Inflammation and stories on Microfinance

Social Enterprise Helping India's Salt Harvesters
Sabras, a social enterprise organization based in India, is using micro-lending to help the country’s poverty-stricken salt workers gain freedom from predatory lenders and non-cooperative banks.

In the state of Gujarat, where nearly 70% of India’s salt is sourced from, self-employed salt pan workers are subject to harsh physical conditions as well as predatory loans leading to little profit. Temperatures reach harsh highs in summer and lows during winter, causing adverse health effects for workers. Since the workers are self-employed, a majority of them need to borrow money from lenders who fix the price of the salt much lower than it normally would be, cutting profits for the salt pan workers down to nearly nothing, most often just 1% of the market value. Most of the banks in the country are not willing to lend to poor people, leaving the workers without options.

Rajesh Shah, the founder of Sabras, recognized these hardships and created an organization that is not only for the poor but mostly owned and operated by the poor as well, with workers holding nearly 74% of shares in the company. Before there was an alternative lender like Sabras, workers were forced to take out loans with interest rates as high as 48%. Sabras’ interest rates are just 12.5% with the ability to purchase advanced solar pumps that allow workers to increase output over the long run.

Sabras has already made a large impact as nearly 70,000 people are employed in the salt industry in Gujarat. Shah contends that the company’s 400 shareholders have seen a profit increase of 400% within the last two years since they used Sabras loans to purchase the solar pumps.

Looking ahead, Sabras hopes to begin including women in the salt industry’s processes in order to increase profits and improve the quality of life for them as well.

Christina Kindlon

Source: The Guardian

crowd-funding-kiva-poverty

For those of you who are not familiar with crowd-funding, please let me invite you to try it. Basically, any individual anywhere in the world can easily go online and make a direct financial contribution to another specific individual across the globe to support their needs.

One of the first huge success stories in this practice is Kiva.org, a non-governmental online organization that helps facilitate loans between lenders (like you) and borrowers in developing communities. The borrower, through the help of an independent community group in their area, posts their name, photo, business idea and desired amount of money to start their own business. The money is then collected online and given as a loan – it’s micro-financing from one regular person to another. Generally it’s a small amount of money (perhaps under $500) that can make the difference between someone who is starving, and someone who is immediately pulling themselves out of poverty. Each lender on average contributes $25, and literally within minutes of posting the loan request and bio, the borrower is fully funded.

Since starting in 2005 Kiva has mobilized 883,289 lenders, raised an estimated $398 million in loans, is now operating in 67 different countries and has repaid 99 percent of all money distributed.

A different type of funding group is Samahope.org. They raise money online for surgical treatments in Zambia and Sierra Leone. Again, anyone can go to their site, view the bios and pictures of individuals in need and then make a direct payment to help whomever they specifically want to. The women being supported by this service all suffer from fistula and are in need of medical services. Fistula is a result of prolonged labor during childbirth when tearing in the skin can cause infection and incontinence. It is very much a result of poverty and lack of healthcare and is almost nonexistent in developed parts of the world. The condition is often debilitating and also carries with it strong taboos that further alienate the sufferer.

These sites and other crowd-funding groups allow regular people all over the world to pool their money and collectively bring about real life change for individuals in the most remote regions of the world. It’s fast and easy, any amount of money can be given, the impact is immediate and your sense of having made real change is compelling… Try it.

– Mary Purcell

Source: Kiva, Samahope