Loans on a knife-edge.

THE MICRO Loan Foundation (MLF) has come a long way since it started out two years ago 'with just a man and a bicycle,' says founder and trustee Peter Ryan. The London-based charity works in Malawi, one of the poorest countries in the world. It gives loans to people who would otherwise be unable to secure funding from the bank, enabling them to start businesses and support their families. The loans given are typically less than 100 [pounds sterling], a huge amount in Malawi where the average annual income per capita is only 95 [pounds sterling].

Remarkably 97 per cent of the loans are returned in full to be recycled back into the scheme. Ryan says this is due to MLF's requirement that those who wish to apply for a loan must first form a group of between 10 and 16 members with an elected chairman, secretary and treasurer. The applicants are then audited during a six-week part-time training programme in basic business skills, during which time they must save money to provide security and prove they are committed. The group is responsible for every individual's loan, so group pressure and support work to ensure repayments are made.

Micro Loan Foundation is working for long-term sustainable development in Malawi as opposed to providing temporary solutions. As celebrity patron Bob Geldof says, 'To treat someone as an adult human being with a stake in his or her future is the essence of sound empirical business sense.'

Controversially, another factor Ryan believes keeps the return on the loans high is that they lend only to women. 'I think it's true in many societies that women are more grounded,' Ryan explains especially in societies where few men work and women are responsible for caring for the children as well as providing for the family. In the future Micro Loan hopes to lend to men as well but for now they feel that they can reach the most people through this policy.

Ryan set up the charity after being inspired by a visit to a similar scheme in the Philippines. 'I was really blown over by the power of the work,' he says. 'I had to do something to support it.'

The foundation still funds an office in the Philippines but moved to Malawi to extend the scheme's reach.

Like most African nations Malawi has suffered terribly with the Aids epidemic. Almost 50 per cent of the women tested at a local hospital recently were HIV positive, and life expectancy stands at only 37 years. Millions of children have been orphaned and under-15s now make up almost half of the population. It is estimated that each loan helps up to four Aids orphans who are dependent on the recipient. Add to the Aids crisis the lack of industry and an annual four-month rainy season and, as Ryan puts it, 'it's a very knife-edge society'.

Ryan, who comes from a business background, worked in Africa 25 years ago and so understood some of the needs of the continent. He had always wanted to do something he really believed in and in MLF he has found it. 'Suddenly it all came together,' he says. 'Actually there has been a purpose behind all the bits of experience I've had.' Ryan is supported in the UK by a team of volunteers from Chiswick, West London, many of whom are professionals working in accounting or PR. Like Ryan, they all give their time and expertise for free so that all the money raised can go directly to help people in Malawi.

Ryan has big visions for the future of MLF. To date the charity has given around 2,750 loans but he wants to see it lending to 10,000 people a year by 2007. There are also plans to add a further two offices in Malawi and to introduce Aids awareness and nutrition classes into the training programmes. Ambitious perhaps, but Ryan is realistic. 'It will take time,' he concedes. Still, they've come a long way from one man and a bicycle.

Further information from www.microloanfoundation.org.uk