The Myth of Microloans; A Nobel Peace Prize for Neoliberalism?

On the website CounterPunch there is an article titled "The Myth of Microloans; A Nobel Peace Prize for Neoliberalism?" In this article Alexander Cockburn, a radical political journalist, who criticizes microloans as having outlived their usefulness. Cockburn says that while it was a radical idea in the '70's when it was first introduced it has failed to live up to its promise of changing how first and third world countries relate. Furthermore he compares them to a micro-band aid on a macro-wound.

To prove his case he quotes economist Robert Pollin who says, "Bangladesh and Bolivia are two countries widely recognized for having the most successful micro credit programs in the world. They also remain two of the poorest countries in the world."

He also quotes P. Sainith, author of "Everybody Loves a Good Drought" who says that microlending can be useful but it shouldn't be romanticized or made out to be a transformational activity. Because transformationally speaking, its relatively useless.

Furthermore, Cockburn argues the Nobel Peace Prize is a joke, because at one point Henry Kissinger, father of the atomic bomb, won it. He continues to argue that Mohammed Yunus should not have won the award because the idea that microloans can help is just as ridiculous as linking "Kissinger" with "Peace".

Below is the link to an article ;
http://www.counterpunch.org/cockburn10202006.html

Grameen Foundation- In Depth

Grameen Foundation- Empowering People. Changing Lives. Innovating for the World's Poor.

History-
The Grameen Foundation is a separate foundation from the Grameen Bank. However, the foundation works closely with the bank, and was founded to help speed the impact that microloans can have. It is a baby organization of the bank, and has its roots in the Bank. The bank was founded in 1976 Professor Muhammad Yunus (the founder of Kiva) with $27 from his pocket. He still serves on the board of directors, but the foundation/bank are both entirely owned by the clients.

What Grameen Foundation Does-
The Grameen Foundation is unlike the bank in that it does not actually handle the money. The Grameen Foundation supports microloan institutes (MFI's) in the form of funding, technical assistance, training and new technology. The Foundation helps harness new technology to make the microfinance industry more efficient. They connect MFI's with the capitol market, bringing in new financial resources to the institutes. A major role of the foundation is publicity, they spread the word about the huge amounts of good that can be done through microloans. And finally they promote "social business".

What is Social Business-
In his book, A World Without Poverty, Muhammad Yunus presents two business models which he labels social businesses. A social business is social-objective driven. The first model is created through building or supporting sustainable "non-loss" business enterprises where all of the profits are ploughed back into the company rather than being distributed to shareholders. The second model is profit driven. Instead of the money going back into the business, the business is owned and operated by the poor, who then reap 100% of the benefits.

Where Does Grameen Help-
The Grameen Foundation is making an impact in the following countries-
Bangladesh, Pakistan, India, China, East Timor, Indonesia, The Philippines, Mexico, Honduras, Haiti, El Salvador, Dominican Republic, Bolivia, Egypt, Lebanon, Morocco, Saudi Arabia, Tunisia, Yemen, Cameroon, Ethiopia, Ghana, Nigeria, Rwanda, and Uganda.

For More Information on The Grameen Foundation visit the website below;
http://www.grameenfoundation.org/who_we_are/

Not Just Third World Countries

Below is a link to an article on Reportonbusiness.com about a woman in Canada that benefited from a microloan. When people think of poverty images of shanty towns in Africa, South America, and other developing countries flash in our minds. But there is poverty everywhere.

Marcia Francis worked two jobs and was still having trouble making ends meet. When she received a $5,000 loan she started a health-care service in Toronto. Freedom Support Services offers at-home care for seniors and people with chronic illnesses and disabilities, and last year generated $500,000 dollars and employs around 50 people. Marcia Francis is able to help many many people because she received the help she needed.

It is important for people to remember that there is poverty everywhere, and it can be relieved.

http://www.theglobeandmail.com/servlet/story/RTGAM.20060116.wrmicrocredit16/BNStory/

Namaste Direct- In Depth

What Does Namaste (na'-ma-stay) Mean-
Namaste is a traditional greeting in many parts of the world, especially the East. Derived from Sanskrit, an English translation is “I bow to the divine in you."

What Namaste Direct Does-
Namaste Direct is unique from other microloan programs in that they have a very specific target group. They aim to help women in rural areas of Central America. They say they are "committed to alleviating poverty in the Mayan communities in Guatemala and Mexico by providing microcredit loans, business education, and vocational training to women."

Namaste's History-
In 1973 Bob Graham, a businessman from California visited Guatemala, where he was awestruck by the extreme poverty that its inhabitants endure everyday. A decade later he created the Katalysis Partnership to launch his "50-50 at 50" plan. His plan was that when he turned 50 he would devote 50% of his time and 50% of his resources to helping others. Namaste Direct is the successor program to Katalysis. Katalysis Partnership has expanded into Katalysis Microfinance Network of Central America. This is a regional non-profit organization that involves 13 intermediary credit providers and helps over 180,000 borrowers, totalling over $60 million in loan capitol in four countries.

More Information-
For more information on the programs and services provided by Namaste Direct visit their website at; http://www.namaste-direct.org/

Micro-Insurance

In a previous post micro-insurance was mentioned. I'm going to take a post to discuss what micro-insurance is, and the importance of it.

Micro-insurance is a term coined to describe insurance available to an atypical risk-pool with low premium, caps, and coverage limits. It is designed to help low-income people as well as businesses that are unable to obtain traditional insurance schemes.

Micro-insurance is defined by C. Churchill in his book Protecting the Poor: A Microinsurance Compendium as; "a financial arrangement to protect low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved...micro-insurance does not refer to: (i) the size of the risk-carrier; (ii) the scope of the risk; (iii) the delivery channel: it can be delivered through a variety of different channels, including small community-based schemes, credit unions or other types of microfinance institutions, but also by enormous multinational insurance companies, etc."

What that means is that the size of the person or company obtaining the insurance is irrelevant, while some companies are small and potentially informal, others are larger companies. The size of personal risk is not relevant either. The risks of the investor are in no way small to the investor. To sum it up, Churchill is saying that the insurance provided is on a smaller scale than what large commercial insurance corporation offer.

Not Just Companies

It's not only companies that are getting involved with micro-finance programs, it's also big names. Here is a clip from The View with Natalie Portman. She's talking about FINCA and how it allows her to make a change, and not just be a talking head.



While it is great that companies and celebrities are taking initiative it's still important for everyone to take an interest in the welfare of the world's population.

Companies Get Involved; 2

Many people feel that either big corporations don't care for the poor, or that big company intervention is the only way to create effective change. So here is another article about powerful companies taking an interest in creating positive change.

Reported on the Corporate Social Responsibility News Wire, American Internationl Group (AIG) has donated $1.5 million to FINCA International to help fund their Microinsurance program. AIG is the worlds leader in insurance and financial services. Through their partnership with FINCA, AIG is continuing to provide insurance to the worlds poorest workers.

http://www.csrwire.com/News/8361.html