September 14th, 2008
Posted by: oneillcristfulk
Microfinance· What is microfinance? How and why has it been so successful?· What are the barriers and enablers to micro-lending?· What are the next steps? Micro-equity? Micro-insurance?
by: O'Neill Crist-Fulk
Andrew Ross
I found the Prahalad case study quite interesting and inspiring. What I kept thinking as I read it and the other articles is, would microlending/microbanking have similar poverty-alleviating effects in the U.S.? Perhaps its already happening and I’m just not aware of it, but as far as I know, its not. It seems like the premise would apply anywhere: empower an impoverished and traditionally neglected group through small loans which catalyze an entrepreneurial spirit and generate income to improve the person’s quality of life. What is unique to developing countries like Bangladesh, India, and Mexico that make their poor more likely to benefit from microlending?
I guess one difference is that in the U.S. we already have a highly developed banking industry with ATM’s on almost every corner and many loan options. But like many developing countries, as far as I know, banks in the U.S. do not provide non-collateralized loans. Another difference may be that our Corporate Chain-dominate culture makes it much more challenging for lots of small businesses to flourish.
Like it did for women in India and Bangladesh, I think micro-lending could have a tremendous impact on ex-felons in America. Like the women in those countries, most ex-felons are barred from mainstream job opportunities because of hiring prohibitions. What’s left then is a huge class of persons who are forced to return to an informal sector, which often involves recidivating to previous criminal behavior.
On an unrelated note, the article about the Mexican company which freely gives out loans in whatever amounts to whoever applies was disturbing. It really highlighted the fact that microlending does have its downsides. Although, in the case of that Mexican company, I think one of the real lessons there is that loans alone will not lift people out of poverty, training is also needed. This fact was clearly demonstrated by the ICICI’s successes with lending and building a self-sustaining business among women in India.
And finally, I’ve been wrestling with the idea of consumer loans to the traditional “bottom of the pyramid” class of persons. On one hand, it just seems ludicrous to me that people who are struggling to make ends meet and have no savings are taking out loans for cd players and tv’s. On the other hand, that all seems quite paternalistic of me; who am I to tell people how to spend their money or how to borrow money. But in the end, I do think companies who freely make consumer loans to very low income populations should bear some responsibility, or at least divulge the APR of the loan.
by: Scott O'Connell
Something that has become a bit of a pattern each week during my weekly reflection has been to read about something I know very little and reflect on how it relates to something I am much more familiar with. This week is no different. After reading various articles including The Ugly Side of Microlending and The Big Trouble in Small Loans that discuss the background, history and some of the problems of micro financing, it very much reminded me of the recent housing bubble and subprime lending crisis that has plagued the United States economy over the past year and a half.
The articles talk about the beginning of micro lending and how at its origin micro finance loans were carefully targeted loans given to the poor usually in developing countries. Many of the originators of micro loans were nonprofit organizations that felt that these small loans that gave people the ability to start or improve a business would improve both the lifestyles of the individuals as well as improve the economy around them. The loans had a very low default rate while also charging very high interest rates, sometimes as high as 100% APR, however this income is circled back around to originate new loans to new borrowers.
Of course the attractiveness of these loans attracted other investors looking to get a piece of the micro financing pie. Non profits began to convert to for profit companies. New companies began to find their way into the market. And now, sub entities of the big banks like Citigroup’s Banamex and HSBC’s Financiera Independencia have entered the market, like everyone else attracted to the high interest, low defaulting loan market.
From my view though this remind me all too much of the recent subprime lending and mortgage backed security crisis. It’s all to similar to the same way that banks jumped on the housing bubble, originating mortgage loans to almost anyone, collecting fees and packaging these mortgages into high interest securities that were seemingly risk free. Now in micro financing all the small banks and big banks are getting involved, originating loans to almost anyone in developing countries because of the high interest and the low default rate. I imagine that the responsibility of these banks is still pretty high, but who will be there to make sure that banks remain responsible. As more and more banks enter the market, more loans will be originated to those who may not deserve it or may be too risky. Ultimately, defaults are going to increase. Fortunately, advanced securities and derivatives using these loans as collateral haven’t been created to the same degree that mortgage backed securities were, but what if they eventually are? Can Mexico or another developing country survive a similar meltdown to the subprime crisis? I doubt it.
