Why I Believe in Microfinance
April 23, 2018
Around the world, there are thousands upon thousands of charities doing wonderful work for worthy causes. There is never a shortage of need. In almost every community, both local and global, there is work that needs to be done. However, because of the ubiquity of need, there also tend to be similarities between the way many of these fine organizations operate. I believe in microfinance because not only does it deviate from that norm, but it creates a different type of success as well.
First off, the characteristic that I found to be the most different was the ricochet effect that a single microfinance loan seemed to have in a community. When one business begins to prosper from a successful loan, they have more capital to spread into the area by purchasing goods through other stores or merchants. In this case, economic growth is not only observed by the loanee, but by all of the people that they interact with as well. In addition, Wisconsin Microfinance implements the use of a loan pool as a manner to dispense the donations. The loan pool functions in this way: Once a loan is repaid, it is immediately returned in full to the pool where is it redistributed to another entrepreneur in the community. Without the infusion of any additional funds. Therefore, a single loan becomes a self-sustaining community betterment fund, available to everyone and a rare source of affordable capital in some areas. Few other non-profit sectors can do so much with just a single donation and rarely ever have the same longevity and duration as a microfinance loan.
Another facet of microfinance I greatly appreciate is its role in mitigating damages in post-disaster zones. The need for safe, reliable capital is most during times of rebuilding when infrastructure and reliable financial services are not always available. Especially once the headlines have faded and the dust has settled, microfinance becomes a vital component in helping affected peoples return to normalcy. With small sums of money providing stability, families can afford to keep their children in school or take time out for necessary medical leave, both of which would be extremely difficult without some sort of safety net.
In addition, microfinance also places a strong emphasis on the empowerment of women. Globally, more than one billion women do not have access to capital. That means that almost a third of all women around the world cannot start a savings account, cannot take out a loan to become a business owner, and cannot become a part of the global economy. It is a fact that women disproportionately bear the burden of poverty, and it is also a fact that over 80% of all microloans are given to women. According to microfinance founder Muhammed Yunus, women are more likely to devote the money solely to grow a business or further their children’s education. When women are given access to capital and are allowed to grow and build, they become financially empowered, and with financial empowerment comes a new sense of autonomy and ability.
Microfinance is not a be all, end all solution. However, what it is, is different. Supporting any cause creates an intimate connection between person and place, and there are so many channels with which one can put their energy. In this instance, the more I learned about the microfinance process, the more I realized the beauty of its unique hallmarks of sustainability and financial equality. It’s not charity. It’s empowerment.