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Positive PlanetAccording to the World Bank, more than 2.5 billion people do not have a bank account and many of those people make up the world’s poor. So, it should not be surprising that just within the past decade, microfinance has become an increasingly popular form of business in many countries. Microfinance, or micro-lending, essentially refers to lending small amounts to individuals who do not have access to typical financial institutions.

Because this service goes to low-income individuals, it is popular among many nonprofits and private businesses to help people start enterprises around the world. Many microfinance institutions lend to women, young people and others who have been historically kept out of finance.

One organization, in particular, strives to alleviate poverty by empowering marginalized populations.

Since its founding in 1988, Positive Planet has set out to provide microloans to women who want to start their own businesses. The nonprofit aims to provide the chance to start a viable, sustainable business to women without resources. The organization also follows some of the intuition behind the Sustainable Development Goals, especially the goals of gender equality, decent work and economic growth.

The organization, based in France, manages projects through different locations that provide assistance to people in different countries. Positive Planet’s reach extends all over the world to 35 countries. Its projects span from helping refugee businesses in the Middle East to inspiring young people in West Africa.

Since its beginning, the organization has touched more than 40,000 people through nearly 40 projects. Just one of these projects helps microfinance groups provide women with financial education. The project aimed to help further develop the infrastructure in place for microfinance in China and also support women’s finance training. Through a partnership with Diageo and the Huimin Microcredit Company, the project was able to directly impact more than 7,000 people.

Another project assisted low-income women in Brazil with entering the labor market and learning the basics of entrepreneurship. The program attempted to benefit vulnerable women through individual support. By partnering with Gerando Vida, a local NGO, the program was able to directly impact the women and their families.

By helping vulnerable women around the world, this organization takes a staunch position against global poverty. This organization and its results demonstrate the importance of empowering women entrepreneurs.

Selasi Amoani

Photo: Flickr

Virtual MicrofinanceFounded in 2009 by Julia Kurnia, Zidisha is a virtual microfinance platform that seeks to combat poverty in developing countries by directly connecting lenders to entrepreneurs. To date, Zidisha has raised more than $10 million in microloans.

Zidisha, which means “grow” or “expand” in Swahili, is the first virtual microfinance service to eliminate the use of local intermediaries to disburse loans to companies in need. The Virginia-based nonprofit follows a platform similar to that of eBay, in which entrepreneurs post public loan requests for lenders across the world to access. This streamlined process is both cost-effective and convenient for emerging entrepreneurs who seek capital to accelerate their businesses.

Zidisha is not the pioneer of virtual microfinance. However, its distinctive feature is its commitment to lower fees and rates for entrepreneurs. Similar organizations such as Kiva make use of “field partners” who often distribute loans at interest rates of more than 35 percent to pay for administrative costs. Zidisha’s flat interest rate of five percent means that borrowers can retain more money to reinvest in their ventures.

The nonprofit has been a highly successful means of growing businesses in 11 developing nations. According to its website, lenders on Zidisha have fully funded more than 70,000 unique projects.

Developing countries are quickly adopting recent technological advances and joining an increasingly interdependent world. According to a Pew Research study, 54 percent of adults in emerging and developing nations described themselves as “Internet users” in 2015, a rise from 45 percent in 2013. However, in the same countries, formal job markets are inadequate and local banks are seldom financially helpful.

Thus, the use of cheap and effective microfinance is critical to spurring economic growth in emerging countries. Developing economies inevitably benefit from microfinance because entrepreneurs can use loans to pay for expansions, renovations, inventory and, most importantly, new employees.

Other virtual microfinance platforms could follow Zidisha’s cost-effective system of lending. If these platforms truly value charity and philanthropy through the form of financial support, they should recognize that the use of third parties to disburse loans poses a financial burden on emerging companies that cannot afford to accumulate thousands of dollars in unpaid interest.

People in developed nations should embrace the unique power of virtual microfinance. It is a viable, even profitable, form of philanthropy that has tangible effects on the crisis of world poverty. Using microfinance as a means of alleviating global economic distress will directly result in more jobs, profit and prosperity for those in need.

Henry Emanuel

Photo: Flickr


Microfinance institutions (MFIs) are institutions which serve to provide unemployed or low-income individuals or groups with access to financial services. The goal of most MFIs is to help individuals become self-sufficient. The institutions accomplish this goal by providing people with short-term funds aimed at providing long-term success.