by: David Lax
Regarding the ICICI microfinance case, I appreciate the fact that the borrowers were collected together and were referred to as the “self-help group” because the name projects the image that the poor are helping themselves in the process. During one of the initial lectures Professor Victor referenced the undeserving poor versus the deserving poor. Although we never elaborated on the definition of or the distinction between these two groups, I came to my own conclusion. The undeserving poor to me are those that in a impoverished state but would be willing to do something about it if given the opportunity meaning they are poor purely based on the environment and not based on any decision they may have made. The ICICI case is clearly an example where the poor, the SHG’s, are willing to help themselves once the empowered by the opportunity created by ICICI. A loan payback rate of 99.9% is quite impressive and demonstrates that the viability of doing business in the BOP market.
by: Virginia Francis
Microfinance was designed to lend money to the poor in order to enable them to build a sustainable income by for example, starting their own businesses, and eventually working themselves out of poverty. In the “Grameen Bank, Banking to the Poor, What is Microcredit?” article, it talked about “Grameencredit” as a way to unleash the energy and creativity of the unutilized skills in each human in order to alleviate poverty. These loans can enable change in people who otherwise have no means of breaking out of poverty. I agree with the statement that charity is not the answer to poverty because it creates dependency rather than personal initiative. Microlending doesn’t just give money to the poor, but requires accountability because the borrowers must pay back the loan within a certain time frame. This is encouragement to get their businesses started in order to start the flow of income to pay back the loans and build a sustainable life. I think microlending has been successful because it links the people who want to give money to the poor with impoverished people who have the capabilities of building a sustainable income, but just need the initial investment.
by: Ashley English
It would be beneficial to have a widespread requirement for a minimum level of education prior to borrowing, just like government student loan programs. This educational program could teach borrowers about interest rates, repayment methods, etc. Furthermore, the poor are borrowing money to begin their own businesses with no training and/or guidance on how to successfully do so. Even if they had to spend a minimal amount of money to receive some entrepreneurial coaching, this may exponentially increase the effectiveness of their borrowing, while decreasing the likelihood that they end up worse off than they started. It is essential that the individuals participating in microlending programs be educated on the benefits and potential drawbacks of their participation.
by: Neal Palmer
Scott’s reference above to the subprime mess reminded me, too, of the current microlending environment in Mexico. As with subprime lending, we have seen the poor taking out loans they ultimately can’t afford, to pay for things they really can’t afford. I believe this reflects an ultimate weakness of the capitalist model in alleviating poverty, IF sufficient regulations are not put in place, in that strategies may be devised not to maximize assistance to the poor, but rather to guarantee optimal profits. The entry of for-profit enterprises into the market, often under the misleading guise of microcredit, has resulted greater profit, greater lending to higher-borrowing customers, and fewer loans to women (Kiviat, “Microfinance). Many of the loans should be classified as consumer loans rather than microloans intended to lift people out of poverty; thus, lenders, rather than customer needs, have increasingly been driving demand. Unfortunately, this model has developed in developing countries, which typically lack strong consumer-protection laws. As Kiviat (”The Big Trouble”) notes, such a model may actually contribute to increased poverty.
One of the most controversial loan markets has developed in Mexico. Mexican microlenders, or, more appropriately, major banks, have been charging interest rates over or near the 100% mark. Even Wal-Mart sets its interest rates “appropriate to the Mexican market,” a telling quote that indicates a greater interest in profit than in poverty alleviation. Similarly, an official at Banco Azteca exclaimed “all this for poor people” when marveling over the bank’s success (Kiviat, “The Big Trouble”). This clearly reflects a top-down approach and the belief that any business is good business. One problem is the residual lack of competition in the Mexican market, or the de facto agreement among the major players to charge astronomical interest rates, coupled with the lack of government oversight. Clearly, Wal-Mart could charge substantially lower rates and still turn a tidy profit, so I question why it has not done so to increase competition. Such examples reveal how creating opportunities for the poor also create opportunities for them to be exploited (Epstein & Smith).
Further supporting the assertion that many of the industry’s recent entrants have a greater eye on profit than poverty alleviation is the continued lack of microlending in Africa, where the majority of the world’s poverty is located. (Kiviat, “The Big Trouble”). Additionally, Kiviat (“The Big Trouble”) points to the development of the life insurance business as proof that competition has improved services, but I question how many of the policies will ever be paid out, especially in under-regulated Mexico. If borrowers are confused about their consumer loans in the country, they are also likely misinformed about insurance policies; when rates go up unexpectedly, many people will stand a significant chance of losing their investments. All of these developments point to the need to define appropriate microlending practices and standards and develop corresponding regulations. An official approval or government recognition will signal to potential lenders that their decisions to engage with a financial institution will not be exploitive.
by: Andrew Greer
Is micro-financing sustainable?
