Microfinance: Giving a Chance to the Working Poor
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Microfinance is one of the most powerful vehicles to help the working poor create jobs, opportunity, and to build a sustainable lifestyle. Jason Duff presents for Opportunity International about Microfinance, Microlending, and other tools helping the words entrepreneurs.
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Microfinance: Giving a Chance to the Working Poor
- 1. Presented By: Jason Duff
- 3. 1 billion children live in poverty (this means every second child)(Globalissues.org)
- 4. 25,000 people die daily from starvation and related causes; of these, 90% died where food was available but not affordable (UNICEF)Two young boys in Ghana 2
- 5. the contribution disparity The contribution disparity In millions Source: Giving USA 3
- 6. The wealth disparity The combined assets of the world’s wealthiest 3 people… …equals the total annual income of the poorest 48 nations. Source: ChristianAid 4
- 7. The untapped market What is microfinance? Microfinance is a movement that envisions “a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers.” (-Robert Peck Christen, Richard Rosenberg & VeenaJayadeva; CGAP Occasional Paper, July 2004, pp. 2-3.) Microfinance could benefit 500 million families worldwide, but less than 10% currently have access to microfinance. Malawian farmer JakobChikaiko and his family 5
- 9. These NGO’s turnaround and fund various local banks in developing microfinance countries
- 10. These local banks then hand out loans to ‘trust groups’ or individuals
- 11. Individuals apply these loans towards their businesses to create products
- 12. Products are then sold to consumers
- 13. The income generated through sales to consumers is used for several things:Pay Back of: Interest Loan Capital Savings Other expenses: Home Improvements Education Medicine Food Tanzania Insight Trip, September 2009 6
- 14. Source: http://credit.frontlinesms.com/blog/2009/10/leveraging-technology-for-microfinance/ Modified by: Alex Kerr
- 15. Believe in our clients With microfinance, our clients, like Clementine Uzabakiriho, have the opportunity to eliminate poverty in their lives by building sustainable businesses. When microentrepreneurs are included in the regular financial arena, self-sufficiency flourishes while new wealth is created. Clementine Uzabakiriho from Rwanda with her family 8
- 16. Opportunity’s Products we provide which results in: loans increased income savings security for the future insurance protection from disaster training business skills and personal growth 9
- 17. Loans Loans are the beginning of monumental changes in the lives of our clients. When clients build businesses with Opportunity loans, they often set into motion monumental changes. • Family income rises. • Children are well fed and go to school. • Homes are improved. • Women gain status. For clients around the globe, these transformations take place every day – beginning with loans as small as $60. Client SugeyArmenteo from Colombia 10
- 19. loan amounts as low as $60
- 20. short terms with weekly repayments
- 21. training by loan officers that provides holistic transformation
- 22. training topics that are tailored to the clients’ needs Dorothy Kanjautsowith her Trust Group, named Chilambo, in Malawi 11
- 23. Savings Opportunity’s regulated banks offer our clients a safe place to save. Historically, people living in poverty in most countries have been excluded from traditional banks. Savings were kept in and around homes, or held by collectors who charged service fees. Grace used to keep her savings in her home. Now she and her business partner keep nearly $2,000 in an interest-bearing account with Opportunity. Savings client Grace Msowoya from Malawi 12
- 24. Insurance Insurance offers protection against the many risks faced by those living in poverty. In 2002, Opportunity International began offering microinsurance that provides protection against the many risks faced by those living in poverty. Innovative products cover policyholders with crop, loan, health, life and property insurance – offering clients a safety net when an unexpected hardship or disaster occurs. Weather-indexed crop insurance not only contributes to increased incomes, but helps feed families. Henry Kangwelema picks up seed to bring to his farm in Malawi 13
- 26. teamwork
- 27. problem solving
- 28. health wellness
- 29. communication and more…TamaiaNyasulu, a loan officer in Malawi, training one of her Trust Groups 14
- 31. bank building
- 32. rural outreach
- 33. local staffingA bank card used at Opportunity International Bank of Malawi (OIBM) Customers at Opportunity International Bank of Malawi (OIBM) 15
- 34. Technology One of Opportunity’s mobile banks in Malawi A critical tool in the fight against poverty, advanced technology allows Opportunity to bring services to the most marginalized and remote clients. A client in Malawi with her bank card 16
- 35. Rural Outreach Through innovative technologies and an expanding network of banks, Opportunity is addressing the financial needs of isolated rural communities. Fifty new branches are in development worldwide, bringing economic opportunity to those would not have access without Opportunity. Before Opportunity’s mobile bank came to his small town, Lucas was among the millions of “unbanked”. Rural loan client Lucas Chingore from Mozambique 17
- 36. Giving that multiplies Gifts are leveraged, dollars are recycled, and communities prosper 18
- 37. What we can do Our Responsibility and How We Can Make an Impact Young Ambassadors for Opportunity Women’s Opportunity Networks OptINnow Tanzania Insight Trip, September 2009 19
- 38. Young Ambassadors for Opportunity Young Ambassadors for Opportunity (YAO) is a network of young professionals (ages 20-35) who are committed to eradicating global poverty through the sustainable solution of microfinance. By creating chapters in major metropolitan areas, YAO seeks to foster a grassroots approach which gives members the opportunity to employ their skills and resources in their Ambassador efforts. 20
- 39. Women’s Opportunity Network The Women’s Opportunity Network (WON) is a powerful network of women supporters and staff committed to helping Opportunity International end global poverty faster. The mission of WON is to invest in the lives of women around the world, giving them access to financial services and training that transform their lives, their children’s lives and their communities. 21
- 40. OptINnow OptINnow™ is a new initiative from Opportunity International that enables you to "opt in" and become part of a global movement to transform the lives of entrepreneurs throughout the developing world – right from your computer. 22
Notas del editor
- There is enough food to feed the world. There is enough fabric to clothe the world. There are enough materials to shelter the world. However, all of the world’s provisions are unequally dispersed, leaving half the world’s population living in extreme poverty. Add to that drought, health issues, lack of education and no access to capital and one determines that the need is great. This should break the heart of us all, and move us to find a solution.
