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Microcredit Presentation


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Microcredit Presentation

  1. 1. Micro-Finance <ul>Class Break-Down I. Micro-Finance II. Micro-Credit III. Global Agents for Change IV. Business Scenario V. In-Class Blogging </ul>
  2. 2. Why Micro-finance? <ul><li>According to the UNDP Human Development Report (HDR) 2005 only 9 countries (4% of the world’s population) have reduced the wealth gap between rich and poor, whilst 80% of the world’s population have recorded an increase in wealth inequality.
  3. 3. The 2.5 billion people living on less than $2 a day – 40% of the world’s population – receive only 5% of global income, while 54% of global income goes to the richest 10% of the world’s population.'
  4. 4. The HDR 2005 cites the unjust global trade regime as a primary cause in increasing global inequality.
  5. 5. According to the International Forum on Globalization, 52 of the top 100 wealthiest economic entities are corporations as opposed to countries. </li></ul>
  6. 6. Common Types of Micro-Finance <ul><li>1) Member-Owned Organizations
  7. 7. 2) NGOs </li><ul><li>Solidarity Lending, Village Banking </li></ul><li>3) Formal Financial Institutions
  8. 8. 4) Informal Financial Service Providers </li><ul><li>Moneyguards, savings collectors, pawnbrokers </li></ul></ul>
  9. 9. How it Works <ul><li>Solidarity lending is based on groups borrowing collectively and encouraging one another to repay.
  10. 10. Avoids fixed cost by bundling
  11. 11. A business model is established
  12. 12. Banker comes to villages/borrowers
  13. 13. Repayment schedule is determined by business plan (usually 6-12 months)
  14. 14. Defaults are handled by village leader of eight solidarity groups </li></ul>
  15. 15. How it Works Part II <ul><li>A lender is found outside of the community
  16. 16. Loans are established through peer-to-peer lending </li><ul><li>Kiva and business profiles
  17. 17. Not charity, it's about fair access
  18. 18. 100% delivered to borrowers
  19. 19. Repayment rate
  20. 20. Vancity and subsidies & less social capital culture </li></ul><li>Field partner evaluates business plans in context of community resources, environmental impacts
  21. 21. A profile is created on the Kiva website
  22. 22. </li></ul>
  23. 23. Success Story <ul><li>Sam Daley-Harris, Microcredit Summit Campaign Director
  24. 24. &quot;Several years ago two friends of mine were speaking with a group of 40 clients at a micro-bank in South Asia. Impact the bank had had on the husbands of then on-borrowers; not their husbands, but the husbands of women who are not with the bank. The clients said, 'Before we took our loans, our husbands were day-labourers, working for others whenever they could find work. When we took our loans our husbands stopped being day-labourers and worked with us - bicycle rickshaw, husking rice, growing garlic on leased land. This caused a shortage of day-labourers in this area, so the husbands of the non-borrowers who were day-laborers-their wages went up.' That was the impact of this bank on the husbands of the non-borrowers.&quot; </li></ul>
  25. 25. Caveats of Micro-Credit <ul><li>Saving-up vs. saving down
  26. 26. Where does the money come from?
  27. 27. Interest rates can be as high as loan sharks
  28. 28. High risk
  29. 29. Informal market and labor
  30. 30. Empirical data
  31. 31. Nothing without education
  32. 32. It's only a loan
  33. 33. What are they buying with the money?
  34. 34. Is there a bigger problem? </li></ul>
  35. 35. A Real Life Loaner <ul><li>Mr. Lucilo Nicolás Calero is 47 years old
  36. 36. Lives in Ticuantep, Nicaragua
  37. 37. He and his wife work a business together. They have three children, all old enough to be on their own.
  38. 38. They plan to open a welding shop that one of their sons
  39. 39. Mr. Lucilo has been farming for the past 30 years.
  40. 40. His biggest setback was not having been able to discharge his loan in time because he fell behind in production a bit, due to lack of raw materials needed for a good harvest.
  41. 41. With this sixth loan, he will buy fertilizer and raw materials to apply to his crops. </li></ul>
  42. 42. <ul>And the Plot Thickens </ul><ul><li>In mid 2008, “Movimiento No Pago”
  43. 43. supported mostly by farmers with ties to the left-wing party in Nicaragua, has been organizing protests (some violent) and forcing microfinance institution branches to close.
  44. 44. Fed by the global the economic crisis
  45. 45. This group has submitted a law to the government to create a moratorium on debt repayment.
  46. 46. If passed, the law could have a crippling effect on the microfinance industry and banking sector in Nicaragua.
  47. 47. Kiva, along with 25 other funders from 9 countries, has signed onto a letter to the Nicaraguan government urging a resolution to this situation without enacting a moratorium on debt repayment.
  48. 48. For more information, please see the following article: </li></ul>
  49. 49. <ul><li>Riding to Break the Cycle: Annual routes across Europe and North America have raised over $200,000 and engaged thousands of people.
  50. 50. Education Generation: Beta launched in fall 2008, this program already has funded 130 scholarships and raised over $30,000.
  51. 51. Young Agents for Change: Funding and ongoing mentorship for young BC social entrepreneurs (12-20)
  52. 52. The Microcredit Challenge: Campus game </li></ul>
  53. 57. Bike Rides! <ul><li>Cambodia Trip </li><ul><li>Inaugural year
  54. 58. 13 days, 650 km, departs December 28, 2009
  55. 59. $500 minimum fundraising goal </li></ul><li>Europe Route </li><ul><li>Amsterdam to Istanbul (9 weeks, 4000 km, June 19 2010
  56. 60. $1500 trip fee, $3000 fundraising goal </li></ul><li>West Coast Tour </li><ul><li>Vancouver to Tijuana - 3000km, 6 weeks, May 24, 2010
  57. 61. $1200 trip fee, minimum $3000 fundraising goal </li></ul></ul>Looking for Sag-wagon drivers too!
  58. 62. Does it make a difference? <ul><li>As far as curing poverty, the solution is multi-faceted
  59. 63. Perhaps there are bigger fish to fry – capitalism
  60. 64. But as far as global issues, poverty is the most pressing as environmental issues compound the poor will be marginalized first
  61. 65. This is the most effective and practical way of solving this major global problem to which there is no answer yet
  62. 66. But as to whether or not we're chaning anything, at least we're changing ourselves and having fun </li></ul>
  63. 69. Possible Blog Headings <ul><li>Why Micro-finance Will Change the World
  64. 70. Alternative Solutions to Global Inequity
  65. 71. Why Micro-credit Rocks
  66. 72. Why Micro-credit is Overrated
  67. 73. How to Keep Grassroots Organizations Grassroots
  68. 74. How Micro-credit and the Environmental Movement are related
  69. 75. Open to ideas! </li></ul>