It depends on one’s definition of sustainability and return. Currently, it appears that Kiva investors receive no return (from interest) on their investments. The principal is repaid, but there is no “reward” to the investors aside from getting their money back (or having to deal with a loss if the borrower defaults). If investors are experiencing other rewards, such as feelings of well-being garnered from the knowledge that they are not simply supplying the “poor” with charity, investing in micro-financing through Kiva could be seen as a sustainable process of development. I would argue that these types of investments are not charity because there may be monetary sustainability on the receiving end and a more psychology focused sustainability on the investment end. (My definition of “charity” would be providing hand-outs with no chance for sustainable development and encouraging a reliance on charity organizations.) Eventually, borrowers starting or expanding businesses should be able to support themselves; thereby lessoning the need for additional borrowed funds. Investors may be able to sustain their feelings of well being from supplying a product that is probably sustainably supporting growth in the developing world. If investors are improving their feelings of well-being, they are also gaining a return on their investment. This appears to be a sustainable situation.
Conversely, as we discussed in class, some businesspeople cannot understand the logic of investments with no return. It seemed many students tended to interpret Pettengill Turner’s idea into an expression of sustainability that is solely based on monetary returns to all parties involved in the micro-lending process. Other “for profit” models of micro-lending would fit more with supporters of the money-focused sustainability view. But, with current returns of only 1.25-3%, if you are really trying to make money, investing in a CD might be a wiser choice. Maybe this type of investment embraces the right combination of sustainability to business oriented persons. If returns of 1.25% seem low, one could argue that he or she is still making some profit AND has increased feelings of well-being because he or she could be helping to eradicate poverty. If someone is purely interested in financial gain, however, even “for profit” micro-lenders seem like a poor choice for investment.
Other options for making micro-lending more sustainable to the investor exist. Many of this week’s readings clearly illustrate corporations using micro-lending as a form of credit to purchase goods from their own stores. In developing countries, investors can exploit insufficient financial laws prohibiting exorbitant interest rates and possibly earn very high returns for themselves. This would increase the financial sustainability to investors in the micro-lending realm, as long as they do not completely deplete their clients’ finances.
Depending on one’s fit with microfinance, there appear to be options that do encourage sustainability. Some models focus on the sustainability of the clients, other models promote a balance between investor and client sustainability, and still other models focus on sustainability of the investors.
by: Heidi Wallenhorst
What are the barriers and enablers to micro-lending?
The term “micro-credit” can and has taken on many definitions over the course of its life since the 1970s when the concept (in its contemporary form) was first developed. In general, microcredit/microlending involves the extension of small loans to the impoverished, who under normal financial circumstances are not considered “bankable,” meaning they lack collateral and credit history to support ordinary loans. The micro-loans are extended for the purpose of creating sustainable, profitable small business for the borrower, who then returns the principal (and in some cases interest) while continuing on with the business, which is then financed by the profits generated based on the original loan. The central idea behind micro-credit is that rather than providing charitable donations, the loans are income generating and are used to build sustainable business to actually overcome poverty rather than just put a bandaid on it.
The form of microlending can take on several different models. Some forms involve having the borrower merely pay back the principal loan amount, as will Grameen Bank in Bangladesh, a pioneer in the microlending industry. Under this model, the only contract between the lender and borrower is one of trust. Borrowers do not need to provide collateral, be employed in any manner or sign legal contracts regarding the loan. In these instances, the borrowers are seeking more social returns on their investments. As microlending has expanded, for-profit models have appeared including financial institutions that do in fact charge interest on loans. A newer concept has been pioneered by online lender MicroPlace, which receives loans from individuals, invests the money for profit and then microlends to the borrowers.
