Microcredit Presentation
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Micro-finance provides small loans and other financial services to low-income individuals who do not have access to traditional banking services. It has helped many people start small businesses and increase their incomes. However, some argue that interest rates on micro-loans are sometimes too high and micro-finance does not address the underlying structural causes of poverty. The document discusses different models of micro-finance organizations and provides examples of how micro-loans have helped individuals and families in developing countries.
Microcredit Presentation
- 1. Micro-Finance Class Break-Down I. Micro-Finance II. Micro-Credit III. Global Agents for Change IV. Business Scenario V. In-Class Blogging
- 2. Why Micro-finance? According to the UNDP Human Development Report (HDR) 2005 only 9 countries (4% of the world’s population) have reduced the wealth gap between rich and poor, whilst 80% of the world’s population have recorded an increase in wealth inequality.
- 3. The 2.5 billion people living on less than $2 a day – 40% of the world’s population – receive only 5% of global income, while 54% of global income goes to the richest 10% of the world’s population.'
- 4. The HDR 2005 cites the unjust global trade regime as a primary cause in increasing global inequality.
- 5. According to the International Forum on Globalization, 52 of the top 100 wealthiest economic entities are corporations as opposed to countries.
- 6. Common Types of Micro-Finance 1) Member-Owned Organizations
- 7. 2) NGOs Solidarity Lending, Village Banking 3) Formal Financial Institutions
- 8. 4) Informal Financial Service Providers Moneyguards, savings collectors, pawnbrokers
- 9. How it Works Solidarity lending is based on groups borrowing collectively and encouraging one another to repay.
- 10. Avoids fixed cost by bundling
- 11. A business model is established
- 12. Banker comes to villages/borrowers
- 13. Repayment schedule is determined by business plan (usually 6-12 months)
- 14. Defaults are handled by village leader of eight solidarity groups
- 15. How it Works Part II A lender is found outside of the community
- 16. Loans are established through peer-to-peer lending Kiva and business profiles
- 17. Not charity, it's about fair access
- 18. 100% delivered to borrowers
- 19. Repayment rate
- 20. Vancity and subsidies & less social capital culture Field partner evaluates business plans in context of community resources, environmental impacts
- 21. A profile is created on the Kiva website
- 23. Success Story Sam Daley-Harris, Microcredit Summit Campaign Director
- 24. "Several years ago two friends of mine were speaking with a group of 40 clients at a micro-bank in South Asia. Impact the bank had had on the husbands of then on-borrowers; not their husbands, but the husbands of women who are not with the bank. The clients said, 'Before we took our loans, our husbands were day-labourers, working for others whenever they could find work. When we took our loans our husbands stopped being day-labourers and worked with us - bicycle rickshaw, husking rice, growing garlic on leased land. This caused a shortage of day-labourers in this area, so the husbands of the non-borrowers who were day-laborers-their wages went up.' That was the impact of this bank on the husbands of the non-borrowers."
- 25. Caveats of Micro-Credit Saving-up vs. saving down
- 26. Where does the money come from?
- 27. Interest rates can be as high as loan sharks
- 28. High risk
- 29. Informal market and labor
- 30. Empirical data
- 32. It's only a loan
- 33. What are they buying with the money?
- 34. Is there a bigger problem?
- 35. A Real Life Loaner Mr. Lucilo Nicolás Calero is 47 years old
- 36. Lives in Ticuantep, Nicaragua
- 37. He and his wife work a business together. They have three children, all old enough to be on their own.
- 38. They plan to open a welding shop that one of their sons
- 39. Mr. Lucilo has been farming for the past 30 years.
- 40. His biggest setback was not having been able to discharge his loan in time because he fell behind in production a bit, due to lack of raw materials needed for a good harvest.
- 41. With this sixth loan, he will buy fertilizer and raw materials to apply to his crops.
- 42. And the Plot Thickens In mid 2008, “Movimiento No Pago”
- 43. supported mostly by farmers with ties to the left-wing party in Nicaragua, has been organizing protests (some violent) and forcing microfinance institution branches to close.
- 44. Fed by the global the economic crisis
- 45. This group has submitted a law to the government to create a moratorium on debt repayment.
- 46. If passed, the law could have a crippling effect on the microfinance industry and banking sector in Nicaragua.
- 47. Kiva, along with 25 other funders from 9 countries, has signed onto a letter to the Nicaraguan government urging a resolution to this situation without enacting a moratorium on debt repayment.
- 48. For more information, please see the following article: http://impreso.elnuevodiario.com.ni/2009/09/24/nacionales/11023
- 49. Riding to Break the Cycle: Annual routes across Europe and North America have raised over $200,000 and engaged thousands of people.
- 50. Education Generation: Beta launched in fall 2008, this program already has funded 130 scholarships and raised over $30,000.
- 51. Young Agents for Change: Funding and ongoing mentorship for young BC social entrepreneurs (12-20)
- 52. The Microcredit Challenge: Campus game
- 57. Bike Rides! Cambodia Trip Inaugural year
- 58. 13 days, 650 km, departs December 28, 2009
- 59. $500 minimum fundraising goal Europe Route Amsterdam to Istanbul (9 weeks, 4000 km, June 19 2010
- 60. $1500 trip fee, $3000 fundraising goal West Coast Tour Vancouver to Tijuana - 3000km, 6 weeks, May 24, 2010
- 61. $1200 trip fee, minimum $3000 fundraising goal Looking for Sag-wagon drivers too!
- 62. Does it make a difference? As far as curing poverty, the solution is multi-faceted
- 63. Perhaps there are bigger fish to fry – capitalism
- 64. But as far as global issues, poverty is the most pressing as environmental issues compound the poor will be marginalized first
- 65. This is the most effective and practical way of solving this major global problem to which there is no answer yet
- 66. But as to whether or not we're chaning anything, at least we're changing ourselves and having fun
- 69. Possible Blog Headings Why Micro-finance Will Change the World
- 70. Alternative Solutions to Global Inequity
- 72. Why Micro-credit is Overrated
- 73. How to Keep Grassroots Organizations Grassroots
- 74. How Micro-credit and the Environmental Movement are related
- 75. Open to ideas!