Microfinancing: The Key To Reducing Poverty

Everyone is aware we are in for some hard economic times ahead. Businesses are closing, employees are being laid-off and the federal government has been in a non-stop debate over various bail-out plans. While we in the United States and other developing countries are shocked by this sudden economic recession, people across the world have been living in a permanent depression, with many surviving off as little as one dollar per day. There are thousands of organizations attempting to lift Africa out of poverty by donating money, food or political support, and while these intentions are good, they are not solving the problem in the long-term. Perusing the internet this past week, I found many blogs and articles discussing microfinancing, a concept I believe is one of the best solutions to ending this extreme lack of capital. In general, it involves loaning small amounts of money to people, usually women, who want to start or improve a small business. Muhammad Yunus, a Bangladeshi banker and economist, brought the idea of microcrediting to the world's attention after he founded Grameen Bank, (pictured to the right), which provides this type of financial support to people in need. Poor women, who often do not have a source of income due to lack of education or capital to start a business, and who are therefore unable to apply for a normal bank loan as they do not have an account or credit history, are candidates to receive small loans of $15-75 dollars as long as they have an existing business, or ideas for an intended one. The money is used to buy supplies for their trade, which most commonly involves the selling of groceries or hand-made crafts such as bowls, blankets, clothes or accessories, as illustrated by the picture below of a woman who used her loan for a clothing business. Recipients of microfinancing are expected to repay the loan with a small interest rate. This is an impressive and ingeniously simple concept for two reasons. First, women hardly default of their loans, and secondly, the interest can be used toward a loan to another small-business owner, making the program almost self-sufficient. It is my opinion that microlending is one of the most successful ways to afford people the opportunity to lift themselves out of poverty and make a long-term change in their lives. In my search of the internet, I found two other bloggers who also felt strongly about this topic, and enjoyed reading what they had to say as well as commenting on their posts. Laura Mehes, a volunteer for the nonprofit Apoolo Na Angor, promotes and explains her Ugandan microlending project in her blog, Lau, while Robin, author of Direct From Dakar, is currently traveling around Senegal to study first-hand the "impact of small loans on financial development" in the country. Robin's blog discusses what she hopes to find and how she plans to conduct her research. I left a comment of my thoughts, questions and opinions on each of their blogs but included them below for convenience. It will be interesting to see where the microcredit industry takes Laura, Robin and the world in the future.



Lau: Financing Microfinance

Hi Laura,

I came across your travel blog while researching microlending and felt compelled to comment. It was interesting to learn that Apoolo Na Angor, a group I was not familiar with, is a "completely self-sustaining, volunteer-run organization," and is developing a microfinancing program that will also be self-sufficient and able to "regenerate the funds needed...while simultaneously improving the lives of rural women." In my opinion this is a very effective way to help those in poverty since it provides the skills needed to build a better life in the long-term. In other words, it is the idea of "teaching one to fish, rather than giving one a fish." I found it especially intriguing that ANA's microlending project is made up of "cells" of thirty-five women and sub-groups of five, with loans made only to women in sub-groups so that they "can support one and other in their income generating activities, as well as build a support system in case of defaults on loans." You also mention that because of these groups, "they can pressure each other to make payments and also help each other make payments if one of the group members is struggling." I think the idea of teaming people up to increase accountability is good, however, I have questions about how it works in reality. For example, if one woman does not make a payment, why will the rest of her group members pressure her to do so? Is it resting on the belief that people will do so because it is the right thing to do, or is there a punishment for the whole group if one falls behind in payments? Since no consequence is mentioned, it seems as though it functions on "peer pressure," which I'm not sure would be entirely effective. Also, when women repay their loan with interest you note that they must contribute part of their profits to the group account as well. It seems to me that those in this program are expected to repay a lot (the loan, interest and contribution) when most microfinancing organizations only require a payment on the loan plus interest. What percent of their profit must they return to this group account? And what if they cannot afford this additional expense? Despite my questions, I admire the thought behind this approach, and understand and appreciate that the interest and contribution make this program completely self-sustaining and ever growing, though am uncertain how groups will truly account for each other and afford the extra contribution payment. In all, I think microlending is a wonderful way to really change people's lives and wish you luck with your project. I look forward to hearing from you at my blog, www.devonvdemars.blogspot.com.

