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A Partnership for Women’s Economic Empowerment

Economic Empowerment
One of the goals of decreasing global poverty is tackling historical inequities that disadvantage certain groups in society. Local, national and international institutions work to empower women in the economic sphere to bring together a variety of groups in society. Four agencies within the United Nations began a partnership to focus on economic empowerment for women in rural regions.

A new phase of the Joint Program: Accelerating Progress Toward Rural Women’s Economic Empowerment (JP RWEE) launched in March 2022 at the 66th Session of the Commission on the Status of Women. This program is a collaboration between five agencies including the Food and Agriculture Organization of the U.N., the International Fund for Agricultural Development, U.N. Women, the U.N. Entity for Gender Equality and the World Food Program (WFP). As the breadth of involved agencies suggests, the program aims to build economic empowerment for rural women in the agricultural sector by increasing their ability to obtain resources and services enabling them to succeed in their own livelihoods. The intended result is a decrease in poverty in rural regions as women unify in communities and combat historically limiting social norms.

Phase 1

The first phase of the JW RWEE was launched in 2014 and ended in 2021. The focus regions were Ethiopia, Guatemala, Kyrgyzstan, Liberia, Nepal, Niger and Rwanda. Results indicate that economic empowerment goals succeeded in raising agricultural production by 82% and assisting about 80,000 women. The new phase of the program also seeks to improve the lives of rural women through sustainable development. 

The program is part of the larger 2030 Agenda to improve poverty in rural communities. Initiatives within the program include improving food security, increasing the income of rural women, strengthening skills in leadership and community and promoting gender inclusivity to complement the goal of economic empowerment. The Norwegian Ministry of Foreign Affairs and the Swedish International Cooperation Agency provide funding.

Phase 2

The second phase of the program will focus on Nepal, Niger, the Pacific Islands, Tanzania and Tunisia. Norway and Sweden donated $25 million toward the initiative. In October 2022, one component of the program began in Tanzania. Over the course of five years, the program will cost $5 million and will target the provinces of Singida, Dodoma and Zanzibar in Tanzania. In that nation, subsistence farming contributes 80% of women’s income. Thus, the five-year JP RWEE will deliver economic empowerment in the form of agricultural assistance to provide resources and skills to combat changes in climate and leadership.

In Africa, the first phase of the JP RWEE assisted Ethiopia, Liberia, Niger and Rwanda. The new phase of the program will continue to assist the country in gender equality and economic empowerment. In addition, all countries in Africa agreed to the Convention on the Elimination of All Forms of Discrimination Against Women, and many also agreed to the African Charter on Human and Women’s Rights. However, despite these efforts, women in Africa still continue to face discrimination on a regular basis. The African Union’s ten-year strategy for gender equality lasts until 2028, but leaders have expressed their commitment to reinforcing gender equality across the continent beyond that timeframe.

– Kaylee Messick
Photo: Flickr

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Women’s Economic Empowerment in Mexico

Women's Economic Empowerment in Mexico
In recent decades Mexico has made significant changes to close the gender gap. These progressive impacts include a series of legislative initiatives in 2002, 2008, 2014, and the 2015-2018 National System for Equality between Women and Men. Additionally, political parties promise to promote gender equality in nominations and to allocate money towards training women. By promoting women’s economic empowerment in Mexico, women of all backgrounds can achieve financial independence.

Obstacles To Financial Independence

Women in Mexico face several obstacles toward reaching financial independence. Martina Zoldos, a Slovanian writer, described the discrimination she faced while interviewing for a job in Mexico. Zoldos was asked, “whether [her] husband agreed with [her] decision of having a 9-to-5 office job.”

Traditional values are often placed on Mexican women. A study conducted by the Organisation for Economic Co-operation and Development discovered that in Mexico, “only 45% of women between the age of 16 and 64 are employed, yet women perform over 75 percent of unpaid household work and childcare.” Additionally, women face daily violence in the form of rape, domestic abuse, and sexual harassment.