Microlending has seen a lot success in the form of growth in number of borrowers. According to Time magazine’s “Women Being Cheated?” the number of micro-credit borrowers has increase by 30% annually. As loans and borrowers are increasing, so are the options provided by microlenders, as some are beginning to provide savings accounts and insurance. Savings accounts have increased by 45% annually according to the same study showing the increase in borrowers. Not only is the number of borrowers increasing, but so is the number of lenders. In areas all over the globe where microlending is proven to be working, big banks and private equity outfits have increased their micro-credit lending by 30-40% per year, providing for actual competition among lenders. (Kiviat, “Women Being Cheated” Time, April 2008 and Kiviat, “The Big Trouble with Small Loans, Time, June 2008)
As positive as some of the growth elements of micro-credit appear, some downsides to the industry have also emerged. According to “Women Being Cheated?” microlenders seem to be lending to fewer women, who are the very people micro-credit options originally intended to help. Micro-credit has in fact seen an unexplainable, very steep drop-off in the number of loans to women, from 88%-60%. Another emerging disconcerting trend is that lenders are beginning to move steadily toward favoring the bigger loan clients, leaving the poorest (small loans/less profitable) behind. Along the same lines, there is a fear that as more banks get involved in microcredit, some will end up actually milking the poor borrowers rather than working to help fight poverty. There is concern that mainstreaming the concept of microlending (particularly the for-profit form) will actually threaten the original purpose of helping the poor lead better lives, as the pressure to turn a profit takes its toll. In one such example, Banco Azteca in Mexico has been accused of taking advantage of the fact that there is no legal limit to interest rates and has made a fortune charging rates of 50-120% to the poor borrowers!
In the end, will the pros of micro-credit lending outweigh the cons?
by: Allison Durham
Lessons from Tupelo: A Case Study demonstrates how a chronically poor community can be invigorated by a shared goal and an individual willing to invest in the development of the community. George McClean saw potential in the people and the community in Tupelo and McClean saw benefits in aiding such a community in coming out of poverty. Another observation that was made was that Tupelo at this point in time lacked the leadership that could enable them to see their own connections and drive the change to improve their conditions. McClean simply provided that leadership and used that observed potential to empower the residents to improve their own circumstances. Once everyone was focused on the same goal, the locals were able to advance themselves and now have the benefit of its Community Development Foundation to continue in McClean’s footsteps to support the advancement of the community. Tupelo is proof that poor communities can find their way out of poverty but need the investment of influential people, organizations, or nations to steer them down the right path.
by: Mikael Jacobs
I have an interesting thought about microfinance that nobody seems to be mentioning. I’ll preface it by saying that I have been very impressed with the microfinance models presented in the class, and certainly think it is beneficial in many circumstances. But is there something to be learned about lending from the current financial crisis in the U.S.? We are talking about imposing debt on a culture as a way to free them up economically. Debt, however, is the exact concept that has bankrupted many businesses in America. Economists in the U.S. like to blame the crisis on specific securities and measurements of risk; however, this would not have occurred if people and businesses were not living above their means. Debt is the root cause. Obviously, lending has its advantages as well, and has allowed the American economy to flourish the majority of the time, but I do not think we should ignore the dangers of lending. It was mentioned in class that suicide rates are higher when microfinancing is present, and I think that is worthwhile to consider. If people aren’t happier with microfinancing, then why do it? Perhaps charitable giving, or no-interest loans are the better option. These are just things to consider, and I am in no way rejecting the idea of microfinance.
by: Andrea Lash
In 2003 two American travelers in West India crossed paths at one of the many open air markets. They began to talk about each of their experiences in the region and then realized that much of what they’d seen and heard overlapped. Each, in conversing with local artisans had heard the same story several times over: “We need more shoppers like you; greater access to markets. We would be able to create so much more opportunity for ourselves, our families, our communities, if we just had more people buying.” Soon thereafter, World of Good was created.
World of Good is the world’s first online marketplace to provide a single destinations for buyerss and sellers of “People Positive” and “Eco Positive “products. The mission of the site is to shop/sell in line with your ethics. Further, independent organizations verify the positive impact of every product sold, whether that impact be on the family of the seller or the environment. Each product on the site features a Goodprint label that explains the specific positive impact the sale of that product has, for example a Goodprint label could say:
Your Purchase Impact was People Positive
-economic empowerment
-quality of life
-preserving tradition
-self-empowerment
World of Good is proof that microfinance does not have to be a stop-gap solution, it has the potential for long-term financial empowerment for BOP individuals when aligned with innovative organizations/thinkers like World of Good.
http://worldofgood.ebay.com/home
by: Marshall Carter
I believe that debt, used wisely, can be a very valuable tool even for poor individuals. The distinction lies in the purpose of the debt; has it been undertaken to finance consumption goods, or to invest in physical or human capital? While consumption debt may carry severely negative consequences in many circumstances, productive capital investment is at the foundation of economic growth.