Microfinancing may include lending capital, opening bank accounts, and offering insurance. Microfinance institutions charge interest on loans. However, interest rates are typically lower than standard bank rates. According to Investopedia, the majority of microfinance operations occur in developing countries such as Uganda, Indonesia, Serbia and Honduras.

Like any operation, microfinance has its ups and downs. On the downside, microfinance can be inundated with broken promises and corrupt institutions. A case study analyzing MFIs in Cameroon demonstrated that MFI’s were less effective at serving the needy in Cameroon than in other African states. The low number of active borrowers and the low percentage of women borrowers and depositors contributed to this conclusion.

According to Ethiopian Satellite and Television Radio (ESAT), the Dedebit Credit and Saving Institution run by the Ethiopian government, Tigrayan People’s Liberation Front (TPLF), has been providing high-interest mortgage loans. High-interest rates contradict the Ethiopian government’s goal of helping the Tigray community by providing low-interest loans.

Former member of the TPLF Asegede Gebreselassie says that the Dedebit Credit and Savings Institution has long been a means for exploitation by rulers in Tigray. Their exploitative actions have rendered many of the Tigray people debt-laden, bankrupt and impoverished.

MFIs are not all bad, though. Their positive impact on needy communities has been felt around the world. The rapid growth of microfinancing made reaching more than 130 million clients possible, according to the International Finance Corporation (IFC), a subset of the World Bank Group. The IFC is one of Columbia’s leading microfinance institutions with more than 460,000 clients. Micro-entrepreneurship has been a growing phenomenon in Columbia, especially among farmers. IFC’s impact on Columbia is an example of microfinance that works.

As microfinance operations continue to grow, they may become one of the most beneficial tools lifting communities out of poverty in a self-sustaining way.

Rebeca Ilisoi

Photo: Flickr

Financial Solutions for Those in Need
A groundbreaking service called microfinance is making a difference providing financial solutions for those in need. It functions by providing financial services to entrepreneurs and small businesses that do not have access to a bank or other financial institution.

This means that those in especially poverty stricken areas can get the services they need to start a business. This method of empowering those without opportunity is making waves in the lives of families everywhere.

Within the microfinance industry, a group called Mifos is currently providing its services to 30 institutions that service almost 825,000 clients. This organized system is open sourced to benefit people everywhere, providing accurate bookkeeping and detailed performance analytics.

Due to the nature of microfinance, many small donations are made daily and need to be accurately kept track of and distributed to those in need. Mifos services are responsible for growing the Grameen Koota (GK), a microfinance group in India, clientele by 40 percent.

The founders of Kiva had a similar vision when they put together a plan to help those around the world get access to small loans. Teaming up and building off of PayPal’s payment system, Kiva functions successfully in 82 countries with 0 percent interest for borrowers. Today Kiva is closing in on a huge accomplishment, $1 billion loaned to create financial solutions for those in need.

Three sisters that used their loan to become fish farming pioneers in Zimbabwe are one of Kiva’s many success stories. B.E.N. Fisheries now farm around a thousand fish for distribution in an area experiencing food shortage and mass poverty. Women like Beauty, Ericah and Netsai of B.E.N. Fisheries are breaking down gender barriers as female business owners, and it is all thanks to small donations made by every people willing to invest in the happiness of others.

Micro financing is empowering hard workers around the world to create change in their countries and break the cycle of poverty. Stimulating business growth in the world builds up the people affected and is a reminder that ending global poverty is possible.

Aaron Walsh

Photo: Flickr

Poverty Reduction in Bangladesh
The People’s Republic of Bangladesh has made a remarkable improvement in poverty reduction since 2000. The number of individuals living in poverty declined from 63 million in 2000 to 47 million in 2010, representing a 27% decrease.

Poverty in Bangladesh has reduced significantly largely due to changes in demographics and increases in labor income. Fertility rates also declined during this period. This led to fewer dependency ratios and a higher per-capita income.

“Against the odds, Bangladesh lifted 16 million people out of poverty in the last 10 years and also reduced inequality; that is a rare and remarkable achievement,” said Johannes Zutt, World Bank Director for Bangladesh.

Bangladesh’s recent improvement is a step toward becoming a middle-income country by 2021. Bangladesh needs to lift an additional 15 million people out of poverty. To do so, the government must boost investments in the transportation, power and gas sectors.

Moreover, the People’s Republic of Bangladesh could improve the skills of its labor force and focus specifically on the youth. This will harness the “demographic opportunity” of the country.