The United Nations identifies Mexico as one of the most violent countries for women. In 2017, The National Institute for Statistics and Geography detailed that 66% of women over 15 experienced some form of violence. In 2018, Mexico’s Security Minister Alfonzo Durazo signed a memorandum with the United Nations Entity for Gender Equality and the Empowerment of Women (UN Women) to “strengthen actions against gender-based violence.” In addition to violence, women also struggle with access to justice, education, and opportunities. However, organizations like UN Women make it possible for women’s economic empowerment in Mexico.

The Work of UN Women

UN Women seeks to improve the financial independence of women. Various international organizations work for women’s economic empowerment, such as the Beijing Platform for Action, the Convention on the Elimination of All Forms of Discrimination against Women, and the International Labour Organization. UN Women prioritizes migrant workers and rural and indigenous entrepreneurs. The agency also develops public systems that recognize the contributions of women to the economy.

The programs encourage women to secure decent jobs, build assets, and influence public policies and institutions. To improve women’s economic empowerment in Mexico, UN Women provides for the most vulnerable women. That work often happens in tandem with civil society groups and grassroots movements. UN Women works to develop financial skills among rural women, domestic workers, and migrants. They aim to help these marginalized women find decent work, earn higher incomes, and gain access to and control of resources. The agency also provides resources for women that face violence.

Government efforts also improve the lives of indigenous women. These women have the highest levels of illiteracy, maternal mortality, domestic violence, and poverty in the country. The government supports groups of indigenous embroiderers that create and sell fair-trade art. These efforts empower indigenous women to take part in local and state elections. While there is more to accomplish in protecting women against violence, financial independence can open doors for many women and generations to come.

– Mia Mendez
Photo: Flickr

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John Coonrod Empowers Poor People to Lift Themselves Out of Poverty

John Coonrod Empowers Poor People
John Coonrod is the Executive Vice President of The Hunger Project — a non-profit organization that helps give poor people the means to lift themselves out of poverty. As part of this organization’s leadership, John Coonrod empowers poor people to lift themselves out of poverty by placing special emphasis on female farmers, who are among the poorest people in the world.

Origins

Coonrod has been advocating for social justice for a very long time. While he was training as a physicist at Stanford and the University of California-Berkeley, he was an active member of local civil rights and anti-war movements. When The Hunger Project was first founded in March of 1977, John Coonrod was its first volunteer and he continued to volunteer while he worked at Princeton University from 1978 to 1984.

In 1985, he became an official member of The Hunger Project’s staff. In addition to meeting his future wife while working at The Hunger Project, Coonrod used — and still uses — his expertise to help poor people in developing countries. To this day, John Coonrod empowers poor people to lift themselves out of poverty.

The Hunger Project

The Hunger Project is a non-profit organization that seeks to end poverty and world hunger by pioneering grassroots movements. While it believes that everyone should be free of poverty and hunger, they place a special focus on women and gender equality. The reason for this is that women are typically in charge of meeting a family’s needs, but are often denied the means and resources to do so by their society.

The Hunger Project currently works with organizations in 11 countries: Benin, Burkina Faso, Ethiopia, Ghana, Malawi, Mozambique, Senegal, Uganda, Bangladesh, India and Mexico. Between these countries, they have helped more than 85 organizations start 2,900 projects. In addition, they have chapters and investors in Australia, the U.S., Canada, Japan, Germany, the Netherlands, Sweden, Peru, Switzerland and the U.K.

In all of the countries where they work, The Hunger Project seeks to empower women, mobilize communities and engage local governments. In India, for example, their main focus is on helping women get elected into local governments. The organization has done this in nearly 2,000 panchayants (clusters of villages) across 6 states, and the women they have helped now lead 9 million people.

In Africa, The Hunger Project helps turn clusters of villages into epicenters where up to 15,000 people can band together to help their communities thrive. These epicenters, in turn, create their own development programs, which reach more than 1.6 million people across the continent. In Bangladesh, local volunteers, especially women and children, are mobilized to reach 185 sustainable development goals in their communities, reaching 5 million people. Finally, in Mexico, community development focuses on indigenous women and children, helping to improve childhood and maternal nutrition; this admirable work reaches 21,000 people.

