It's easy for politicians to talk about helping the poor. They make lots of promises, especially at election time. They will talk about it at lavish conferences, the cost of which would feed hundreds of needy people. But little is happening to help those for whom poverty is a daily grinding reality.

Yes, there are 15 million people on government grants, but this is a "hand out". It's not a "hand up" that would enable them to permanently uplift themselves. There is a huge need for very small loans to the poorest of the poor, but no conventional bank will provide this.

The best model is the Grameen Bank in Bangladesh, whose founder Muhammad Yunis won the Nobel Peace Prize in 2006. It extends small loans to the rural poor, using group solidarity to ensure that individual loans are repaid. I recently visited the Phakamani ("rise up") Foundation in White River, Mpumalanga, which uses Grameen Bank principles of micro-credit.

It is run by Mark Tucker, a Canadian businessman who was inspired by Christian principles to help the poor in South Africa. Trained field workers actively seek out new clients based on the dreams they have and their energy to do something about it. Only women are targeted, as experience has shown that they are more likely to handle the money responsibly.

Each borrower has a different business plan, but they join in groups of five, who support each other so that loans are repaid. The first loan is from R600 to R1200, which is repaid over four to six months at an interest rate of about 2.3% per month.

I attended a meeting where the borrowing groups presented the receipts to show that they were up to date with repayments. Songs and hymns accompanied the hand-over of paper files that kept track of their accounts.

Invaluable training is given along with the loans e.g. how to calculate a selling price for a fair profit. Everyone has to save R20 a month. It's small, but inculcates an important principle.

As Tucker explains: "If you don't save, your lives will never change. You won't have choices as others will decide for you. When hardship comes, you will have money to help." Repayment of loans is 97%, which makes them eligible for another loan that is a bit larger.

I visited a hawker stall where a middle-aged woman was on her sixth loan, now amounting to R3000. She showed how she had diversified, selling beautifully sown cushions in addition to fruits and vegetables. She spoke proudly of her son, who is now attending a private school and doing well in maths and science. I could see the pathway out of poverty for her family.

Phakamani was founded in 2008, and has issued more than 11 000 loans to date, amounting to R13 million. It is still dependent on donor funding, but is becoming more self-sufficient every year.

There are only 8 other microfinance organisations in South Africa. They assist a tiny fraction of the two to three million people who could benefit from small loan assistance. I see so much waste in government spending that could easily be redirected to these wonderful non-profit organisations. It would make a huge impact. Why do we delay?

Note - donations can be made at www.phakamanifoundation.org

Jack Bloom MPL is DA leader in the Gauteng legislature. This article first appeared in The Citizen.

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