Bangladesh could also make use of its vast social safety net expenditures by improving program design to emphasize on human capital accumulation. Such services will be targeted towards the poorest communities and ensuring that growth remains inclusive.

Another considerable factor that contributed to poverty reduction in Bangladesh was microfinance institutions (MFIs). Such programs thrive to create innovative ways to financially support the poor.

These initiatives include training and entrepreneurial programs for the poor communities, helping 32 million individuals. In the past two decades, MFIs have contributed to poverty reduction in Bangladesh.

Noman Ahmed
Photo: Flickr

Financial Services in Developing Countries
When talking about fighting global poverty, most people discuss solutions to problems of malnutrition, poor shelter, or dirty water. But how about greater access to financial services?

Most individuals in the developed world could never imagine living on wages of less than $10 a day. There are thousands of ways to secure an adequate daily income because of the countless economic opportunities that are supplied by developed markets.

Access to these financial services, a sparse resource in areas suffering from poverty, provides individuals with the chance to actively participate in securing a means of subsistence.

In March, the World Bank released a video interview with Douglas Pearce, the Global Lead for Financial Inclusion at the international organization. The conversation shed light on the lack of access to financial services in developing countries.

“My favorite number is two billion,” said Pearce, “Two billion is the number of adults who don’t have access to formal financial services.” This latest statistic has fueled the World Bank’s new Universal Financial Access Goal which targets 25 countries that account for 73 percent of the world’s “unbanked.”

Access to financial services in developing countries would offer more of the world’s poor the opportunity to feed themselves and increase their potential income. “Being able to tap into savings provides that level of protection, cushion, of falling back into poverty,” Pearce continued. This method of poverty relief plays an important role in sustaining an individual’s rise out of hardship.

The World Bank plans to meet the goal of more financial inclusion by ensuring that each individual helped has a bank account regardless of gender. Pearce hopes that these accounts will be “gateways to a range of credit, insurance, payment, and savings services.” These services then allow people living in poverty to afford education, a home or vehicle and equipment to start a business.

Pearce hopes that these accounts will be “gateways to a range of credit, insurance, payment, and savings services.” These services then allow people living in poverty to afford education, a home or vehicle and equipment to start a business.

There are multiple kinds of financial services that are being integrated into poverty-ridden areas:

  1. Microfinancing is a smaller, more intimate version of a traditional loan from a large financial institution. This type of lending is more beneficial for the poor because smaller institutions can work closely with the borrower to design a plan that works for both parties. Also, a relationship of trust between the borrower and the lender can often take the place of a good credit history which allows more people to qualify for loans.
  2. Access to a micro savings account allows people to safely store any additional resources as well as earn interest on money not being spent. Digital services provided by mobile technology can enhance the interaction between those in poverty and financial institutions as electronics get cheaper and internet access increases.
  3. Owning a micro insurance policy may not seem like a useful service for those with few assets, but its importance emerges as individuals start to rise out of poverty. People who are rising out of poverty cannot afford the sudden costs and extreme losses that come with an accident. Without an insurance policy, unexpected events endanger the pathway to a better life.

These financial services are being integrated into many developing countries across the goal. The emergence of these economic opportunities has the power to inspire entrepreneurship and income security in areas with the most poverty. As Pearce says, “financial inclusion has the potential to unlock opportunity for people.”

Jacob Hess

Photo: Flickr

Whole Planet Foundation

Whole Planet Foundation, the nonprofit organization founded by Whole Foods Market, seeks to alleviate poverty in communities around the world that supply Whole Foods stores. All of the Foundation’s overhead costs are covered by Whole Foods Market, meaning 100 percent of donations go straight to community micro-lending programs.

According to the Kiva organization, “microfinance is a general term to describe financial services to low-income individuals or to those who do not have access to typical banking services.”

Microfinance encompasses a wide array of services, such as credit, savings and small loans services. Whole Planet Foundation focuses on the credit component of microfinance by supporting microfinance institutions that provide small business loans.

To ensure the efficacy and intentions of Microfinance Institutions (MFIs), Whole Planet Foundation conducts careful research. Field teams in each country first identify potential partners. After reviewing relevant information, the list of potential partners is shortened.

Each institution is visited in person by Regional Directors. The field visit allows the Foundation “to see first-hand the approach and practices of an MFI”. Once approved, MFIs are eligible to receive grants from the Whole Planet Foundation to service their clients.