Partners A-Plenty

The Hunger Project has numerous partners in the countries where they work. One of these partners is Rotary International, a global organization in which 1.2 million people work in sustainable projects to improve life in general across the globe. This includes fighting diseases, providing water, supporting educations, saving mothers and children, growing local economies and promoting peace. The Hunger Project mainly works with Rotary International in Ethiopia, where Rotary International uses vocational training to teach doctors how to resuscitate newborns.

In India, SKL International is a major partner of The Hunger Project. SKL International is a Swedish organization that uses the model of Sweden’s extensive local governments as a baseline to help developing countries achieve democracy. Like The Hunger Project, SKL International’s main goal in India is getting local women elected.

In Mexico, The Hunger Project works with Water For Humans — a non-profit organization that uses sustainable technology to bring clean water to those who need it, especially in Mexico. The organization is currently working on helping indigenous people build eco-cookstoves which require less wood than traditional stoves, need only one fire to work in multiple burners at once, and keeps coffee warm every day — as is culturally preferred.

Local Empowerment

All in all, John Coonrod empowers poor people to lift themselves out of poverty by helping to create and promote local movements, especially women-centric movements, that promote community welfare and engage with local governments. By working with several partners in various countries around the world, John Coonrod and The Hunger Project make lives better for women and other people across the globe.

– Cassie Parvaz
Photo: Flickr

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Economic Growth Increases Credit Access In Uzbekistan

credit access in Uzbekistan
Uzbekistan is setting strong economic precedents for the European and Central Asian region. New supportive legislative policies have increased government spending on education and training programs. Global economists argue this is one of the main reasons Uzbekistan’s GDP has increased by more than eight percent the past three years.

Recent economic success is also attributed to growing economic freedom allowed by a currently changing Soviet-style economy. Uzbekistan has the most diversified economy in Central Asia. This provides an increase in GDP per capita, which has been increasing steadily over the past three years as well. Improvements in GDP per capita are strong indicators of improvement in personal living standards.

At present, the service sector accounts for about 45 percent of GDP. Examples of common Uzbekistan services include car repairs, the medical industry, teaching and the food industry. Not far behind services lies industry and agriculture. Uzbekistan is the world’s fifth-leading cotton exporter and seventh-leading producer.

Economic projections for the private sector show a steady increase over the next few years. Fiscal space in the government budget allows the economy to increase stimulus without increasing public debt. This leaves the public to continue growing in wealth while working simultaneously to steadily boost GDP.

The Banking System

Credit access in Uzbekistan is likely to increase due to recent banking growth. More money circulating through the Uzbekistan economy raises banking lending power. In the past, Uzbekistan banking systems limited access to foreign investments due to governmental regulations. Almost all money contributed had come from the domestic system.

Exclusive banking provided benefits such as domestic accountability. An increase in Uzbekistan credit access relied on loans by the population. Other past pros to this system included resilience to global financial crises. Banks proved most effective in 2014 when domestic capital injections provided immunity from failing global counterparts.

This, however, has changed in 2018. Total banking capital increased 26 percent in 2014, and this year banking directors met to discuss boosting central bank interdependence with foreign allies to target foreseen inflation rates.

Banking directors continue to emphasize the importance of regulation to create and maintain a newly inclusive baking system. The new system would include an interactive global policy regarding foreign loans and cooperation.

Personal Credit Access in Uzbekistan

Smaller banking also influences credit access in Uzbekistan. A closer look reveals smaller economic changes, some of which include assistance from the International Finance Corporation (IFC). The IFC is a member of the World Bank and works to improve business in the private sectors of developing countries.

Private sector investments from the IFC have improved credit access in Uzbekistan in several ways. For example, the financial Markets Infrastructure Program (2009 to present) aims to create and improve credit information sharing. Members of the public can now receive an accurate prediction of loan repayment possibilities.

