A safe harbour in life’s financial storms - Nga Tangata Microfinance
Ngā Tangata Microfinance supports this year’s Money Week focus; asking New Zealanders how they will weather life’s financial storms, and how quickly they can bounce back.
When you are on a low income managing a very tight budget, it does not take much for calm waters to quickly turn into a raging storm.
Crises or emergencies inevitably occur: the fridge stops working, children become ill and need a doctor, an unexpected repair for the car arises. Once reserves and the support of family or friends is exhausted, and without access to mainstream credit, the only option is easy-access, high cost finance companies, pay day lenders or mobile traders.
New Zealand is unusual in having no limit on the cost of consumer credit, and interest rates and excessive charges can legally exceed 500% annually. While appearing helpful or necessary at the outset, such debts can capture families in a poverty cycle that then limits food for the children and family essentials.
Not too different from being in a small boat in a storm, in a shark-infested sea. But help is available.
Budgeting Services provide a tremendous support to their clients who are under the burden of such debts: providing a budget plan, negotiating with creditors where possible and advising ways that limited income can be stretched.
With loan capital provided by Kiwibank, and partnering with Budgeting Services, Ngā Tangata Microfinance (NTM) provides no fees, no interest loans to qualifying low income families. These are in stark contrast to those from loan sharks.
Robert Choy, Executive Officer of NTM, says "In almost all cases, our clients have taken on high-interest debt out of desperation and because there are no other options available to them. That’s why we exist - to provide a service that’s safe, fair and affordable, and to show people that the debilitating stress of high-interest debt doesn’t have to be permanent."
NTM welcomes work currently underway towards a safer consumer credit environment, led by the Minister of Commerce and Consumer Affairs Hon Kris Faafoi. The review of the credit regulations will formulate draft recommendations towards the end of this year.
It’s hoped the outcome of that, together with the work of Budgeting Services and ethical lenders like Ngā Tangata, will establish a needed safe harbour in Aotearoa, for weathering life’s financial storms.
Background information on Ngā Tangata Microfinance
Established in 2010 with a vision of building a more just and equitable society for people on low incomes
Offers two loan products which are offered at no interest or fees. The first, NILS©, is to assist with family asset building and well-being or essential items or services. The second loan product, DRLS, is for relief from high interest debt, and debt consolidation.
Qualifying conditions for all loan applicants include a Community Services card or a low income and the willingness and capacity to repay the loan within 2 years.
Ngā Tangata values the relationship that clients have with a financial mentor. Financial education occurring alongside our loans is encouraged.
The three establishing organisations of NTM are Child Poverty Action Group, New Zealand Council of Christian Social Services, and New Zealand Federation of Family Budgeting Services.
The loan capital is provided by Kiwibank. J R McKenzie Trust provides funding for operational costs. Good Shepherd Microfinance in Australia and Good Shepherd NZ, has provided advice, support and information.
In 2013, Ngā Tangata Microfinance Trust and Kiwibank were supreme winners of the NZI Sustainable Business Awards.