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Azerbaijan -- Nardane Umuyeva lives in the village of Vandam in the district of Gabala. She is 45 years old and looks after her sick mother and a nephew, who is a student at the university in the capital, Baku. She inherited a small shop from her father. After the republic became independent, her sole source of income was her mother’s pension and a small profit from the shop.

When Nardane decided to expand the business, she took out a loan from the village moneylender. At an interest rate of 15 per cent per month, loan repayments were extremely high. She had trouble meeting them and was forced to sell off her merchandise at half price to repay the loan. When she tried to apply for credit in Baku, the bank refused to accept her shop as collateral.

“That was the most difficult time of my life,” she says, “but I had to keep looking for solutions. I had to provide food and medicine for my mother and myself and support my nephew in his studies.”

When Nardane heard about the availability of loans through the Rural Development Programme for Mountainous and Highland Areas (RDPMHA), she immediately decided to apply. Together with a group of friends who had small businesses in the village, she formed a business group. The group members guarantee the loan for each member of the group. Nardane’s first microcredit application was for AZM1.0 million (US$200), which she used to buy goods for her shop. She successfully repaid the loan within the allotted time and her shop began to gain popularity with the villagers. With her second application for AZM2.0 million (US$400) she bought inputs for her shop. Again she was successful in repaying the loan and she applied for credit a third time.

Nardane used her credit wisely and has been highly successful in relaunching her business. She now earns about US$100 per month, considered a good income in the village. She has been able to maintain the household, buy medicine for her sick mother and support her nephew financially.

“I am so happy to have been able to start work, earn money and be active,” she says, “after all the months of difficulties and financial problems I had as a result of borrowing from the village moneylenders. It was easy to apply for the credit, and I enjoyed organizing the group. The training provided for the business groups was very useful.”

Now she plans to extend the repayment period on the latest loan to be able to expand her business and make renovations to her shop. She knows and trusts the members of her group and is aware of the responsibility she bears if one of them fails to make the repayments.

Source: IFAD