forward to lend money to MFIs. This is one of the major challenges of the microfinance sector in Kosovo.
Second, the unemployment rate in Kosovo is very high. More than 70% of the population is unemployed and the market is still very much undeveloped, without any major industry. The main occupation is basically trading; for example, people own grocery shops, caf és, or internet cafés, instead of other established industries. So, the absence of variation in economic activity is another challenge for microfinance.
Finally, due to the uncertain economic and political situation in Kosovo, people are shying away from making investments there. So, with persisting unemployment and lack of scope, it is a challenge for microfinance to build upon people’s ability to create self-employment.
GD : What are the personal difficulties you have faced in a particular setting such as Kosovo?
HK : Basically, the first and greatest difficulty is that in Bangladesh, we have never experienced temperatures below zero. In Kosovo, people have protection against the cold and are used to it. In our country, people do not need heavy winter clothing, but in Kosovo, it is cold round the year. So, the continuous harsh winter is a problem I feel personally.
Just this February, we had very bad blizzards for a week. Everything had to stop, even though all our center meetings were closed for the winter anyway, as rural roads are usually not cleaned by the government (UNMIK or KFOR) after heavy snowfall.
Besides, Kosovo is very mountainous. We have to always travel up and down, sometimes even climbing 1000 feet high up. We are not used to traveling in this way, but gradually we are becoming habituated to such conditions.
GD : What are the challenges you have faced in running the program by local staff? How did you overcome such problems?
HK : When I took over as Project Director in December 2003, KGMAMF already had all local staff, including branch managers and loan officers. The international team built up the capacity of this staff to work with microcredit, so they had already gathered experience.
Although I did not face many problems, there were still some issues relating to field level credit operations, central to MFIs, that needed to be dealt with.
Language was another problem. Since we carry out our operations in English, our colleagues have taken English courses, but some problems still remain. For example, when we conduct Grameen training program for the staff, all our training materials and manuals are in English. Even if our colleagues can converse in English, it becomes difficult for them to process the materials if English is used so extensively.
So, how did we manage to overcome these problems? Well, from the beginning of my tenure, we conducted many training programs for our staff members. We arranged training on how to handle a microfinance branch operation in a strict, professional manner; we also arranged other programs on problem solving methodologies, preparing our colleagues to cope with the types of problems faced by an MFI.
To overcome the language barrier, we encouraged our local colleagues to speak in English instead of Albanian when they are all together, even outside of KGMAMF settings. In this way, they have improved their fluency in English.
Also, while introducing new methods, as we did this year in our year-end closing, we conducted extensive staff meetings, skill development programs for the accountants, branch managers, and other staff. This is a continuous process, so we will continue our efforts till ultimately the staff are well equipped to work with microcredit.
(End of part one)
The remaining part of this interview will be published in the next issue of Grameen Dialogue .
Interview by Lamiya Morshed, Tasmina Rahman and Tania Sharmin