Opportunity International


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Opportunity International

  1. 1. Giving the Poor a Working Chance: How Microfinance Transforms the Lives of the Poor Presented By: Peter Thorrington
  2. 2. The Need… • 3 billion people – half the world’s population – live on less than $2 a day • Every day, 25,000 people die of hunger and hunger- related illnesses • 90% of these deaths occur where food is available… but the poor can’t afford to buy it
  3. 3. Poverty IQ : How much of the world population… …is living on $2 per day? 50% (2.8 billion)
  4. 4. Poverty IQ : Can you fill in the numbers? The combined assets of the world’s 3 wealthiest ________ people… = …equals the total annual income of 48 the poorest _____________ nations. (1/4 of world’s countries)
  5. 5. Poverty IQ : How many AIDS orphans in Africa… …do we anticipate by the end of this decade? 25 million.
  6. 6. Poverty IQ : What is the average life expectancy… …in countries in southern Africa? 46 years.
  7. 7. Poverty IQ : Do you think… …that there is currently enough food available in the world to provide every person with a balanced diet? Yes there is! No there is not.
  8. 8. Poverty IQ : According to the World Bank, microfinance could benefit 500 million families worldwide… …How many of these currently have access to microfinance? 10%
  9. 9. Voices of Hope…on Hope, not Hate “I was in Pakistan and I was talking to a farmer and I had heard that he had sent his son to a hate school. “I said, ‘Well, why do you do that? They teach hate about the United States and Western nations.’ “He said… ‘I am kind of embarrassed but I am poor. I have no money. They feed my child, and they give him free school- ing. It’s one less mouth that I have to feed.’” -- Ambassador Tony Hall
  10. 10. Voices of Hope…on Peace and Poverty “People who live in extreme poverty, they constitute breeding ground for violence, for recruitment for violence... unless we improve the quality of life at the very bottom, stable peace will not be ensured.” --Professor Muhammad Yunus Nobel Peace Prize Laureate
  11. 11. Voices of Hope…on Education “In Army intelligence, we believe that people must have an investment in their society to create an orderly civil society. “Economic deprivation and hunger lead to lack of education and illiteracy, which leads to powerlessness and despair and social chaos. Doors open for radical leadership ready to take advantage of people who can be told what to think, because they have not been taught how to think. “Education is the defense of the bullied from the bullies. The prerequisite for a child’s education is the parents’ ability to earn the money needed to send the child to school.” -- Lieutenant General Claudia J. Kennedy, U.S. Army
  12. 12. Voices of Hope… “We will not solve the problem of poverty or global peace or stability unless we change our perception of poor people from the object of charity to the asset on which you build a better world.” -- James Wolfensohn Former World Bank President
  13. 13. Voices of Hope… “It is demonstrated that those people who cater to violence or can be swept into violence are those who are excluded. And the people who are most excluded are those who can’t walk into banks… once they feel a part of [the financial system], then the reason to rebel against the system no longer exists. “One of the wonderful things about microcredit is that it is a first step into that broader world which they obviously want to be part of. It reaches out to poor people. It tells them, ‘I trust you.’ “Microcredit goes way beyond just giving people credit. It gets into the very thing of human solidarity and peace.” --Peruvian Economist Hernando de Soto
  14. 14. Where Does the $295 Billion Go? Unallocated Giving (6.2%) International Affairs (2.5%) Environment/Animals (3.4%) Religion (35.8%) Arts, Culture & Humanities (5.2%) Public/Society Benefit (5.4%) Education (14.8%) Health (8.7%) Foundations (8.3%) Human services (9.7%) Source: AAFRC Trust for Philanthropy/Giving USA 2006
  15. 15. Back into the Area of Least Need… 98% 98% 2% $295 billion $260 billion
  16. 16. Bottom-Up vs. Top-Down… • Where has the money gone? » $2.3 trillion in foreign aid » Economic growth in Africa relatively flat • The poor are the solution to poverty » Business not government/politics » Grassroots or community planning rather than central planning
  17. 17. Hand Up vs. Hand Out… Treat the poor as masters of their lives, not objects of our charity. Conquer poverty with capitalism and the innate human hunger for dignity. Self-sufficiency will flourish.
