Inflammation and stories on Microfinance

avon
Approximately 5% of the rural population in sub-Saharan Africa enjoys access to electricity. In an area where sunlight is abundant, solar power is an excellent alternative energy selection. Solar Sister, a registered nonprofit organization dedicated to empowering women through solar power, chose to develop the solar-tech industry in sub-Saharan Africa and is taking a unique approach in doing so.

Inspired by Avon cosmetics’ style of distribution system where one woman distributes products by contacting her network of family and friends, the Solar Sister program provides a unique, single-investment approach to social entrepreneurship in sub-Saharan Africa. Because the network is built on connections between women, the program can extend to rural communities, places traditionally untouched by energy companies.

The startup kit — the “business in a bag” — that each new entrepreneur receives includes everything each woman needs to start her own business in solar-powered innovation technology. The capital provided by Solar Sister gives each member of the community the funds to get started at only $500 a bag. Micro-financing from individual donors combined with corporate investments make up the organization’s capital for these investments and are eventually paid back by the women involved.

Being a part of the Solar Sister team provides much needed income to women and their families by investing in women on a micro-financing level. As indicated on the Solar Sister website, $1 invested generates $46 for the solar sister and her customers in the first year alone. And not only does the organization’s investment empower women to build both family and community, it also falls in line with the global green movement to move away from traditional energy sources, such as kerosene.

The Solar Sister program addresses two major issues in sub-Saharan Africa in their alternative energy-based solution to poverty. To support the initiative, help the environment, and invest in women’s empowerment, click here.

– Herman Watson

Source: Avon, Solar Sister
Photo: Kiva

Pro_Mujer_International_info
Pro Mujer International is a development and microfinance organization helping women in Latin America. They provide financial, health, and human development services to help women break the cycle of poverty. Pro Mujer equips women with the tools and resources necessary to build their own livelihoods through microfinance, business training, and health care support.

Pro Mujer is motivated to affect change in Latin American society. They understand the conditions of income disparity and gender inequality. They believe that when women are given the tools to lift themselves out of poverty, they will also lift their families too. According to Pro Mujer, women are more likely to reinvest in their families to provide education, healthcare and to improve living conditions.

The organization is committed to a client-focused approach that actively seeks results. They strive for integrity, transparency, solidarity and they work to maintain commitment to human development. Pro Mujer was founded by Lynne Patterson and Carmen Velasco in 1990 in Bolivia. Their vision for an organization to help lift women from poverty has today become one of Latin America’s premiere development and microfinance organizations for women. Pro Mujer has since been able to allocate over $1 billion in small loans and services including empowerment training, preventive health education and primary healthcare services.

Examples of the financial services provided by Pro Mujer include small business loans, education and housing loans, savings accounts, and life insurance. Their business and empowerment training programs teach women to be more economically independent and informed decision makers as well as teaching basic financial literacy, and empowerment training on domestic violence, communication and leadership skills. Additionally, Pro Mujer is able to provide healthcare assistance including pre and post natal monitoring, family planning, and sexual and reproductive health services to name a few.

Pro Mujer’s current CEO is Rosario Perez. Perez began her career in private banking where she was charged with leading multinational businesses and teams and executing organizational transformations. She is now responsible for Pro Mujer’s portfolio of more than US $100 million and 1,700 employees. Her employees serve more than 2,547,000 clients in Argentina, Bolivia, Mexico, Nicaragua, and Peru.

– Caitlin Zusy

Sources: Pro Mujer, Mastercard Worldwide

The Temenos Company has become one of the newest sponsors of the 2013 Microcredit Summit to fight poverty. Temenos is a banking software company that started in New York City in 1997. Temenos now services over 60 institutions across 8 offices, and acquires profits of $50 million each year in its North American services.

The 2013 Microcredit Summit is an effort to eradicate poverty. Other sponsors of the summit include Johnson & Johnson, the World Savings Banks Institute, and the central bank of the Philippines. This year, it will be hosted in the Philippines from October 9th until October 11th. The 2013 Microcredit Summit is the 16th summit organized by the Microcredit Summit Campaign. The idea is to organize advocates, educational institutions, microfinance experts, international institutions of finance, NGOs, and anyone else involved with microfinance in order to share knowledge and to work towards poverty eradication. The goal is to improve the lives of the poorest families in the world by providing them with microcredit and other financial services. The summit will include discussions on how to reach these goals.

Murray Gardiner, the Director of Microfinance at Temenos, said that the 2013 Microcredit Summit creates a platform to address poor families of the world. Two years ago, Temenos helped sponsor the 2011 Microcredit Summit, showing their lasting commitment to the ideals of the Microcredit Summit Campaign. The summit will hopefully help eradicate poverty by improving access to microfinance around the world.