Direct From Dakar: Microfinance in Senegal and a Long Technical Blog Entry

Hi Robin,

It appears you have an exciting and challenging task ahead of you! I also am researching how the microcredit industry works, though unlike you I will have to base my information on only secondary research. It will be interesting to see what you discover while out in the field! Although you plan on learning how microfinancing "impacts women's financial and social situation in rural Senegal" as well as their communities and gender roles, I was wondering what your thoughts are on these topics before beginning the study? I would like to know if you have a hypothesis or certain expectation, as it can make final results fascinating when they prove your supposition true or false. To give you my own opinion on those topics, I strongly believe that microlending can significantly impact a female’s financial and social situation over time because with her own capital she can be independent, which I believe is vital to improving her overall condition. With independence, she does not need to stay with a man who mistreats her or her children, can demand rights or an education and will eventually achieve more power and status in society. In time, females may attain equality. Some argue that women’s empowerment in Africa should be achieved diplomatically by applying international pressure or requesting governmental action, however much has shown that even where males and females are given equal rights under a nation’s constitution, it is not always practiced in reality. It is my belief that programs providing educational, vocational and financial opportunities to women will be the most successful way to truly improve the lives of women and their communities. To that end, I expect your research will find that communities as a whole benefit from this gendered-microfinancing. Women are often the backbone of the African community, and when they are better off, the whole community is better off. For more information on how a whole village can be positively affected, I suggest looking at www.Camfed.org. How powerful do you imagine this lending scheme will be in changing the situation of women? And do you think this will be one of the best ways to help solve poverty, or just one of many ways? I am eager to hear your current thoughts and opinions as well as your future findings. You can reach me at www.devonvdemars.blogpsot.com with questions or comments. Good luck with your study!

A Common Cause: Online Exploration Regarding the African Condition

Though my past entries have been written with the intent to inform and promote discussion on topics pertaining to women in Africa, this week's entry is instead a collection of respectable Web sites and blogs I have found helpful for enhancing my own research and for providing quality links of interest to my readers. Using the criteria set forth by Webby and IMSA, I evaluated twenty sites that are not only about African women, but also about the continent's general news, gender issues around the world, human rights and international humanitarian organizations. The links can be found in my Linkroll to the right, as well as below where I've evaluated each Web site or blog.

The first three of my selection deal exclusively with female issues in Africa. Gender and Women's Studies for Africa's Transformation is a suitable site for those looking for in-depth backgrounds on African feminist thinkers and a vast amount of related scholarly essays, though some links lead to blank pages and there is little to no interactivity; an important criterion of Webby. On the other hand, Feminist Africa encourages interactivity as the online journal "provides a forum for progressive, cutting-edge gender research and dialogue focused on the continent" and asks for reader responses and contributions to past and future issues. The journal also offers a strong selection of information in each online issue, however with its severe lack of visuals or graphics it is boring to the eye. Lastly, the Association of African Women Scholars suffers from a need for updated material in the AAWS page that describes the organization (for example, the newsletter is from 1998!) but otherwise information is neatly arranged in categories such as health and human rights, women, literature and youth that each supply a multitude of easy-to-access resources.

A few online African news sources I found useful are the Sub-Saharan Informer, (its main page shown to the right), Pambazuka News and All Africa. Strong in content, the Sub-Saharan Informer presents the reader with several articles on a variety of topics, however the design is unappealing with miniature summaries of each report covering the main page and there are very little pictures to supplement them. The few images that do exist are weak and too small, which is similar to Pambazuka News, a Web site with zero visuals though it also has good content with stories on every subject a person could think of; from elections and governance, to LGBTI, environment, corruption and technology just to name a few. All Africa gets high marks in functionality for its convenient links to other sites, but because it has advertisements surrounding every side of the page, the appearance is cluttered and it is hard to distinguish between which links lead to ads or articles.

