Microcredit … It Grows

by S. Geraldine Lancaster

At the launch of the UN Year of Microcredit in 2005, the Secretary General Kofi Annan, encapsulated the goals and ideals of microfinancing in his introductory statement.

He declared:

“Let us be clear: microfinance is not charity. It is a way to extend the same rights and services to low income households that are available to everyone else. It is a recognition that poor people are the solution, not the problem. It is a way to build on their ideas, energy and vision. It is a way to grow productive enterprises, and so allow communities to prosper,”

That same year Oikocredit (Sisters of Charity have shares in this church based investment model) held a Sunday Prayer Service, by way of honouring the UN designation. The homolist at the service drew his reflection from Biblical texts related to loans rather than donations given to poor people.

He reflected:

“Making a loan means offering a deal on an equal footing. The recipients are the partners, and not just getting a handout. They receive money, work for it, and pay it back. Anyone who gives credit gives an advance not just in money but above all, in trust. That way they show respect to other people, and restore their often damaged dignity, along with faith in themselves and the possibility of a better future.”

The following facts may enlarge the understanding of Microcredit, established to be an alternative investment/credit way of loaning money to people who could not access money from traditional banking institutions.

Muhammod Yunus, Nobel Peace Prize Laureate, founder of the Grameen Banks in Bangladesh, has been honoured for his success story and the promotion of microcredit throughout the world.

Today there are more than 3000 organizations worldwide providing microcredit loans.

Loans are given to people excluded from the traditional financial structures.

Small loans given to women in the developing world allow them to purchase a chicken to lay eggs to feed the children, then sell some and buy another chicken … and so it grows ….

A loan for a tractor allows a farmer to develop land and provide food and then income … it grows.

A larger loan allows a group of peasant people to develop a Fair Trade Coffee cooperative … it grows.

The 3000 microcredit organizations are structured in different ways to provide loans to individuals and groups. Some organizations are local, others only work with people in the developing world, and some are larger and work internationally. Creativity and need come into play in the formation of the models. However,there is always need to comply with strict regulation.

Most microcredit organizations offer support and personal assistance to the recipients of loans. Skills are imparted and personal relationships are developed. The whole person’s development is a prime consideration. The result is a mutual learning experience … it grows.

It is heartening to highlight the fact that more than 99% of the loans along with the modest interest are repaid. What a day of celebration when that happens!!! What transformation takes place! What about the Biblical trust!

Microcredit Summits bring together the many microfinancing organizations. More than a decade ago the Summit set a goal that by the year 2015 microcredit financing will reach 75-million of the world’s poorest people.

Microcredit organizations are numerous because investors are choosing to put their trust in these alternative,ethical loan structures, placing people before profits, while abandoning the traditional banking system which in many cases, put profits before people.

There is indeed promise and hope that the Summit’s goal for the year 2015 will be reached.

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