The field visit allows the Foundation “to see first-hand the approach and practices of an MFI”. Once approved, MFIs are eligible to receive grants from the Whole Planet Foundation to service their clients.

The Whole Planet Foundation does not work with government-run MFIs which they have found to be “poorly run and corrupt”. The Foundation states that it has found “great success by working with MFIs with no government affiliation”.

At the same time, the Foundation acknowledges that microcredit is not a “silver bullet” that can address all the factors that contribute to global poverty. As the website notes, one loan doesn’t immediately lift a family out of poverty.

However, MFIs, when run correctly, can help people without jobs start and maintain their own businesses. MFIs give people the opportunity to invest in their own potential and create opportunities for themselves and their families.

Whole Planet Foundation currently supports over 1.3 million micro-entrepreneurs in 70 countries around the world. Of note, 87 percent of those reached globally are women. This investment has been met with success, boasting a repayment rate of 97 percent.

One entrepreneur who is benefitting from the program is a woman named Yajaris from Nicaragua. According to the Foundation, she heard about her local MFI, Pro Mujer Nicaragua, from a neighbor several years ago. She used micro credit loans as a way to expand her kiosk business. Yajaris added a variety of vegetables, drinks and cleaning supplies to her inventory.

Microloans also helped Yajaris to purchase a refrigerator and shelves on which to display the new items. Within just three years, according to Whole Planet Foundation, her kiosk doubled in size. Yajaris used her savings and an additional housing loan from Pro Mujer to build a two-room home. She rents out that property and is currently using the rental income to save up for another floor.

According to Kiva, the benefits of MFIs have been proven to go far beyond supporting small businesses. By providing people with opportunities to become self-sufficient, household economic welfare stabilizes, allowing families to better cope with the challenges they face. The success of female-run businesses, in particular, contributes to the increase in gender equality. As households succeed, communities can grow to become more empowered and educated.

Taylor Resteghini

Photo: Flickr

Poverty_business_finance

Cashpor Micro Credit is a non-profit assisting those who live in impoverished communities in India. The organization uses microfinance techniques and loans to help women build a life for themselves and their families in addition to earning enough money to repay the loans provided to them by Cashpor Micro Credit.

Cashpor Micro Credit

Founded in Varanasi, India in 1996, the organization works in Uttar Pradesh and Bihar, India. In addition to microloan assistance, Cashpor Micro Credit also provides scholarships for college education, financial training, health education and insurance programs.

Their mission is to reach all impoverished women throughout the BIMARU states in India, which include the cities of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh, and guide them in lifting themselves and their families, out of poverty.

Astronomic Growth

As of 2014, Cashpor Micro Credit had 864,551 women actively borrowing loans from them, according to Mix Market statistics. Their gross loan portfolio, which comprises all outstanding client loans, reached 147.4 million, with the average loan per borrower averaging 170 dollars. This has allowed them to maintain a 40 percent business growth over the past few years.

In total, Cashpor Micro Credit has 341 branches in and around the BIMARU states. Cashpor Micro Credit is known for its efficient business model, the way in which it manages its finances and assets and the fact that Cashpor Micro Credit shares this knowledge with its clients to ensure a proactive use of their loans.

Three Main Programs

Its credit plus activities are divided into three major programs. This program assists members through scholarships, health education and a community health facilitator program.

The scholarships allow members to send their children to college, thus distancing them from the poverty line.

Cashpor’s health education teaches overall health to their clients. During their regular business meetings, community leaders are required to engage in 15 minute discussions about health, including how to best fight illnesses in children.

The community health facilitator program is designed to provide clients with a health mentor, who will give health intermediary services. The program designates 80 women, who are trained in health and assigned to 300 Cashpor clients. The program is run in each district Cashpor operates in.

Improving Quality of Life

Cashpor Micro Credit continues to assist those in India struggling to get out of poverty and will continue until the quality of life in India becomes sustainable, abundant and efficient.

Julia N. Hettiger

Photo: Flickr

CARD MRIThe Center for Agriculture and Rural Development’s Mutually Reinforcing Institution (CARD MRI) fights poverty in the Philippines. It does this through strategic microfinance programs aimed at helping women living in poverty.

The institution first started helping women with finances for activities on a small scale like education, farming and health. Now, the institute’s main goal is to help women evolve into businesspersons through years of training and education on how to manage loans.

These newly evolved businesswomen called for a new type of assistance. To accommodate, CARD created multiple banking institutions such as CARD Bank, Inc. and CARD SME Bank, Inc.