Additional sources of news may be found in online magazines or blogs, such as Africa Renewal, a magazine that "provides up-to-date information and analysis of the major economic and development challenges facing Africa today" though it is created by the United Nations' Department of Public Information and therefore includes public relations pieces such as press and news releases, media advisories and links to other UN programs. The visual design, structure and navigation are wonderful but there is nothing that engages the reader to interact with the site. When gathering research through blogs, one must employ a critical eye as many blogs have an agenda or may appear as a news site at first glance. Africa News does just this, as it can be easily mistaken for a news page. It does not disclose information about the blogger, which is an important criterion of IMSA, although it does offer a link to almost every African country for more information and is actively posting current articles. In contrast, the PoliGazette, which writes about current events in Africa, makes it very clear who the blogger and editorial staff is, but could benefit from more frequent posts. Two very academic blogs are ODI Blog and Concerned Africa Scholars. The ODI Blog (Overseas Development Institute) is made up of extremely in-depth and knowledgeable posts with topics ranging from health, economics and international aid, and although it is meant to be scholarly, it would be helpful to the reader to include more images and graphics to make the reports less daunting and to enhance understanding of the concepts. Quite the opposite and enjoyable for its visually supportive design as well as its up-to-date collection of research, Concerned Africa Scholars is frustrating when links do not lead to the whole story, but rather a small section. A small criticism, because readers can eventually find the complete report by then scrolling down and clicking "read more", but the blog would be more easily navigable and appealing if links went directly to the entire story the first time.

Facts and statistics may be useful for some looking for more direct and succinct information. In those cases, recent census statistics (in areas such as population, women and men in families, health, education, work and political decision making) for different continents and countries can be found at WIDNET (Women in Development Network). Besides being a valuable source for numbers, the site is very functional but it lacks in appearance and interactivity. Africa Development Indicators (ADI) is another similar resource created by the World Bank that has more than one-thousand indicators on fifty-three African countries. The indicators focus more on developmental goals, for example infrastructure, disease and agriculture rather than census information. A good amount of information can be downloaded, but other important documents cannot be accessed online and must be purchased, which is unfortunate. To find summaries of African charters and systems, explore the Institute for Human Rights and Development in Africa Web site. While the site is not appreciated for its aesthetics (it is not attractively designed and some pages are left blank) it has easy-to-follow explanations of legal issues surrounding the African Union, the rights of the child and much more.

The last six of my selections are sites of international humanitarian funds, organizations or non-profits. UNIFEM (United Nations Developing Fund for Women) and Women Watch (United Nations Inter-Agency Network on Women and Gender Equality) both have beautiful presented pages, (though the latter may be a bit wordy,) and both are rich in content and demand the visitors interactivity. Nevertheless, UNIFEM's fact sheets are complicated and not "reader friendly" as they should be to invite people's interest to the cause, and Women Watch could be improved by cleaning up the page so it isn't quite as busy. USAID: Sub-Saharan Africa gives a good overview of the United States foreign assistance with links to budget, initiatives, success stories, FAQs, related documents and recent updates in a visually pleasing and easily navigable format, but it doesn't provide a very transparent budget analysis. A budget for each country is accessible, though there is no study of what is or is not working and what should be done monetarily to improve the programs in the future -- something many taxpayers like to see. The Carter Center, a non-profit founded by Nobel Peace Prize winner and former President Jimmy Carter that promotes peace and health around the world, has an interactive-encouraging Web site that is also well designed and easy for the visitor to follow. It is hard to critique this site, though a small complaint is that otherwise "hard" information such as the analysis of the Carter Center's projects and budgets appears to be written as a public relations piece with more fluff and photos than a more sincere, concise and informative report. It was also difficult to find fault in Camfed's Web site (Campaign for Female Education) which is creative and unique with its quick introductory video for those who are new to the organization. Many sites do not make use of videos, which can be extremely user-friendly and an interesting medium to discuss information. If anything, Camfed's Web page could include a stronger news and press release section with more frequent updates that catch reader and media attention -- an important factor for many non-profits. On the other hand, it is easy to critique the loud orange and black color scheme of CARE which is a bit jarring, and contributes to an overall feeling of disorder when combined with the multiple links. The picture shown above, to the left, is nice when is separated from the rest of the halloween-looking page. But to it's credit, CARE's Web site insists that you become involved by giving upfront options on how to donate or spread the word, and suggests that you engage in the organization's blog.