– Corina Balsamo

Sources: Temenos, Micro Credit Summit
Photo: Tumblr

Caterpillar's Role in International Development

Caterpillar Inc. is an Illinois based company that plays a dominant role in energy, trade, and infrastructure for developing countries. Yet Caterpillar is more than just business. The philanthropic efforts of the Caterpillar Foundation, founded in 1952, have contributed more than $550 million towards human development around the world. The Foundation has partnered with a variety of key organizations to fund projects in the areas of environmental sustainability, access to education, and meeting basic human needs for food, shelter, and healthcare.

As a Fortune 100 company with 2012 sales and revenues of $65.875 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. They are best known for their big, yellow tractors. Caterpillar’s global reach and presence are unmatched in the industry. They have a presence in more than 180 countries around the globe and over 500 locations worldwide. More than half of their sales are outside the United States. As a powerful multinational corporation, Caterpillar has a very influential role in human development.

The Caterpillar Foundation invested $3 million during 2012 in a partnership with a World Resources Institute (WRI) project to promote the development of sustainable cities in China, India and Brazil. Through this “smart cities” initiative, WRI will work with five cities on strategies to increase energy efficiency, curb greenhouse gas emissions, and improve water quality, urban mobility and land use.

Specific project goals include solutions that will reach one billion people with new public transportation options; avoid 617,000 metric tons of CO2 emissions in the transportation area; reduce nitrogen, phosphorus and ammonia water pollution by 15 percent; and provide more reliable energy to 11 million industrial, corporate and residential consumers. In total, the Caterpillar Foundation expects to support this project with $12.5 million over five years – all in an effort to curb the negative environmental side effects of rapid urbanization in the developing countries.

The Resource Foundation is another partner of the Caterpillar Foundation. This $3 million partnership will reach more than 11,000 children in Latin America and the Caribbean over three years, beginning in January 2013. Through a regional strategy targeting specific communities in 10 countries, the program seeks to improve academic achievement, gender equity and life skills among primary school-age boys and girls from 54 schools.

The Caterpillar Foundation has also been a long-time supporter of Opportunity International’s microfinance programs in more than 20 countries around the world. The Caterpillar Foundation’s investment has helped Opportunity International provide life-changing microloans to more than 75,000 small entrepreneurs, create 30,000 jobs and give more than 60,000 rural families access to basic banking services. A majority of Opportunity International’s clients are women who reinvest more of their earnings into health care, education and their communities, which helps break the cycle of generational poverty. As of July 2012, Opportunity International has four million clients, 17,600 employees, 2.3 million insurance policies, and a 95 percent loan repayment rate.

– Maria Caluag

Source: Caterpillar,CSR Wire
Photo: Companies and Markets

Myanmar Leader Takes Steps to Fight Poverty
The history of Myanmar is one that allowed poverty to thrive and its people to suffer. However, in the past two years, the newly elected democratic government has been taking strides to lift the country from the depths of poverty and destruction to which it had sunk. President Thein Sein made a commitment Sunday to fight poverty and rebuild Myanmar’s economy.

Myanmar has ample water resources, an efficient labor force, an advantageous climate, and abundant natural resources which make economic development a natural reality. President Sein acknowledged this foundation in his speech in Yangon, the former capital of Myanmar. He also acknowledged that Myanmar is one of the poorest among the LDC’s (least developed countries). It is going to take hard work, coordinated efforts, and top priorities to lift Myanmar out of poverty.

Poverty alleviation is a priority with the new government. Myanmar was at one time a country full of hope and economic prospects. It was a bright light in Southeast Asia prior to the years of military control that caused Myanmar to fall far behind its neighbors. According to the Asian Development Bank, a quarter of the population of Myanmar lives below the nation’s poverty line.

The plan to alleviate poverty launched by President Sein’s government includes micro-finance loans as a tool to help rid the nation of poverty. Those loans worth several million dollars will be given to households and workers who can utilize the loans to lift themselves out of poverty.  It is a step in the right direction and a glimmer of hope in a nation that has been dark for so long.

– Amanda Kloeppel
Source: Channel News Asia

What is Microenterprise?
What is microenterprise? Microenterprise is the mom and pop shop on the corner. It is the lemon-aid stand on the side-walk. It is the vegetable stand in the local market. Microenterprises are entrepreneurs working towards a livelihood with a small number of products and often limited access to financial security and support.

USAID uses financing of microenterprises as an anti-poverty program. Economic growth on its own is not enough. Poor people in developing countries often do not share in the wealth creation. The distribution of income from economic growth through empowering poor people to participate is a crucial and fundamental challenge undertaken by USAID.

