Zero-interest Loans Change Lives For Struggling New Zealanders

Ngā Tāngata Microfinance Trust (NTMT) announces a significant milestone today. Since the charitable organisation was founded in 2009, it has provided 1,000 interest-free, fee-free loans, helping low-income New Zealanders escape unmanageable debt and get ahead with money.

Ngā Tāngata Microfinance Trust has ‘recycled’ the $500k in capital from Kiwibank to provide $2.5 million in community loans, with a remarkable 94% repayment rate. NTMT punches well above its weight regarding social return on investment, generating a return of $3.60 for every dollar spent.[1]

"Every one of these loans has helped low-income New Zealanders and their whānau to get ahead with money, enabling them to pay off debt or buy the essential items they need. Importantly, working with a financial mentor means our borrowers learn how to manage their money in the future," explains CEO, Natalie Vincent.

"Our zero interest and fee-free loans have a multiplier effect. These loans help to break the cycle of poverty and problem debt and improve the financial well-being of the loan recipient and their families for generations to come," she says.

Fairer, kinder loans that reduce debt and improve lives

NTMT’s fairer and kinder loans are provided to the ‘poorest of the poor’ in New Zealand. 75% of our clients are in the lowest income quintile and struggling to live on household incomes of less than $36,000 per annum, many trying to survive on as little as $25,000 pa. [2]

NTMT clients are six times more likely to struggle to pay for basic living costs, like food and accommodation, compared to the average New Zealander. [2] Yet, despite this, two out of three clients, since repaying their NTMT loan, haven’t borrowed any more money for living costs. This demonstrates the power of safe, fair credit and financial mentoring.

A recent survey also shows that clients who have finished repaying an NTMT loan are more confident with managing debt, [3] and more careful when making financial decisions. [4] And 100% of clients agree that their NTMT loan has helped them meet their goals. [5]

"When you provide fair and equitable loans that people can afford to repay, coupled with ongoing support, they are motivated and able to improve their financial stability," says Vincent. "Our no-interest, fee-free loans, combined with working with a financial mentor, enables our lowest income earners to build financial capability."

NTMT loan applicants must work with a financial mentor to strengthen their financial skills and well-being. This wrap-around approach assists low-income New Zealanders in developing financial stability and money skills, improving self-efficacy, and avoiding high-interest predatory lenders.

"A loan from Ngā Tāngata Microfinance can serve as one part of the solution for people to lift themselves out of poverty. These loans play an essential role in the broader fight for social justice outcomes in New Zealand," explains Vincent.

More investment needed to address New Zealand’s poverty levels

NTMT’s track record also demonstrates the benefits of multiple organisations working together to reduce poverty in New Zealand. NTMT partners with Kiwibank, the Ministry of Social Development and FinCap, and has support from several charities and trusts. NTMT is always seeking further investment to enable us to provide more fair financial options to the communities who need it.

"Last year’s lockdowns followed by this year’s soaring inflation rates means low-income New Zealanders are really struggling," says Vincent. "We would greatly welcome donations and corporate sponsorship from individuals and organisations who share our vision of a fairer New Zealand for our most vulnerable citizens."

"Investing as a country to enable people to be more financially literate is critical to longer term outcomes," she says. "When we lift people out of poverty, we also improve mental health, reduce family violence, risky behaviour, addictions and child placement, and decrease reliance on emergency benefits."

"Our loans absolutely make a difference, helping those in severe hardship to reduce high-cost debt, access financial mentors and learn how to manage their money. But far more investment is needed"

1 ImpactLab GoodMeasure Report - Ngā Tāngata Microfinance, September 2021

2 Compared to results from New Zealand Household Health Survey September 2020

3 Compared to results from New Zealand Financial Capability Survey 2021

4 Compared to results from New Zealand Financial Capability Survey 2021

5 Results from a phone survey of 55 NTM survey participants in May/ June 2022

© Scoop Media