The current program also educates possible loan participants on formal risk factors associated with taking a loan. The certification for financial institution employees is the most prevalent in this project, as it allows job creation while creating a more knowledgeable private sector.

The Mortgage Market Development Project also instituted public credit access in Uzbekistan by improving mortgage lending procedures in local banks, made possible through set lending practices. Both programs continue today, allowing the general public higher access to jobs, loans and savings options.

Strong Projections

Expansion into the global economic sphere is a huge step for Uzbekistan, as previous years of Soviet-style economics would not have allowed this type of growth. Compared to its European-Asian counterparts, the Uzbekistan economy is at the forefront of balance and diversity.

The shift from exclusive banking to possibly inclusive is a prime example of the forward economic thinking propelling the country forward. Further improvements to liberalize the Uzbekistan economy, establish rule of law, social safety, constructive foreign policy and personal banking are also paving the way for success in the coming years.

– Logan Moore
Photo: Flickr

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Rang De Facilitates Peer-to-Peer Microloans in India

Rang De Facilitates Peer-to-Peer Microloans in India
According to the World Bank, approximately 20 percent of India’s population is poor. This totals 270 million people. These low-income individuals often lack credit or banking history and are considered too risky to finance by traditional lenders, like banks.

Rang De is a peer-to-peer microlending platform that works to increase low-income Indians’ access to capital. So far, Rang De has disbursed 57,096 microloans in India.

How Rang De Facilitates Peer-to-Peer Microloans in India

Low-income individuals are often unable to access capital from major lenders. Often, this underserved population turns to independent lenders who charge extremely high-interest rates for small loan amounts. Microloans from qualifying lending institutions are an alternative to predatory lenders. Rang De keeps interest rates low, between six and 10 percent.

Loans are financed by social investors, who choose a borrower through the platform and contribute in multiples of Rs.100. So far, 12,443 social investors have helped finance microloans in India.

Interest is used to pay back investors and to fund Rang De’s internal expenses; two percent of interest payments go to each. The rest of the interest payment funds rural partners who conduct literacy training sessions and collect borrower statistics.

Rang De’s Success So Far

Social investors can choose to finance a wide range of borrowers, from entrepreneurs to students to farmers. One example is Pooja Devi, a tailor who secured a loan of RS.10000.

Devi’s husband works at a factory and earns only Rs.7000 per month, too little to pay for their housing. Devi holds a Master of Arts degree but lives in a village with few work opportunities. As a new mother, finding suitable work while looking after her infant has proven impossible.

Devi accessed a Rang De loan to purchase a sewing machine for her at-home tailoring business. Her business is about four months old and she currently earns only Rs.1000 per month but plans to grow her client base. Tailoring at home gives Devi the flexibility needed to look after her infant while providing an additional stream of income for her family.

Ensuring Continued Success for Rang De

Rang De’s cofounder, Smita Ramakrishna, says that Rang De purposely keeps initiatives small so individual lenders receive more assistance. In addition to facilitating microloans in India, Rang De also focuses on increasing the financial literacy of borrowers. “For every sector we work with, we actually design the loan product to make sure that it works for them,” said Ramakrishna.

The majority of Rang De’s microloans in India, 93.25 percent, go to women. To further support this group, Rang De launched a new initiative targeted at women called Swabhimaan. Swabhimaan provides online loan applications and credit scoring. Self-serve kiosks set up around villages serve as portals to the online services. Women will be able to access same-day loans from Rang De with more ease and autonomy thanks to the kiosks.

To tackle skepticism in target borrower communities, Rang De publishes interest rates publicly on its website. The nonprofit also regularly updates social investors and hosts in-person meetings with both investors and borrowers.

Rang De’s hands-on approach and transparent business practices have led to a consistently high loan repayment rate of 93 percent. Ultimately, Rang De’s cofounders believe the innovative initiatives implemented through Rang De will “go a long way in making poverty history in India.”