An additional challenge, particularly for women in developing countries, is finding a safe place to keep their savings. Without a reservoir of savings, obtaining credit and making investments in their business is next to impossible. The savings they do accumulate are often drained when natural disasters and social/cultural events occur. Their lack of access to insurance means they spend their available money on purchasing life saving medicine for an ailing relative or purchasing new seeds when drought kills a crop.

The USAID provides financial services to many of those lacking access through their national and private institutions. These services include savings and credit. These two basic financial tools allow entrepreneurs to invest in technology, connect to professional networks and most importantly, get their products to market.

The USAID microfinance programs have three goals:
1. “Improve the quality and affordability of financial services.
2. “Extend access to excluded populations such as women, the disabled, and those living in remote areas
3. “Assist smallholder farmers and small business entrepreneurs in selling their products by linking them with buyers and suppliers of good and services.”

The approach USAID and partners use is called the Value Chain Approach. The VCA views each business as a unique cog in the intricate clockwork of the global marketplace. To assess the potential of projects VCA focuses on influencing “structures, systems and relationships that define the value chain.” Manipulating these factors increases competitiveness by improving/upgrading processes and products. The scope of industry analysis and inputs to intervention design yield a unique perspective that has led to great success.

• “A market system perspective
• “A focus on end markets
• “Understanding the role of value chain governance
• “Recognition of the importance of relationships
• “Facilitating changes in firm behavior
• “Transforming relationships
• “Targeting leverage points
• “Empowering the private sector”

By working to fulfill these goals, USAID and entrepreneurs make higher quality products and increase the visible to consumers. In the experience of USAID, when micro financing options are offered alongside education, health and energy services, household earnings are increased allowing people to “graduate themselves out of poverty.”

Katherine Zobre
Sources: USAID , Microlinks
Photo: USAID

Jeopardy’s Bob Harris Writes About Microlending

For many fans of Jeopardy, the name Bob Harris is synonymous with knowing things. Because he’s a thirteen-time champion of the game show and general outspokenness, many respect his opinions. Thus, his new book is making waves in the literary community and may initiate some important dialogue about how to deal with international poverty.

It all began when Harris, a writer and radio commentator by trade, was given the opportunity by ForbesTraveler.com to review some of the world’s finest luxury hotels. However, instead of simply pocketing the earnings, Harris decided to lend the money via kiva.org while continuing to travel around the world to take a look at all the lives that the money had affected. His experiences were compiled into a book titled The International Book of Bob. The book, in addition to shining a light on microlending, shows the juxtaposition of the world’s wealthiest and poorest people. Harris writes of ATM machines that emit gold ingots and Asian construction workers who live like indentured servants in Dubai for the chance to send money back to their families.

In an interview, Harris explains the fundamentals of microlending:

“Microlending was pioneered more than 30 years ago by, among others, Muhammad Yunus and the Grameen Bank in Bangladesh. Charity certainly has its place in poverty alleviation, obviously — when there’s been a disaster, or when there’s epic need — but in many places, the people have small enterprises, and they know what they can do to solve their own problems. They’re in the middle of their businesses and they simply need a small loan.

But if you’re a fisherman, and you simply need to patch a hole in your rowboat, you can’t go to Citibank for a bridge loan in Cambodia. So who do you go to? Prior to microlending, your alternative would be maybe leaning on your family or villagers, or going to black-market money lenders, and paying an exorbitant interest rate. When you go to kiva.org, the vast majority of donors are finding people on the website to whom they can put $25 toward a loan; that money goes overseas to a local lender and the recipients pay the loan back, then you get paid back.”

Speaking once again about kiva.org, Harris says “Now there’s this place on the Internet — where total strangers go, to be nice with other total strangers so they can all collectively be generous to yet more total strangers whom they will never meet — and somehow my name is in the middle of that. That’s magical.”

– Samantha Mauney

Source: Huffington Post
Photo: Telegraph

microfinance

The values and benefits of microfinance lending to the world’s poor are mixed; but they have overall proven to be a mechanism for lifting individuals out of poverty.  The system of proving microloans is a well-oiled machine providing finance to individuals in low resource areas. One micro lender wants to go a step beyond microfinance and provide the poor with much needed savings and insurance products.To continue to help the poor life themselves up, Microlending pioneer Accion has called for more financial products typically common in the developed world.

These financial products such as insurance, saving accounts, and ways to move money are sophisticated tools many in the developed world don’t think twice about, but for the world’s poor these products are rarely available.  Accion, based in Boston, announced they would begin investing in start-ups that are working to provide more variety of financial tools to people around the world.  Unfortunately, business models and technology to deliver financial tools like savings accounts is much less tested in rural and poor areas. The lack of longevity in testing and practice causes many venture firms to be wary of investing in start-ups.