The key word here, “productive,” indicates that micro lending must emphasis quality of loans as opposed to volume. High volumes of unproductive loans will increase default rates, leaving people worse of than before. However, given that debt is used to finance investment, and this investment is channeled to productive projects, debt becomes and incredibly powerful tool.
This raises an interesting question; how often do these assumptions hold true? How do banks in underdeveloped countries, operating under fragile legal and financial systems, estimate potential productivity? Furthermore, how much emphasis is placed on training loan recipients and taking steps to increase their probability of success? Are there incentives to exploit loan recipients, such as may be the case in Mexico? Certainly, governments have a role to play in regulating micro-finance institutions in a manner that protects borrowers; however, given the nature of political and legal systems in low-income countries, this may not be achieved.
However, I do not believe that charitable giving or interest-free loans are a valuable alternative. There may be situations where these forms of benevolence achieve productive ends, but I believe the probably is much lower. For one, I don’t believe they carry a sense of responsibility for the borrower and secondly, the charitable giver is completely detached from the result of the gift as the giver is not a stakeholder in the success of the project. Entire books are written about the failures of foreign aid and no country has ever attained industrialized status due to foreign giving and benevolence.
In terms of happiness, successful micro-credit institutions that invest in productive projects, allocate resources to ensure the success of businesses, and offer fair lending terms, should have a positive impact on the happiness of borrowers. The question is thus not whether micro-finance improves happiness but which micro-credit lending model achieves the highest level of satisfaction among borrowers.
by: Laura Skibinski
It really disturbs me that something set up with well intentions, like microfinance, could be transformed to an operation that essentially takes advantage of the limited options the working poor have. Needless to say, I wasn’t really surprised to see that Walmart had entered the mix in Mexico, and was charging 86% interest rates.
I would also be interested to see what two microfinance companies, Kiva and Microplace, are charging as interest rates. Their big push was that they were started by socially conscious people and would like to cater to socially conscious lenders. But if it is hard to compete with companies that are charging exorbitant interest rates, they will have to follow suit just to compete.
Another troubling article I read was the one highlighting the shift away from loaning to women. As pointed out in class and in the article, women are more likely to spend their profits on the health and well-being of their family. These are sustainable sources of upward mobility, if that makes any sense? Basically, they are less likely than men to spend the money on consumable goods. So… if this trend of giving less money to women continues, and the predicted trend that men will spend the money poorly continues, will micro finance even be able to continue? It’s so successful right now because it is working and loans are being repaid. If that stops happening, even those utilizing the loan properly will be hurt.
This week’s articles made me question the sustainability of this market. Even though it started out with (hopefully) good intentions, corporate greed seems to be taking its toll. I don’t think it’s a good thing.
by: Gary Olsen
As I was reading the case studies this week, I felt inspired and proud of those who have decided to dedicate their lives to help others. I have never heard of the Jaipur Foot or the progress they have made in India prior to reading this case. My exposure to these foundations have been limited, but I’m extremely interested in learning more after reading about them and what they have accomplished. I was intrigued as to how a foundation could be so successful with such limited funds. From a business model perspective, there are a few key drivers as to how they can accomplish such a task.
1) Low Marginal Costs
According to the case, about “…90% of the company’s expenses in the 2002 fiscal year were directly related to the costs of producing and fitting prostheses for the poor.” This is simply incredible. With the majority of these patients being charged the bare minimum or in often cases nothing at all, the doctors who perform these procedures must take a minimal amount for payment. It’s encouraging and inspiring to see such love from these doctors.
2) Funding from Government and other Philanthropic groups
Shortly after Ram Chandra developed the prosthetic foot, the founding members created the BVMSS organization to help facilitate these procedures. This group has worked closely with the Indian government and other charities to finance a considerable amount of their operations. Without this intervention from these groups, it would be extremely difficult to offer these services at such a low cost. As with the doctors mentioned in the earlier paragraph, it’s encouraging to see the positive response from people to help out those in need.