- Even though Americans are generous, only a small percent of all charitable dollars goes to international affairs, which includes aid and relief efforts as well as Opportunity’s economic growth initiatives.In 2007, for the first time, charitable giving broke through the $300 billion mark with an adjusted total of $314.07 billion contributed by individuals, foundations and corporations. Only 4.3% or $13.22 billion of those funds went to international affairs organizations. In 2008, charitable giving was estimated at $307 billion, with $13.3 billion going to international affairs. This slightly increased amount is actually a decrease after adjusting for inflation.
- The wealthiest 3 people in the world control more wealth than all 600 million people living in the world’s poorest countries (source: ChristianAid).The income of the wealthiest 25 millionUS citizens is equal to that of almost 2 billionpeople (Encyclopedia of the Developing World, Lennard pg 1310).
- Opportunity International is working hard to close the gap and serve more of those who have the drive and determination to work their way out of poverty. Opportunity serves over 1 million loan clients, over 500,000 savings clients, and 2 million insurance clients. According to the World Bank, microfinance could benefit many more people and families than those being served – 450 million more! The main reason for this gap is lack of access to microfinance, in spite of the hundreds of organizations that offer microfinance services. Opportunity’s outreach expansion efforts will change this.
- Microfinance is effective for poverty elimination because it uses the one asset that exists in abundance in even the poorest and most fragile sectors – people’s self-initiative. It increases the productivity of entrepreneurial activity and creates new wealth instead of depending on the redistribution of existing wealth.
- As a global leader in microfinance, Opportunity International is building a network of scalable, sustainable and accessible banks throughout the developing world. Our banks bring financial services and hope to the most marginalized and remote clients. They help create jobs, stimulate small businesses and strengthen communities among the poor. Our microfinance banks help in the development of an economy by giving low-income people the chance to establish a sustainable means of income. Eventual increases in disposable income will lead to economic development and growth, as well as personal development and growth.
- Sugey and her family escaped armed guerillas and became displaced some years ago. In 2008, she became an Opportunity client. Her business, selling sandals from a cart, has grown and she has repaid her first loan of $109. Her children are well-fed and they attend school. Sugey has renewed hope for her family’s future. When our clients build a business with an Opportunity loan, they often set into motion monumental changes. Family income rises. Children are well fed. Neighbors become employees. Homes are improved. Tuition is within reach. Women, who comprise the largest group of loan recipients, gain status. For Opportunity clients around the globe, these transformations take place every day – beginning with loans as little as $60.
- Opportunity’s interest-bearing savings accounts provide a secure, convenient way for clients to manage money and prepare for a crisis or business opportunity. A few dollars in the bank can buy medicine for a sick child. A new roof can be purchased when money builds up over time. For our clients, savings bring stability and a means to move away from subsistence living.When Grace was keeping profits in her home, she was robbed twice. Now, with money in the bank, Grace and her business partner Betty use their joint savings to rent a truck every other week to purchase potatoes directly from a farmers which they sell to other vendors. They are the first women distributors in Blantyre, Malawi, and have dramatically increased their profits and redefined the place of women in the local market.
- Opportunity’s MicroEnsure is the world’s first and largest microinsurance broker, providing protection against the many risks faced by those living in poverty. Innovative products cover more than a million policyholders with crop, loan, health, life and property insurance—offering a safety net when an unexpected hardship or disaster occurs.For example, weather-indexed crop insurance mitigates the devastating consequences of drought or excess rain. It enables farmers like Henry access to credit for high quality seed and fertilizer. Without the insurance, banks would view agricultural loans as too risky.In the past, Henry lost 2 family members to starvation due to drought.
- AIDS education in Ghana, inventory management in the Philippines, a civil rights module in Colombia, domestic violence awareness in India – Opportunity training runs the gamut of topics pertinent to clients across the globe. Each week as Trust Groups gather to repay their loans, we provide educational sessions to develop business skills and enhance personal growth.
- Cards using biometric technology provide convenient and secure access to finances—even for those who are illiterate or lack formal identification. New technologies in development will use cell phones, and satellite and broadband internet to further increase our reach.With a grant from Omidyar Network, Opportunity has launched an electronic wallet strategy tailored to the needs of Malawi and seven other sub-Saharan countries. Building on existing infrastructure, Opportunity is designing and implementing new electronic and mobile banking technologies to reduce transaction costs for customers and increase the number of people who have access to these critical services.
- Opportunity’s mobile banks make weekly stops within walking distance of the homes of rural entrepreneurs. Before Opportunity, Lucas had little hope of establishing a business. His farm was outside of town and he could not afford the start-up seed and equipment. However, with his first Opportunity loan, Lucas purchased an irrigation pump and his farm is now thriving. His second loan allowed him to diversify into poultry. Access to financial services made the difference for him and he can now provide nutritious food, medical care and education for his family.
- Gifts are leveraged and combined with client savings and commercial borrowings to significantly increase the size of our loan pool. Every $100 donation turns into $187 in available funds. Dollars are recycled as loans are repaid and the money benefits an ever-growing number of clients and their families. Communities prosper as new income is reinvested to grow businesses, employ neighbors and enroll children in school—creating an economic cycle of growth for every dollar contributed.