SOCIAL TOPICS (Archive): INTERNATIONAL SOCIALLY RESPONSIVE INVESTING

Published, Summer 2001

       By Donna Katzin

       At midnight on the eve of the new millennium, when the rest of the world was lighting firecrackers and dancing in the streets, South Africa’s president, Nelson Mandela, quietly lit a candle in his former prison cell on Robben Island. Carefully he handed it to the man who would succeed him, Thabo Mbeki, who placed it in the hands of a solemn group of South African children of all colors and sizes. More than a symbol of continuity, commitment and hope, it was the first glimmer of what has since been called “the dawning of the dawn” of the African Century.

       The poignancy, potential, and power of that moment characterize South Africa’s ongoing struggle to build an equitable new nation. As South Africa labors to overcome the inequalities inherited from its colonial and apartheid past, the economic and social fallout of globalization, and the specter of the HIV/AIDS pandemic—its grassroots communities are working with quiet determination to reconstruct themselves. Their vision was eloquently expressed by Mavis Makukukule, one of the pioneers of a new commercial sustainable agriculture project launched with the help of a Shared Interest guarantee, when she noted, “Our success will give a role model to those who never believed in themselves.”

       With the help of Shared Interest and its South African partner, the Thembani International Guarantee Fund, Mavis and her group of rural women in Northern Province embarked on a bold new venture: commercial farming. They worked with a community lending institution, the Bushbuckridge Local Business Service Centre (BLBSC), to secure the project prerequisites—land from traditional authorities (a significant precedent for rural women), training from neighboring Afrikaner farmers in the innovative appropriate technology of shade-cloth farming (a first in the area), and a loan from the Land Bank for a group project (which the bank would typically decline). One of the project’s most notable precedents was the white farmers’ agreement to place their training fees in escrow—to be used as security in the event that the new farmers had any difficulty repaying their loans.

       In recent years, Shared Interest’s work has spread to townships and rural communities across the country, and has begun to combine housing with economic development initiatives on a significant scale. Shared Interest’s guarantee for loans by one financial institution—King Finance—to emerging contractors was designed to enable blacks with building skills to establish their own construction businesses for the first time and to take advantage of government contracts to build houses for people with monthly incomes below $100. Originally, Shared Interest extended a $750,000 guarantee that combined with several other guarantees to secure loans totaling $2.8 million to emerging contractors in the Free State Province. Within 18 months, King Finance recognized that the new borrowers were such good builders, businesspeople, and clients that it extended $23 million in credit to similar builders in eight of the country’s nine provinces. More than a new line of credit, this guarantee introduced King Finance to a new market.

       Since it was established in 1994, Shared Interest has used the capital it borrows from Walden clients and other investors to guarantee South African bank loans to communities of color previously considered “unbankable.” In the process it has helped create more than 5,000 very small businesses, 10,000 jobs and 25,000 houses—affecting the lives of more than 200,000 of South Africa’s most economically marginalized people. It has also provided a means for socially responsible U.S. investors to help unlock the potential of South Africa’s grassroots communities and lay the foundations for the African Century.

       Donna Katzin is the Executive Director of Shared Interest. For more information about Shared Interest and the Thembani Fund, call 212-337-8547.

       Through our Community Development Investment Service, Walden clients have invested $6.5 million in community development banks, credit unions, and loan funds. We are pleased to have included Shared Interest in this service.