Microfinancing: Alleviating Poverty Sustainably
Paul Hawken, in the book Ecology of Commerce, wrote:If you look at the science about what is happening on earth and aren’t pessimistic, you don’t understand data. But if you meet people who are working to restore this earth and the lives of the poor and you aren’t optimistic, you haven’t got a pulse.
With 2015 around the corner, one question dominates—what we are doing to eliminate poverty from this world? This is a world of challenges, but these challenges can also present opportunities, especially if they kindle a new spirit of innovation, mutual respect, and mutual benefit.
The spectacular growth of the microfinance industry has been fueled not by market forces but by conscious actions of national governments, non-profit organizations (NGOs), and companies who view microfinance as an effective economic tool for alleviating poverty. Since much of the impetus behind this increasing support for microfinance hinges on the assumption that its economic and social impacts are significant, it needs to be examined more closely from a sustainability point of view. After all, socio-economic impact is the one of the key considerations for any conversation or business strategy focused on sustainability.
UPS Partnership with Opportunity International
UPS is the world’s largest package delivery company and a global leader in supply chain and freight services. As part of their CSR efforts, the company launched the UPS Foundation. The foundation focuses on helping underserved communities through economic literacy programs, and supports emerging entrepreneurs through grants to innovative micro enterprise organizations, like Opportunity International.
Opportunity International provides microfinance loans, savings, insurance and training to over 5 million people working their way out of poverty in the developing world. Over the past five years, UPS has contributed $945,000 to Opportunity International to support microfinance work in India. Through this partnership, more than 1,600 new clients have received loans—averaging $136 for the first loan—and accompanying counsel, benefiting nearly 7,000 people. In 2011, The UPS Foundation also supported the provision of 1,134 school fee loans that helps bring education within reach for children in struggling communities. India is home to at least 1/3rd of the world’s poor, and education is the most rational step towards alleviating poverty.
Use of technology for microfinancing
As part of its corporate social responsibility efforts, SAP AG has teamed up with PlaNet Finance to play a role in assisting microfinance organizations with technology software. SAP has made a commitment to provide financial, software, and expert assistance to PlaNet Finance, a leading international non-profit organization that offers support services to microfinance institutions (MFIs). Based in Paris, PlaNet Finance’s international network holds activities in close to 80 countries around the world and benefits more than 8 million people. By leveraging new technology, SAP and PlaNet Finance plan to improve the existing microfinance offering through better access to education and skills training for more people in need worldwide.
Social Innovation —No Longer a Myth
According to the World Bank, five hundred million people living in poverty could benefit from a small business loan and only 1/3rd of the world’s population has access to any kind of bank account. The combination of economic value created by successfully established businesses is only one side of the critical socio-economic equation. On its own, microfinance cannot alleviate poverty, but it can be an effective part of the solution if implemented well and accompanied by other social empowerment measures.
If successfully established businesses direct some of their CSR budgets towards microfinancing activities, they could effectively empower the lower segments of society financially, thereby leveraging the creative and entrepreneurial capacity of the poor. In short, coupling microfinancing activities with CSR programs may provide “win-win” opportunities that should not be missed.
Leave your comment below, or reply to others.
Please note that this comment section is for thoughtful, on-topic discussions. Admin approval is required for all comments. Your comment may be edited if it contains grammatical errors. Low effort, self-promotional, or impolite comments will be deleted.
Read more from MeetingoftheMinds.org
Spotlighting innovations in urban sustainability and connected technology
Since historically marginalized communities are already being disproportionally impacted by the COVID-19 pandemic, I am frustrated to see these communities also negatively impacted by the lack of on-the-ground public engagement. While I realize the threat of COVID-19 and the associated restrictions make conducting on-the-ground public engagement challenging, I want to encourage fellow planners to think more creatively. I will admit that I struggled to think creatively when I first heard that Clackamas Community College (CCC) would continue having mostly online classes in Spring Term 2021. CCC has had mostly online classes since the end of Winter Term 2020 when COVID-19 first started impacting Oregon. CCC’s decision about Spring Term 2021 became more stressful when Clackamas County staff told me that public outreach for their new shuttles could not be delayed until next summer.
A new toolkit has been developed to help businesses think through strategies to decrease mobility barriers to the workplace, which reduces turnover. When workers can reliably get to work regardless of their personal circumstances, it provides employment stability and the opportunity to build wealth. It’s a win-win. Developed through a partnership between Metropolitan Planning Council and a pro bono Boston Consulting Group team, the toolkit includes slide decks, an overview report, customizable templates, a cost calculator, and instructional videos walking a company through the thought process of establishing a baseline situation, evaluating and selecting a solution, and standing up a program.
Depending on the employer’s location and employees’ needs, solutions may range from helping with last-mile transportation to the transit system, to developing on-demand vanpools, to establishing in-house carpool matching systems. The ROI calculator gives employers the ability to determine the break-even cost—the subsidy amount a company can manage without hurting the bottom line.
Housing that is affordable to low-income residents is often substandard and suffering from deferred maintenance, exposing residents to poor air quality and high energy bills. This situation can exacerbate asthma and other respiratory health issues, and siphon scarce dollars from higher value items like more nutritious food, health care, or education. Providing safe, decent, affordable, and healthy housing is one way to address historic inequities in community investment. Engaging with affordable housing and other types of community benefit projects is an important first step toward fully integrating equity into the green building process. In creating a framework for going deeper on equity, our new book, the Blueprint for Affordable Housing (Island Press 2020), starts with the Convention on Human Rights and the fundamental right to housing.