– Katherine Parks
Photo: Flickr

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Credit Access In Burkina Faso Is Slowly But Steadily Improving

credit access in Burkina Faso

In Burkina Faso, a landlocked country in West Africa, access to credit is very limited. Around 44 percent of the population lives on less than $1.90 a day, only 15 percent of the population has access to a checking account and a mere seven percent of the population has access to banking services.

But the scarcity of credit access in Burkina Faso is more reflective of the country’s socioeconomic structural barriers rather than a systemic lack of capital. The banking system is regulated by the Centrale des États de l’Afrique de l’Ouest (BCEAO) and is comprised of 12 commercial banks and five specialized credit institutions, and as of June 2011, the majority of these banks met the new capital regional requirement of CFAF five billion.

But credit access is generally concentrated to a few large clients, with collateral requirements and high interest rates of 10-12 percent, preventing the majority of small and medium sized borrowers from participation. Pervasive gender inequality especially exacerbates these high barriers of access for women. Women are typically confined to lower paid informal sector jobs (such as subsistence agriculture) and there is no legislation prohibiting discrimination in access to credit based on gender or marital status.

However, the recent implementation of microcredit initiatives has helped lower these barriers to credit access in Burkina Faso, especially for women in rural areas. One of these programs is part of the Victory Against Malnutrition Project (VIM) that works with 200 villages in the Sanmatenga province and is funded by USAID’s Office of Food for Peace, implemented by ACDI/VOCA, Save the Children and three local NGOs. For example, in 2015 through a partnership with the microfinance institution Caisse Populaire, VIM brought financial agents to the village of Ouintokouliga and offered education and access to financing options.

For village resident Nobila Koroga, access to this additional capital allowed her to buy more animals on her farm which, in turn, generated enough extra produce and additional income to create food security for her household, pay her children’s school fees and cover unexpected issues such as family medical visits. This is especially significant considering that Burkina Faso’s human development index ranking is one of the lowest globally and the country is especially challenged by low levels of education and healthcare.

As Koroga’s experience demonstrates, credit access is a crucial asset in socioeconomic development and empowerment. The government of Burkina Faso has recognized this and is making financial inclusion a priority, as outlined in a recent IMF report.

One of the goals of the government’s four-year National Plan For Economic And Social Development, which went into effect in 2016, is to bring broader banking service utilization rates to 35 percent by 2020. This will begin to be implemented in 2018 through the national inclusion financial strategy, which, alongside further expanding microcredit initiatives, also emphasizes mobile banking and the reduction of administrative barriers.

Additionally, on March 14, the IMF approved a three-year arrangement with Burkina Faso under its extended credit authority, totaling $157.6 million in support of these initiatives. While credit access in Burkina Faso, and banking more broadly, still has a long way to go in terms of inclusion, the success of these international collaborative microfinance initiatives and the country’s broader long-term strategy demonstrate it is embarking on a path toward success.

– Emily Bender

Photo: Flickr

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Continued Progress for Credit Access in Bolivia

Credit access in BoliviaCredit access is considered a key driver of economic growth and poverty alleviation, capable of granting the poor and small businesses the funding necessary to invest in their future. In the past, credit access in Bolivia has seen an expansion through innovative commercial initiatives and through recently imposed laws, Bolivia’s government has sought to encourage the expansion of credit in the country and to direct it toward productive and socially useful sectors.

In one respect, the story of credit access in Bolivia has been particularly influential: commercial microfinance. When BancoSol, originally a charity sponsored by Acción Internacional, transformed itself into a microfinance commercial bank in 1992, it became the first chartered microfinance bank in the world.

The transition showed the country that microfinance could function without the largesse of nongovernmental organizations and within a commercial environment. Significantly, by proving this model was feasible, it provided a meaningful lesson for international observers.

Since then, the country has continued to burnish its legacy of credit initiatives in microfinance and beyond. It has consistently ranked highly in the annual Global Microscope, a report prepared by the Economist Intelligence Unit (EIU) that assesses the regulatory environment for financial inclusion in 55 countries.