Accion’s Venture Lab will invest $10 million in ventures seeking to expand financial tools beyond microfinance.  This is not to diminish the effects and needs of microfinance, but to continue to take the poor a step beyond microfinance.   Accion’s first investments include Salud Facil, which helps low-income individuals in Mexico pay for health care, and Varthana, an Indian company financing low-cost private schools.  In addition, the fund is investing in payment companies in Asia and Mexico as well as a start-up in Hong Kong attempting to use data to improve credit scores.

Other investors are also offering money for financial products in the developing world. LeapFrog Investments has dedicated $135 million to bring insurance to underserved markets. Those in poorer income brackets need financial services beyond credit. Constant innovation and testing must be continued to find self-sustaining and profitable financial products to developing markets. Accion Venture Lab will continue to invest in start-ups to help them do the testing they need and continue to innovate in providing insurance and savings products to low-income individuals. Accion’s model is to help the start-ups and if they fail, to take the lessons learned and start over. Ultimately, the goal is improving the credit and lives of the world’s poor.

– Amanda Kloeppel

Source: Bloomberg Businessweek

$27 Sparked a Global Development PhenomenonA global development phenomenon that has changed the nature of poverty started with only $27 in Bangladesh.  $27 was the amount of a loan awarded to a group of village women struggling to start a small business. With that small loan, the women were able to start their business, pay back the loan, and create a profit.

The source of funding was from Professor Muhammad Yunus. He loaned out money on the belief that the key to fighting global poverty was through economically empowering the world’s poorest people. So he started with a $27 loan and went on to create the Grameen Bank. His idea became known as microfinance and the Grameen Bank has become the global standard for microfinance. The interview above shares some of Professor Yunus’ vision for fighting global poverty.

Small loans have changed the way the world’s poor participate in the global economy. Entrepreneurs all over the world with ideas have access to funds and credit that was previously unavailable to them. The results have been remarkable with most loaning institutions boasting over 99 percent repayment rates. Those that previous struggling on $1.25 a day can now afford to send their children to school and expand their business and afford luxuries like electricity.

For his outstanding efforts in microfinance and global development, Professor Yunus was awarded a Congressional Gold Medal. This is the highest level of honor Congress can award an individual person.  Only 153 of these have been awarded since their establishment in 1776.  Professor Yunus joins the ranks of George Washington, Martin Luther King, Jr., and other trailblazers who have impacted and benefited humanity in tremendous ways.

To get involved or find out more about microfinance and global development, check out Professor Yunus’ website or Kiva.

 – Amanda Kloeppel

Source: UN Foundation

Top 10 Microfinance Blogs
Blogs are a great way to hear a variety of voices and experience an issue from diverse perspectives, and there are a variety of sites full of information, opinions, and more. Below are 10 interesting blogs that present unique perspectives on the topic of microfinance.

  1. The Consultative Group to Assist the Poor (CGAP) Microfinance Blog discusses the benefits and challenges of various tools used in microfinance and provides a forum to learn more about new microfinance initiatives. There is a variety of contributing writers who share their expertise on the nuances of microfinance, and CGAP also presents fact-based blog entries in addition to opinions on how to improve the industry.
  2. The Nicholas D. Kristof blog is a favorite of many readers of The New York Times. This blog is not directly related to microfinance but discusses many of the world problems that microfinance addresses.  It tackles many development issues around the world and discusses issues ranging from hunger to education to women’s rights.
  3. A Grameen Foundation blog (Creating a World Without Poverty) discusses Grameen’s work in microfinance and showcases thoughts and feelings from the organization’s volunteers in the field. It provides a variety of voices experiencing microfinance in action around the world.
  4. The Wall Street Journal’s India Real Time blog provides a “daily pulse for the world’s largest democracy.” This blog is not solely about microfinance or poverty eradication but it does provide many articles related to daily life and the economic growth of India. It offers regular comments and critiques of the Indian microfinance industry.
  5. The Center for Financial Inclusion blog from ACCION International covers and comments on the many new ventures currently in progress in the field of microfinance. It also discusses methods for how to enable more people to access microfinance services in the future.
  6. Defeat Poverty provides reviews on current books in the field of development and microfinance, in addition to covering many other issues related to poverty eradication.
  7. The India Microfinance blog discusses the issues and triumphs of the microfinance industry in India. It discusses many specifics on the financial tools used. India’s microfinance industry is critiqued by many and this blog provides voices that speak on either side of the issue.
  8. Banking with the Poor Network blog discusses microfinance in Asia and around the world, with a focus on a wide variety of organizations.
  9. The MF Transparency blog deals with some of the challenges faced by for-profit and nonprofit microfinance organizations and offers information and resources that encourage transparent pricing.
  10. The myKRO blog serves as an online community where microfinance organizations can raise awareness about their work, offering and receiving commentary about their actions with other players in the field.

 – Katie Brockman

Source: Opportunity International
Photo: Fairview High School