Washington, DC — Shared Interest, an organization that guarantees loans for thousands of black South Africans, recently celebrated its tenth anniversary. In an interview with AllAfrica's Maria Nghidinwa, Shared Interest's Executive Director Donna Katzin comments on her organization's mission to combat apartheid's legacy of inequality, its track record over the past 10 years, and its hopes for the future.
What would you say have been your major achievements since Shared Interest's inception?
We are celebrating not only our 10th anniversary but also South Africa's first 10 years of democracy and its really a tremendous moment of promise and pride and possibility. From Shared Interest's point of view, one of the most significant achievements has been the impact that we have made on the life of everyday low-income South Africans. We estimate that during our first 10 years we have helped to create more than 6,000 very small businesses, more than 12,000 new jobs, more than 62,000 new affordable homes and have affected or impacted the lives of more than 350,000 black South Africans - 80 percent of them women.
For us, that has been a significant achievement. Every dollar that we have put up in our loan guarantee has resulted in more than the equivalent of 10 dollars being left to low-income South Africans in townships and in rural areas of the country and to top it off none of our investors has lost a penny of interest or principle.
The story behind it though is one of partnership. In 1994, we looked at the fact that so many groups had supported the South African struggle and we wanted to find a way to continue to be part of the process of building a new nation. This vehicle that we have created, Shared Interest, with many, many partners in South Africa and in the United States has made it possible for individual institutions in this country to accompany South Africa, a nation that can continue to lead the continent.
What was Shared Interest created to do?
When we were created in 1994, the original task that we faced was one of helping individual communities and their organizations become more self sufficient in South Africa to be able to stand on their own feet and the vehicle that we used was providing people with access to credit. Even 10 years after democracy arrived in South Africa, three out of every five people in the country have no access to banking services. The unemployment rate is still over 40 percent. 2.3 million homes still need to be built. The poverty rate is 50 percent. So what we decided to do 10 years ago was to create a way for people in this country to turn from disinvestments to reinvestment and to begin to put economic power in the hands of everyday people from communities in South Africa.
How does the mechanism work?
The mechanism works like this: people in U.S. religious congregations or community institutions lend us money. The money that we borrow from them is used as collateral to get banks in South Africa to make loans to low-income communities of color. The banks would typically say, `How can we possibly make a loan to this community? It has no credit reading. It is people of color. It is women. It is people who are rural. We've never banked to people like this and we don't know how to start now.' So to cut through all of that and to bring banks into the business of providing capital to the people who can use it most productively in the country, we partly guarantee those loans.
Working with our partner organization, the Themboni International Guarantee Funds, we provide guarantees so that the bank has no excuse to turn down a loan to a Themboni has helped bring that organization to the point at which you can borrow and to hook it up with the bank. The bank, with the help of our guarantee, makes a loan to a community organization serving a low income community. And that organization in turn lends out the money it's borrowed for people starting very small business, micro-enterprises, [and] rural development projects.
How is Shared Interest dealing with HIV/Aids in South Africa?
The impact that we have is primarily in three different sectors: one is rural development, one is micro enterprising and one is affordable housing. What that means in terms of HIV/Aids is that in each of those sectors, we basically experience the impact of the Aids pandemic but also are able to work with community institutions that are combating the epidemic. For example, in housing we provide guarantees for loans to emerging contractors - that is, small contractors of color who are starting up, who were barred from ever even owning a business under apartheid. Some of those contractors are working in communities that are themselves hit by Aids. Sometimes contractors in a family are dealing with the pandemic. The institutions that we work with provide technical support to those families [and] to those entrepreneurs.
We are also about to launch a project with the Home Loan Guarantee Company in South Africa that would specifically provide credit to HIV-positive home buyers. There have been many, many ways of discriminating that have been other than perfected over the years. One of the most distressing and most recent is discriminating against people who are HIV positive. And in South Africa, with its very progressive new constitution, that kind of out-and-out discrimination is illegal. However, it is legal for a bank to require that you have an insurance policy before you can take out a loan and people who are HIV-positive tend not to have an insurance policy. So with this particular project we do, Housing for HIV, would make it possible for people who are HIV-positive to have their loans guaranteed in the event that their illnesses got in the way of their being able to repay. At the same time, according to this program, they would receive free services - counseling, education and the support that is available to make it possible for them to live longer. And at the end of it, the borrower knows that should something happen to him or her, the family will not be homeless.