In 2016, Bolivia ranked thirteenth of 55 and sixth of the 21 Latin American and Caribbean countries included, and in its 2015 report, the EIU highlighted the country’s Financial Services Law (FSL) as a key in moving toward greater financial inclusion. Whether the FSL, enacted in 2013, will achieve all its goals is yet to be determined, but evidence to date suggests the government’s initiatives have had their intended effect.

The law, among other objectives, mandates credit quotas and interest rate caps to encourage lending to designated productive sectors and social housing. This requires banks and other financial institutions to extend a minimum share of their credit toward these objectives at an affordable rate. A 2015 report by the International Monetary Fund (IMF) found that the requirements were spurring progress: total credit reached almost 46 percent of GDP in 2015 from 35 percent in the mid-2000s, and credit directed to the productive sectors and social housing increased 26 percent in the year leading to June 2015.

In combination with elements of the law improving deposit insurance and consumer protection measures, the FSL has laid the groundwork for furthering the expansion of credit access in Bolivia. As the IMF report emphasizes, the Bolivian financial system is fundamentally sound, but the methods employed to increase credit access do not come without risks.

In attempting to lower borrowing costs, interest rate caps can ultimately limit access to credit and hurt bank profitability, while credit quotas can lead to banks’ portfolios becoming over-concentrated and designated borrowers becoming over-indebted, as credit is extended disproportionately to certain sectors. The report stresses that managing these risks will be vital for the country to ensure its expansion of credit is healthy and sustainable.

Overall, from BancoSol’s breakthrough in the 1990s to modern regulatory initiatives, credit access in Bolivia has continued to expand. Given the capability of financial inclusion to economically empower the poor, it is likely to remain an important goal in the country for the foreseeable future.

– Mark Fitzpatrick

Photo: Flickr

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Credit Access in Uganda a Success Story in Africa

Credit Access in UgandaThe ability to access credit in various countries is not often a topic of discussion. This issue usually tends to fall by the wayside when discussing various problems of countries around the world, despite the issue being of great importance when it comes to both the financial literacy and economic growth of a country.

In Uganda, credit access is not a pressing issue. The country is among the top six nations in Africa in regards to accessing credit. Credit access in Uganda is very important to sustaining economic growth and helping to alleviate poverty in the country. The increase in financial services for poorer communities can have a huge impact on eliminating poverty in those areas, which will improve the economy of the whole country and help improve financial literacy among the citizens.

Uganda has 24 banks, four credit institutions, a Social Security Fund, 60 private retirement benefit schemes and seven mobile money providers throughout the country. The abundance of credit access in Uganda has helped improve the economic status of the country as a whole, especially for those in impoverished neighborhoods. Financial services are immensely important when trying to improve the economy of a country, and that is what is happening in Uganda. The accessibility of financial services to poor citizens allow them to save money and help both them and the country grow economically.

The security of financial institutions allows the impoverished citizens of the country to feel safe entrusting their money to a bank and allows them to save more money than they would without a financial institution so easily accessible to them. This allows both citizens and businesses to balance their income and manage any financial shocks they may experience in the future.

Uganda is slowly but surely improving economically. The country saw a GDP growth of 4.8 percent in 2016, which is an improvement for the country as a whole. Although not as high as some neighboring countries, it is still progress for Uganda, and hopefully, it will continue to grow.

Currently, the most popular form of credit access in Uganda is mobile banking, with more than seven million users. This is because of the increased popularity and use of technology in the country. More than half of Ugandans now have access to a financial institution. This is a vast increase from 28 percent in 2009. This shows that both financial literacy and economic stability are increasing in Uganda.

As the economy grows, so does the financial literacy of the country. The accessibility of financial institutions makes it easier for citizens to become more financially literate and manage their money better than they have previously. This will continue to benefit both the citizens and the country in the long run, as Uganda become more economically stable because of the number of easily accessible financial institutions that are now operating in the country.

