November 12, 2003

Dear Friend:

Thank you for your support for The Townships Project during 2003. Here is an update on our progress.

The Townships Project makes repayable, interest-bearing loans to entrepreneurs, primarily women, in the township areas outside East London, South Africa. Borrowers operate a range of small businesses including home-based grocery, candy and snack shops, fruit and vegetable stands, dress making, second hand clothing and school lunch businesses, etc. The object is to enable borrowers to become self-sustaining and to break the cycle of poverty. The Township of Mdantsane, for instance, has an unemployment rate of about 70% and an HIV/AIDS infection rate of about 30%.

We are pleased to report:

· 369 loans have been made by the project to date in 2003, of which 62 were to “step up” borrowers, i.e. clients who have repaid a prior loan and are eligible for a higher loan amount to expand their business (the initial loan amount is R600 or CDN $115). The principal only repayment rate for completed loans this year is more than 98%. This exceeds the international standard of 95%.

· Since its inception in June of 1999, The Townships Project has made 717 loans to 544 clients with 102 clients reaching level two (R850), 38 level three (R1,100) and one reaching level 5 (R2,200).

· During 2003, The Townships Project was incorporated under the Society Act of British Columbia. We are in the process of applying for a charitable donations tax receipt number. Until it is received, Canadian Memorial United Church will continue to issue tax receipts for donations.

· During 2003, we incorporated our not-for-profit entity in South African as the Eastern Cape Micro Finance Enterprise. Its Board of Directors is comprised of three Canadian and four South African members, including Mr. JJ Oosthuysen, an experienced micro-finance lender who is Managing Director of Nicro Enterprise Finance in CapeTown. Our field office staff has been expanded to three: Ms. Bongi Ndubaza, our Project Manager, is assisted by two field workers to administer new loans, weekly meetings, business training and collections.

· During the past summer, Bongi visited Canada to attend the Africa-Canada Youth Symposium at Antigonish, Nova Scotia, sponsored by the Coady International Institute. We used this opportunity to organize a variety of fundraising activities in Charlottetown, Toronto and Vancouver. As a result of this and other initiatives, we have raised approximately $35,000 of the $65,000 funding required during 2004.

During 2004, we plan to increase the number of loans made to more than 550, to increase the proportion of “step up” loans and to increase the proportion of field expenses covered by interest. To accomplish these objectives, we need to raise an additional $30,000. We are therefore planning fundraising events as well as requesting donations from interested individuals.

We are proud of our record of efficiency. With each client typically supporting 3-4 family members, The Townships Project has positively impacted over 2,200 people since its inception. We have achieved this with an investment to date of about $110,000, or roughly $50 per individual.

Thank you for your continued interest in and support for The Townships Project.

Jocelyn Pritchard
Chair, The Townships Project

Martha Deacon
Co-Founder and Director