Do you think Shared Interest will ever expand to other countries in the region? Namibia, for example, was also a part of South Africa's apartheid system for many years and has faced similar problems since independence?
We would very much want to, but the need is so significant in South Africa that at this point we are still responding to a very, very big demand for these guarantees and the need to help people gain access to credit. In the future, if this model continues to go well and continues to have the impact that we are looking for, then we would certainly consider extending, but at this point working in South Africa is in many ways like working in the region by itself.
Can you give us an example of the sort of projects you are currently supporting in rural South Africa?
Most recently, one of our guarantees provided access to credit for an organization called Bee Foundation in South Africa. This foundation has set out to put 10,000 black rural South Africans - 80 percent of them women - into the beekeeping business in the provinces of Limpopo and Mpumalanga. The women and some men who are participating in the project each receive 50 hives that are fully stuffed with bees - with training. They receive bee food, and they begin to take care of these bees.
The way that they pay for them is in honey. The bees produce the honey which is collected by Bee Foundation. The new bee keepers become full owners of their hives. This is tremendously exciting in areas where there is - in many cases - no cash income. People have no cash economy or regular source of income. People who have not been able to send their children to school or to provide even the most basic necessities for their familie - this is already beginning to help these families begin to support themselves and to generate a base of wealth for their communities.
What the bee keepers soon figured out only months after the program started was that where there were a hundred beekeepers in an given place, it would make sense to form cooperatives. And those cooperatives would not only provide technical assistance and support to the members of the co-op, but will also help to market their honey. Every time there are a hundred beekeepers in one place, there will be a small honey processing plant. They will then become part owners in that plant, and the ownership is shared with other institutions in the community. So this one project is a tremendous example, of achieving not only sustainability, but also building a basic economic calendar community, organizing their community, and beginning to make a difference in the economy of these provinces as a whole.
South Africa currently imports two-thirds of its honey from China, so this program is bound to make it more self-sufficient in honey and build the economies - not only of the bee keepers and their families - but of the white farms in the surrounding areas that are until recently renting bees because local bees would become extinct. So it's a particularly powerful example of not only economic empowerment, but also of development that is based on a shared interest. That means that there is a social and an organizational and an economic basis to the processes of reconstruction, in the economic sense, and reconciliation between communities that have had very little to do with each other. This example we think is not only creative but also very instructive. Several other countries have expressed an interest in this model, even though Shared Interest at this point is not working in any country except South Africa. We are happy to see examples like this jump borders. People pick up projects and adopt them in their own countries and cultures.
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What is your challenge for the next 10 years?
We took a delegation to South Africa for the 10th anniversary in April and sitting at the inauguration we were really pleased to hear President Mbeki underscore the importance of what so many of us know to be true. He said that, "Endemic and widespread poverty continues to disfigure the face of our country. It will always be impossible for us to say that we have fully restored the dignity of all our people as long as this situation persists. So for this reason the struggle to eradicate poverty has been and will continue to be a central part of the national effort to build the new South Africa."
For us, just those few sentences really identify the challenge for the next 10 years. We had spoken with Archbishop Desmond Tutu when he was in New York several months ago and asked him what would you say to people in country who say, `Hallelujah, South Africa is free. Can we go home now?' And instantly he just bounced back and he said no. He said, `Achieving our freedom was the easier part of our struggle. Now we are looking to make a reality of our freedom. We need you and the people in this country to make reconciliation a reality. Don't leave us.'
So for us that continues to be a vision that we hope has a top priority to continue the partnership that has helped South Africa to come this far and to give them new strength in the coming decade. It's a moment of possibility and it's a moment of promise but it is a moment when that commitment by the international community is more necessary than ever. If the Millennium Goals are to be met, halving poverty by the year 2015, that is particularity challenging in Sub-Saharan Africa, where overall poverty has continued to increase for the last 20 years according to a recent UN report.
We're really tackling poverty and restructuring economic relationships in the county and in the continent. That's a really precious example, and we think that international supporters are more necessary than ever. It's necessary in grants, loans and continuing people-to-people relationships that have been so important to South Africa's history.
