Frequently Asked Questions

Why do you work with the church?
“Christian institutions are rooted in their communities. They have developed a credible leadership familiar with the needs of the poor, familiar with cultures, histories and contexts of its people. Religious communities approach their development work from a unique perspective that reinforces the moral and ethical values systems of these communities.” World Bank, Faith in Development 2001

The Christian church has a very strong presence in Africa (approx. 50 million members), and the network also covers all of Asia and South and Central America (though less strong). This provides a powerful means to identify local partners – benefiting entire communities and not just Christians.

How religious is Five Talents?
Loan clients can have any or no religious background. We do not discriminate in who can access our services. Our values are founded in the Christian Faith (Anglican denomination), emphasizing integrity, good stewardship and service to the poor. Our leadership in the United States and overseas consists of Christian professionals with skills to provide a quality service. Our loan programs are usually linked to an Anglican church as a means of reaching the poor in the community and providing local accountability.

Does my entire donation reach the poor?
If you restrict your gift to the loan fund or training fund, then all the money will go overseas for the loans or training programs. If it is restricted for the administration fund, it will be spent in the United States on publicity, staff, overhead, etc., which is necessary to facilitate the programs. General donations will be allocated to the greatest need.

For existing loan programs (e.g. Indonesia), new donations will increase the loan capital available for loans, enabling more clients and bigger loans. For new loans programs, some of your donation will be used to set up the office and pay local staff.

What interest rate is charged on the loans?
Rates vary from country to country and are not always an appropriate measure. In Uganda, a group borrowing $282 must pay a charge of $51 over six months. This includes the application fee, business training and monitoring. Fees are set to cover local running costs, such as the salary of the loans officers, fuel, and office expenses in order to be self-sustaining.. The feedback from most clients is that they can afford to pay back the loans with fees. After paying back in full, most clients apply for second and subsequent loans.

How big are the loans?
The biggest loans are around $1,316 per person. The smallest are $56 per person. The loan itself is made to a group of five to 10 entrepreneurs who each take their share of the loan and who all co-guarantee the repayment schedule.

The average monthly wage in Uganda is around $28 per month, so a $56 loan repaid over six months is a significant cash-injection to a small business. Loan sizes grow with subsequent loan cycles.

What are the repayment rates?
The range across the current 13 programs is between 80 to 100% repayment, as of June 2005. The rates can go up and down over time. Where loans are repaid late, the loan officers continue to follow them up, until such time as they are written off as a bad debt. A critical factor in achieving high repayment rates is wise group selection and follow-up by the loan officers. As we expand the reach of Five Talents to new clients and new programs, this is always going to be a challenging area. But we anticipate some defaulters as a consequence of funding start-ups and working with the poor.

Does the money really re-cycle indefinitely?
Yes, but it depends on repayment rates (see above). The loan capital in each program is loaned out to groups, and repaid by groups with interest, repeatedly. In a mature program, the interest meets 100% of the running costs of the program, leaving the loan capital intact. In some cases, the interest can exceed the running costs (e.g. 110%) in which case the local program committee can decide whether to buy a piece of equipment for the office (e.g. a computer or a motorbike), or save it for reserves, or transfer the excess to the loan account. In other cases, the interest is insufficient to cover all running costs and the shortfall is met by funds from the Five Talents International office (for young programs) or from the loan capital (for under-performing programs). This is carefully monitored through monthly reporting by both the local program committees and by the Five Talents International office.

Are many women receiving loans?
In June 2005, we gave loans to a total of 4,910 clients of whom 3,339 (68%) were women. We have found, in line with other micro-finance institutions, that women, on average, have higher repayment rates than men. We are glad to empower women in this way, especially in view of the following quote from the former President of Tanzania: “When you educate a man, you educate an individual. But when you educate a woman you educate an entire family and a nation”

How do you target the active poor?
The active poor are those below the poverty line (defined as a dollar a day) who are seeking to help themselves through employment or self-employment. Most Five Talents programs are located in poor areas, and the active poor join the programs through self-selection. Loan Officers occasionally reject applications from middle-class entrepreneurs seeking loans, even though such clients might be easy “profit centers.” In most cases the middle classes prefer individual loans and they do not want to co-guarantee loans in a group methodology.

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