So, the question at hand is what can we do on this side of the world to help out those desperate in need? We can start by doing our research on organizations and foundations who participate in these types of activities. My dad has actively participated in a foundation that provides wheelchairs to the needy that don’t have the monetary means to buy a wheelchair. By “doing our homework” on these organizations, and becoming aware of their activities, we can help spread the word and get more people involved. I have found that most people are extremely willing to help, but just need to know how they can help. Hopefully, we can fill this disconnect and help both groups find each other.
by: Allison Durham
C.K. Prahalad’s identified benefits of microfinance are also applicable to corporate social responsibility. Prahalad asserts that microfinance “is beginning to convert the poorest of the poor into customers, and thus at the same time empower them.” (pg 115) While the programs in place by many of these corporations may attempt to improve their brand, profit off of their customers, and gain access to new markets, like microfinance they also empower the poor to rise out of poverty. Prahalad also describes how microfinancing programs have resulted in “total transformation, not only of the individual’s self-confidence, but also of village politics, ethics, and social norms.” (pg 122) In the act of helping one, corporations can have a wider impact on entire communities that will come back to profit them as well. Similar to way microfinance enables individuals and whole communities to prosper, corporations engaging in sustainable and social responsibility give those who have nothing an opportunity, to have the basic needs they deserve. For the question raised as to why as a shareholder you would want a company to engage in corporate social responsibility, I respond saying that a person should only invest in something that is willing to invest back. Why would you want to take stock in any entity that would not return the favor?
by: Paige Brown
As I have said in some reflections before, Microfinance is something that I have heard vaguely about in the past but never taken the time to learn much about. I think this is how most of the world is operating. Microfinance loans seem to be a very popular and important way for people to reach the BOP. I personally like the idea that it is a loan and not a charity donation. After spending some time on the Kiva.org website, I was amazed at how the process worked. I love the idea that you can pick which recipient you would like your loan to go to and then get updates on their progress. I think that more people would be willing to loan people money than donate and they will still get a goodwill feeling out of their investment.
There were some interesting perspectives in the articles that we were given this week however. There is a definite difference between the micro lending banks that are helping people to start business in impoverished nations. On the other hand, there are businesses that are lending to impoverished people at interest rates that are obscene. The one that is mentioned in Mexico that is lending to families that couldn’t possibly pay back the loans at the “un-disclosed” rate is not being fair to its customers. Families are entering loans that they couldn’t possibly afford to pay back without the proper information being conveyed to them.
I think it is very interesting that many banks including Grameen Bank will only loan their money to women. The organizations obviously have experience to back up their decision and it is working in India and other areas. I just wonder if this will hinder their ability to loan in regions that do not allow women to participate in the working world. I am sure that they have thought through many of these scenarios. I would be interested to look into where local religious beliefs would force the banks to adapt their strategy to accommodate them.
There should be more information and marketing available to educate the general public about the availability of microfinance loans as a way to contribute to the alleviation of poverty. I would have started to contribute to such loans years ago had I known the full extent of them. I plan on becoming more educated about these loans and sharing it with people that I know. What a great way to put money to good use. I know companies like Kiva.org are non-profit and are already starting to put some marketing out on the internet, but there should be more information out there.
I also appreciated the story in Prahalad’s book about the structure of the bank and how they get the women involved to start groups and learn to manage them. The women in groups of 15 to 20 people learn to manage their loans and depend on each other for help. This teaches the women much more than just managing their business or paying back a loan, it teaches them to work with each other to accomplish a common goal. This teamwork will be used much later on as they develop their small businesses and band together in villages to help others. The pyramid scheme that was developed is really smart and allow these women to grow themselves along with their income.
by: Allison Earnhart
Why microfinance?
The key point to remember is that microcredit is not charity. As the Grameen Bank says, “charity is not an answer to poverty. It only helps poverty to continue. It creates dependency and takes away individual’s initiative to break through the wall of poverty. Unleashing of energy and creativity in each human being is the answer to poverty.” If an individual was considering providing money for a microcredit loan – for instance through kiva.org – they would not be throwing money at a cause without seeing the payoff of their donation. Instead, they would know that their investment was financing the opportunity for an impoverished person or family to help themselves. And, this is our goal.
Poverty is not just a lack of income; it is a lack of access to such things as food, water, shelter, education and healthcare, and it is a lack of dignity. Microcredit provides much needed capital to poor individuals so that they might have the opportunity to build a decent life and gain dignity and self-respect. While there are certainly “ugly sides” to microlending, the benefits associated with microcredit far outweigh the risks and downfalls of the industry.