SPECIAL REPORTS

Credit to the poor

Micro-finance used a tool for empowerment to the most impoverished

Extreme poverty plagues places like Haiti and countries throughout the world. People are living on less than $2 a day and without the pleasantries of water and electricity. The hope is that through small loans to people with business ideas, those in these conditions can rise up to better conditions. Micro-finance is that strategy. © Clemson Saint-fleur 2012

Tataille Andremene poses with her family in front of her tent in the tent city of Capvva just outside of Haiti's Cite Soleil. She desires a small loan to help her make clothes. © Clemson Saint-fleur 2012

Imagine living on a dollar a day, unable to do basic tasks such as send your children to school or provide your family with a nutritious diet. Imagine being part of a family forced to live in tiny shacks with their entire extended family, with little to no plumbing and minimal abilities to sustain hygiene.

These are some of the conditions that many people all over the world face every day.

The conditions of the poor can be dire, but there is a solution in the development field that is offering hope to those living in these conditions.

It is not a “one-stop” solution but finance to the poor—called micro-credit—is allowing people to bring ideas to the marketplace and get their lives back on track using profits from the businesses they’ve chosen to start. From selling clothes to staple goods like rice, small loans can help the poor buy initial goods or increase capacity so that they can join others in the market, one of the most bustling economic centers for the poor.

“Micro loans help lift people out of poverty by allowing them to create income for themselves,” said Laura Ross, director of microfinance for Poverty Resolutions, a non-profit that provides loans to the poor in Haiti. “The loans are used to start businesses that can then provide income both to repay the loan and to improve standards of living.”

According to Ross, micro loans are different from just giving aid because they empower the poor instead of offering a hand out.

“Aid is ultimately used and gone,” but a micro loan, once it’s repaid, “can be recycled from one client to another.”

The concept of a micro loan was first put into practice in 1976 by Professor Muhammad Yunus, who had been head of the Rural Economics Program at the University of Chittagong in Bangladesh at the time. In doing his research in a rural village called Jobra, Yunus saw a need for some basket weavers to have capital in order to attain supplies they needed. He would go on to hand out $27 of his personal finances to 40 villagers. He was repaid in full by each of them and the small bit of generosity helped tremendously in getting their businesses going. After this experiment in lending to those villagers, Professor Yunus set out to design a credit system in which banking services would be available to the rural poor. He founded the Grameen Bank, meaning “rural” or “village” in Bangla, which now have more than eight million clients and is replicated model throughout the world.

Micro loans are usually anywhere from $50-$500. Interest and allotted time for repayment varies. Micro-finance institutions keep interest low—as low as 2 percent if at all—to allow borrowers a better opportunity to pay back. Due to the nature of the poverty situation borrowers are in, collateral is not required of borrowers for these loans. Loans are targeted at those that have business and need capital to get those ideas moving. According to Grameen Bank, In areas such as Bangladesh, India and Indonesia 50 percent to 90 percent of micro loan clients are no longer living in poverty and have a repayment of 95 percent. World wide 9.4 million people have been helped by micro loans.

Join The Journey, a Christian non-profit dedicated to equipping the poor, is working closely with Poverty Resolutions to provide micro loans to Capvva, a small tent village located just outside of Haiti’s Cite Solieil. The goal is to provide micro loans to groups of five people. Loans will be given out individually but each person in the group is jointly accountable for the repayment: if one member doesn’t pay, the others have to compensative for that member. The purpose of this is to encourage motivation to work together so that they can both achieve their personal goals as well as share in the work to get to those goals.

Join the Journey’s goal is to prepare individuals who were business owners before the earthquake, but presently do not have the means to start up a business, said Roland Temah, micro loan project manager for Join the Journey.

Temah is confident that the work will impact the people in the present and the eternal.

“Reading the comments from the people [as part of pre-loan surveys], I do think the Lord is at work in Capvva,” said Temah. “We are continuously praying that everyone in Capvva would join us in preserving the legacy that Jesus Christ kept 2000 years ago by dying on the Cross for our sins.”

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For more information on Join the Journey’s micro-loan program, please contact Roland Temah at roland@jointhejourney.cc.