– Simone Williams

Photo: Flickr

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Credit Access in Liberia Improving Thanks to Efforts of Central Bank

Credit Access in LiberiaLiberia is a predominantly rural nation. Because of this, the financial literacy of its citizens and the country’s financial institutions are often put on the backburner. This has resulted in credit access in Liberia lagging behind when compared to other countries.

In the country of Liberia, there has not been an effective credit rating system, and many businesses lack the records needed for credit approval. In response to this, the Central Bank of Liberia (CBL) has established a credit reference system that contains credit history and derogatory information about certain creditors. The CBL focuses on delivering financial services to the communities in the country without any services available to them. These services allow these sections of the country to become integrated into the formal economy.

These services include increasing access to medium-term financing, creating an environment for private-sector job creation and improving and empowering the Liberian-owned business segment of the economy. This will help improve credit access in Liberia and allow more citizens and businesses to have up-to-date financial records. It will also improve the legitimacy of those businesses and their credit records.

The CBL has also begun to issue treasury bills in an effort to develop a capital market. This has allowed the country to expand its foreign market, which helps improve the economy of the country as a whole. With the help of the CBL, the financial system in Liberia is steadily improving. This is happening despite the Ebola crisis and external shocks from the fall in international commodities. Liberia is slowly becoming more financially stable, which is helping both citizens and businesses.

Throughout the country, there has been significant progress in strengthening the banking sector. This has included the adoption of a national corporate governance framework and increasing the regulatory capital adequacy ratio and the minimum capital requirements. These changes to Liberia’s banking system have helped improve the effectiveness of financial institutions throughout the country.

The CBL has recently implemented regulations for all licensed insurance companies operating in Liberia. The regulation sets the capital requirement for each class of insurance business. It also requires each company to maintain a minimum amount of capital. This has been implemented in the hopes of strengthening the insurance sector. These regulations have had a positive effect on credit access in Liberia. They help improve the economy of the country and strengthen its finances.

Despite a significant portion of the population still residing in rural areas, the financial institutions throughout the country are helping businesses become more credible and allowing them to maintain their financial records through banks. As a whole, Liberia has greatly improved its banking sector, and is well on its way to being a significant part of the formal economy.

– Simone Williams

Photo: Flickr

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Solidarity Lending Benefits the Rural Poor

solidarity lendingFor too long, the plight of the urban poor had monopolized the concerns of those working to eradicate abject poverty. The millions of people in rural poverty have been forced to toil in silence, overshadowed by their urban counterparts and underrepresented by the advocates of economic development. Most are relegated to subsistence agriculture, making the best of what little they have. However, a renewed emphasis on the rural poor has facilitated new and innovative techniques to help, among them solidarity lending.

One such pioneer is SHARE Micro Finance Limited, which offers loans to rural women in India in an attempt to fund entrepreneurship among the rural poor. Recently, a number of studies have been conducted to assess the effectiveness of such programs, with some encouraging results. An article from the Stanford Graduate School of Business tells the story of Vinod Khosla, a venture capitalist from India. Khosla described solidarity lending as a “virtuous pyramid scheme” where groups of women are given modest loans from SHARE. This program differs from individual loans because “the group members are under strong social pressure not to default…and if one person does, the others have to make up for it”.

The program empowers women to invest the money in a stall at the local market or use it to invest in equipment which enables them to produce or transport their items more efficiently. To some, this may seem like only a marginal benefit, but Khosla reports that among nearly 200,000 clients, 77 percent saw reduced poverty.

To test the feasibility of such programs further, a study on solidarity lending was conducted in Mongolia, which compared the results to those of regular lending practices. Research showed that while repayment rates were similar, food consumption increased among group lenders, an encouraging sign to researchers.

Another study on group lending conducted by the African Growth Institute in Kenya revealed that “microcredit is an important entrepreneurial tool in alleviating poverty”. They also found that group lending was a way of achieving greater financial stability.

Because of innovative initiatives like solidarity lending, the rural poor are better equipped to prosper. By providing groups with much-needed access to financial capital, farmers from India to Mongolia to Kenya are no longer overlooked.

– Brendan Wade

Photo: Flickr