Every Wednesday we highlight an article, book or a blog in our “What We’re Reading” series. We feature works that are noteworthy, inspiring, educational or relevant to the work we do at Opportunity. We welcome your comments in the comment field below–-tell us what you’re reading, or respond to the piece we’ve highlighted. The following post by Eric Walcott, an intern in our Resource Development department, reflects on two recent articles he read about domestic microfinance, and the lessons learned from the successful expansion and employment of global microfinance. See the original articles posted in The Huffington Post and the website New America Media…
In the midst of an economic crisis in which banks are severely restricting the accessibility of loans and capital, American small business owners and potential entrepreneurs are learning what the poor in developing countries have known for years: Microfinance works. I recently read a couple of articles about the growth of microfinance in the United States. One author wrote: “Too many people still cannot find jobs, the income gap is ever-widening and signs of economic recovery remain sluggish… yet the ‘irrepressibly American’ spirit of can-do entrepreneurs, hardworking small business owners and brave survivors marches on.”
In reading these articles, two pieces of info got my attention. First was the rise in popularity of microfinance in the U.S. Microfinance is most often thought of as “banking for the poor,” but here we see it being used in the country with the world’s biggest economy. Another thing I noticed was that as the author of one article was describing the hard work and perseverance of American entrepreneurs, it sounded just like the descriptions I’ve heard of so many people living in poverty in the developing countries where Opportunity works.
Of course, the truth is that the can-do spirit of entrepreneurs is not an exclusively “American” ideal. It’s global. Now American small business owners, and entrepreneurs around the world, are realizing the potential impact and benefits of microfinance. But entrepreneurs in developing countries have been benefiting from microfinance for years and continue to do so in the face of a difficult economic environment. Even with the global economic struggles, many are able to work their way out of poverty thanks to expanded access to loans, savings, microinsurance and other innovative microfinance solutions.
The impact of microfinance around the world is undeniable and goes beyond simply increasing income and providing savings for people living in poverty. When clients’ income rises, it impacts individuals, families and communities in a number of ways.
Personal and household impact:
- Empowerment of women leads to a higher social status, better education and more independence, which has been found to have a positive impact on the local community as well
- Ability to cope with economic shocks such as death, illness and natural disaster through increased access to savings, insurance and emergency loans
- Better access to education, healthcare, sanitary infrastructure, food security and other basic needs
Local community level:
- Creation of jobs and increased quality of jobs available in the community with an increased number of small businesses
- Higher and more stable income levels make the community more resistant to external economic shocks
- Empowered community members educate and help each other, building a cohesive support system in the community
- Creative entrepreneurship among community members, as well as increased trade with neighboring communities improves the economic base
Opportunity International provides nearly 1.4 million active loans, along with almost 600,000 savings accounts, and over one million microinsurance clients throughout the world. And the need is great. There are over two billion people worldwide who live on $2 per day or less. Opportunity’s microfinance services have an impact on millions of lives, empowering people who are working their way out of poverty, helping them improve their futures.