  18. 18. The Hard Working Poor… • The chronically poor are industrious and have small businesses, but lack working capital • Loan sharks exploit the poor with expensive loans and high interest rates • Microloans make a difference
  19. 19. Entrepreneurs Make the Difference… Microentrepreneurs are the economic heroes of the developing world • Business profits care for children • Support average household of 5 • Employ 60%-70% of the population • Become leaders in their communities
  20. 20. Why Microfinance…? Microfinance Services… Provide: Which result in: • Loans • Increased income • Savings • Security for the future • Insurance • Protection from disaster • Business training • Empowerment • Dignity • Stimulated economy
  21. 21. A Brief History of Microfinance… • 1970s • Prof. Yunus and Grameen • Opportunity International » Al Whittaker and David Bussau • ACCION
  22. 22. Microfinance Today… • The World Bank estimates that there are now more than 7,000 microfinance institutions, serving 16 million poor people in developing countries. • CGAP experts estimate that 500 million households benefit from these small loans. • First commercial bank dedicated solely to microfinance: BancoSol, 1992 (ACCION) • First savings and insurance program: Mid 1990s– Microcredit evolved to microfinance, offering other financial services such as savings and insurance • Grameen Bank and its founder Muhammad Yunus were awarded the Nobel Peace Prize for 2006
  23. 23. Opportunity International… Our Mission is to provide opportunities for people in chronic poverty to transform their lives Our Strategy is to stimulate small businesses, create jobs, and strengthen communities among the poor Our Method is to work through indigenous partner organizations that provide small loans, training, and counsel Our Commitment is motivated by Jesus Christ’s call to serve the poor
  24. 24. The Triple Bottom Line… Opportunity’s “triple bottom line” : OUTREACH » Almost 1 million active loan clients SUSTAINABILITY » Opportunity’s program revenues exceeded expenses in 2006 TRANSFORMATION » Opportunity not only economic, but social and spiritual transformation as well
  26. 26. Sustainable Solution… Opportunity’s Revenue as Percentage of Cost 120% 100% 80% 60% 40% 20% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
  27. 27. Trust Groups Transform Lives… Opportunity’s Trust Group method: • 15 to 40 people guarantee each other’s loans • Small loans ($50 - $300) • Competitive interest rates and fees • Short terms with weekly payments at Trust Group meetings • Trainings cultivate holistic transformation
  28. 28. Loyal Loan Officers… Frontline staff meet the poor everyday • Organizing, training, and monitoring • Example of Target: 400 clients in 10 Trust Groups • Incentives to perform and grow
  29. 29. Client Story… Martha
  30. 30. Focus on Women… 84.13% of all loans go to women “Give a man a fish, he'll eat for a day. Give a woman microcredit and she, her husband, her children and her extended family will eat for a lifetime.” – Bono, The New York Times, September 21, 2005
  31. 31. Focus on Women… • Best clients • 2 out 3 new HIV infections • “Ubuntu” “The most direct way to improve childrens’ survival and welfare is to strengthen their own mothers’ ability to take care of them.”
  32. 32. Building Banks for the Poor… • Opportunity has built 17 commercial microfinance institutions • Building two a year in new countries • By 2010, Opportunity will run 10 microfinance banks in Africa alone
  33. 33. Safe Place to Save… • Saving cash is a struggle for the poor • Opportunity’s deposit-taking banks give the poor a safe place to save • 250,000 regulated, interest- bearing savings accounts
  34. 34. Microinsurance… • “Chutes and Ladders” • 3.2 Million lives insured in 10 countries • Varieties: Life, Livestock, Property, Crop Derivative, Package Policy • In the Works: Health, Direct to Public Products
  35. 35. Innovating for the Poor… • Biometric technology used to create fingerprint embedded identification cards for the poor, called “smart cards” • Gives clients a safe and secure way to make financial transactions
  36. 36. Smart-cards…
  37. 37. Opportunity’s Vision… • Opportunity’s goal is to reach 100 million poor people by 2015 • To reach this goal, Opportunity must mobilize $1 billion by 2012
  38. 38. The Multiplier Effect… $200 $100 GIVEN LOAN FUNDS 98% Capital Mobilization loans repaid $81 3:1 2x rotation $2000 in Bank Development Debt to Equity per year hands of the poor $62 Bank Management $49 Bank Equity
  39. 39. Make an Impact… • Give • Pray • Learn • Share • Work
  40. 40. Any Questions…?
  41. 41. Data Sources… •Campaign Against Poverty: http://www.campaignagainstpoverty.org/id5.html •World Bank: http://www.wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2007/01/22/000104615_2007012410 4753/Original/PNG0Road0Maintenance1PID0FINAL1Jan22107.doc http://worldbank.org/month/2007/05 •Unicef http://www.cfed.org/focus.m?parentid=2&siteid=374&id=378 http://www.globalenvision.org/index.php?fuseaction=library.print&printerfriendly=1&category=4&itemid=1051 http://en.wikipedia.org/wiki/Microcredit#History •Freedom From Hunger: http://www.freedomfromhunger.org/about/faq.php •KIVA: http://www.villagebanking.org/site/c.erKPI2PCIoE/b.2394157/ •Grameen Foundation: www.GrameenFoundation.org •Opportunity International: www.OpportunityInternational.org •World Relief: www.WorldRelief.org •World Vision: www.WorldVision.org •Microned •http://www.microned.org/microned/frequently_asked_questions/microfinance/7_can_poor_people_save •http://www.microned.org/microned/frequently_asked_questions/microfinance/11_is_microcredit_the_magic_c ure_against_poverty