CARD MRI was founded unofficially in 1986, as CARD, an organization to help social development. It was founded by 15 development practitioners. They came together in December 1986 to assist underdeveloped communities in the Philippines.

The year 1988 marked the official start of CARD’s operations. They began assisting women who owned no land by creating a training-focused community and livelihood assistance program for coconut workers. The organization followed this model for some time. Then it initiated another program for landless women, called the Landless People’s program, in 1990.

It was in 1995 that CARD decided to extend its program to start the Mutually Reinforcing Institution. After receiving the proper licensing in 1997, CARD MRI began assisting landless men and women through their microfinance programs.

In addition to assisting with loan management development and livelihood expenses, CARD MRI also has a Microfinance Plus program that assists people with holistic needs. The program issues micro-insurance for pharmaceutical needs, strategic marketing services and life insurance.

CARD MRI routinely collaborates with other development programs to ensure everyone has fair access to their community development services. These services include health, education, resource mobilization and communication.

Most recently, CARD MRI acquired the Riza Rural Bank. This allowed them to expand their services even further throughout the Philippines. The creation of their Leasing and Finance Corporation was fulfilled in 2013, adding to their growing number of reinforcing institutions.

Julia N. Hettiger

Sources: CARD-MRI, My Philanthropedia, PR News Wire
Photo: Flickr

Lendwithcare

Next time you need to give someone a gift, why not give the gift of giving? That is the idea behind Lendwithcare, a microfinance program established by CARE International UK. The idea is simple: you give someone a gift voucher that they can use to help the less fortunate.

At a minimum of £15, Lendwithcare vouchers enable people eager to give to provide loans for entrepreneurs in developing countries that lack access to financial services and institutions.

Entrepreneurs can fold themselves into the program by applying to local microfinance institutions (MFIs) partnered with Lendwithcare. If the MFI is confident in the entrepreneur, they give them their stamp of approval and put them in touch with Lendwithcare, which makes a profile for the entrepreneur on its website.

Lendwithcare lenders can go online, read about the entrepreneurs and their ambitions and choose which one they would like to support. After that, the entrepreneur’s activities, setbacks and successes can be tracked on the Lendwithcare website. Their profiles will be regularly updated.

Once the loans are repaid, the lender can either withdraw or find another entrepreneur to finance. It’s the gift that keeps on giving.

Since its founding in 2010, Lendwithcare has partnered up with MFIs in Benin, Bosnia and Herzegovina, Cambodia, Ecuador, the Philippines, Togo and Vietnam. According to the Guardian, by 2013, they had processed over 74,000 loans totaling £2.7 million to 4,600 entrepreneurs worldwide.

Best of all, the loans are not cut down by administrative charges. Everything goes to the entrepreneur. Lenders do not have to worry about not getting their money back. Lendwithcare’s default rate is “virtually zero,” says the Guardian.

For over two decades, according to their website, CARE has used microfinance to serve people who otherwise would not be able to find loans to support their businesses and households. Microfinance also helps entrepreneurs avoid loan sharks who prey on low-income areas.

CARE views microfinance “as a long-term and more sustainable approach to helping poor people” than simpler aid provisions. Microfinance encourages and supports self-sufficiency.

Despite the increasing popularity of the method, CARE believes that “the real potential of microfinance is still to be realized.”

Lendwithcare is the next step toward reaching that potential. Rather than restricting lending opportunities to professional institutions, the program allows regular people to get involved with financially supporting entrepreneurs in developing countries, many of whom come from isolated rural areas, according to Lendwithcare’s website.

Guided by its “strong social development mission,” Lendwithcare encourages loans which “create employment opportunities for the very poor, promote sustainable agriculture, recycling and renewable energy and energy efficiency.” It also refuses to promote loans that “involve poor animal welfare.”

Not only do loans help underprivileged entrepreneurs and the communities they live and work in but they also give do-gooders a chance to enjoy a new kind of gift.

BBC Three’s Stacey Dooley, an eager lender herself, wrote a moving article for Huffington Post about meeting the people she supports in Bosnia and Herzegovina. Lendwithcare vouchers are different from charity gifts, Dooley says, “because they keep on giving, year-in and year-out.”

With its skyrocketing success, Lendwithcare has demonstrated that its model works and that other companies can use this revolutionary idea to make development more personal and sustainable.

Joe D’Amore

Sources: Huffington Post, Lendwithcare, The Guardian
Photo: Care International