Presented By: Peter Thorrington

Giving the Poor aWorking Chance:

How Microfinance Transforms the Lives of the Poor

The Need…

• 3 billion people – half theworld’s population – live onless than $2 a day

• Every day, 25,000 people dieof hunger and hunger-related illnesses

• 90% of these deaths occurwhere food is available…but the poor can’t afford tobuy it

Poverty IQ :

How much of the world population……is living on $2 per day?

50%(2.8 billion)

Poverty IQ :

Can you fill in the numbers?

…equals the total annual income ofthe poorest _____________ nations.

The combined assets of the world’swealthiest ________ people…

=

3

48(1/4 of world’s countries)

Poverty IQ :

How many AIDS orphans in Africa…

…do we anticipate bythe end of this decade?

25 million.

Poverty IQ :

What is the average life expectancy…

…in countries insouthern Africa?

46 years.

Poverty IQ :

Do you think…

…that there is currently enough food availablein the world to provide every person with abalanced diet?

Yes there is! No there is not.

Poverty IQ :

…How many of these currently haveaccess to microfinance?

10%

According to the World Bank, microfinance couldbenefit 500 million families worldwide…

Voices of Hope…on Hope, not Hate

“I was in Pakistan and I was talking to a farmer and I hadheard that he had sent his son to a hate school.

“I said, ‘Well, why do you do that? They teach hate about theUnited States and Western nations.’

“He said… ‘I am kind of embarrassed butI am poor. I have no money. They feedmy child, and they give him free school-ing. It’s one less mouth that I have to feed.’”

-- Ambassador Tony Hall

Voices of Hope…on Peace and Poverty

“People who live in extreme poverty, theyconstitute breeding ground for violence, forrecruitment for violence... unless we improvethe quality of life at the very bottom, stablepeace will not be ensured.”

--Professor Muhammad Yunus Nobel Peace Prize Laureate

“In Army intelligence, we believe that people must have aninvestment in their society to create an orderly civil society.

“Economic deprivation and hunger lead to lack of education andilliteracy, which leads to powerlessness and despair and socialchaos. Doors open for radical leadership ready to take advantage ofpeople who can be told what to think, because they have not beentaught 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

Voices of Hope…on Education

Voices of Hope…

“We will not solve the problem of poverty orglobal peace or stability unless we change ourperception of poor people fromthe object of charity to the asseton which you build a better world.”

-- James Wolfensohn Former World Bank President

Voices of Hope…“It is demonstrated that those people who cater to violence or can be swept into violence are those who areexcluded. 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 systemno longer exists.

“One of the wonderful things about microcredit is that it is a first stepinto that broader world which they obviously want to be part of. Itreaches 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

Where Does the $295 Billion Go?

International Affairs (2.5%)Environment/Animals (3.4%)

Public/Society Benefit (5.4%)

Arts, Culture & Humanities (5.2%)

Unallocated Giving (6.2%)

Foundations (8.3%)

Religion (35.8%)

Education (14.8%)

Health (8.7%)

Human services (9.7%)Source: AAFRC Trust for Philanthropy/Giving USA 2006

Back into the Area of Least Need…

98%

$260 billion

2%

98%

$295 billion

• Where has the money gone?» $2.3 trillion in foreign aid» Economic growth in Africa

relatively flat

• The poor are the solution topoverty» Business not

government/politics» Grassroots or community

planning rather than centralplanning

Bottom-Up vs. Top-Down…

Hand Up vs. Hand Out…

Treat the poor as masters of theirlives, not objects of our charity.

Conquer poverty with capitalism and theinnate human hunger for dignity.

Self-sufficiency will flourish.

The Hard Working Poor…

• The chronically poor areindustrious and have smallbusinesses, but lack workingcapital

• Loan sharks exploit the poorwith expensive loans andhigh interest rates

• Microloans make adifference

Entrepreneurs Make the Difference…

Microentrepreneurs are the economic heroesof the developing world

• Business profits care for children• Support average household of 5• Employ 60%-70% of the

population• Become leaders in their

communities

Why Microfinance…?

Microfinance Services…

Provide:

• Loans• Savings• Insurance• Business training

• Dignity

Which result in:

• Increased income• Security for the future• Protection from disaster• Empowerment

• Stimulated economy

• 1970s• Prof. Yunus and

Grameen• Opportunity International

» Al Whittaker and DavidBussau

• ACCION

A Brief History of Microfinance…

Microfinance Today…

• The World Bank estimates that there are now more than 7,000 microfinanceinstitutions, serving 16 million poor people in developing countries.

• CGAP experts estimate that 500 million households benefit from these smallloans.

• First commercial bank dedicated solely to microfinance: BancoSol, 1992 (ACCION)

• First savings and insurance program: Mid 1990s– Microcredit evolved tomicrofinance, offering other financial services such as savings and insurance

• Grameen Bank and its founder Muhammad Yunus were awarded the Nobel PeacePrize for 2006

Opportunity International…

Our Mission is to provideopportunities for people in chronicpoverty to transform their lives

Our Strategy is to stimulate smallbusinesses, create jobs, andstrengthen communities among thepoor

Our Method is to work throughindigenous partner organizations thatprovide small loans, training, andcounsel

Our Commitment is motivated byJesus Christ’s call to serve the poor

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 spiritualtransformation as well

The Triple Bottom Line…

OUTREACH

SUSTAINABILITY TRANSFORMATION

Sustainable Solution…

0%

20%

40%

60%

80%

100%

120%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Opportunity’s Revenue as Percentage of Cost

Trust Groups Transform Lives…

• 15 to 40 people guarantee each other’s loans• Small loans ($50 - $300)• Competitive interest rates and fees

Opportunity’s Trust Group method:

• Short terms withweekly payments atTrust Group meetings

• Trainings cultivateholistic transformation

Loyal Loan Officers…

Frontline staff meet the pooreveryday

• Organizing, training,and monitoring

• Example of Target:400 clients in 10 TrustGroups

• Incentives to performand grow

Client Story…

Martha

Focus on Women…

84.13% of all loansgo to women

“Give a man a fish, he'll eat for a day. Give a woman microcredit andshe, her husband, her children and her extended family will eat for alifetime.” – Bono, The New York Times, September 21, 2005

Focus on Women…

• Best clients• 2 out 3 new HIV infections• “Ubuntu”

“The most direct way to improve childrens’ survival and welfare is tostrengthen their own mothers’ ability to take care of them.”

Building Banks for the Poor…

• Opportunity has built 17commercial microfinanceinstitutions

• Building two a year innew countries

• By 2010, Opportunity willrun 10 microfinance banksin Africa alone

Safe Place to Save…

• Saving cash is a struggle forthe poor

• Opportunity’s deposit-takingbanks give the poor a safeplace to save

• 250,000 regulated, interest-bearing savings accounts

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

Innovating for the Poor…

• Biometric technology usedto create fingerprintembedded identificationcards for the poor, called“smart cards”

• Gives clients a safe andsecure way to make financialtransactions

Smart-cards…

Opportunity’s Vision…

• Opportunity’s goal is to reach100 million poor people by2015

• To reach this goal,Opportunity must mobilize$1 billion by 2012

The Multiplier Effect…

$100 GIVEN

Capital Mobilization

$81

Bank Development

$62

Bank Management

$49 Bank

Equity

3:1

Debt to Equity

$200

LOAN FUNDS

98% loansrepaid

2x rotation per year

$2000 in

hands of

the poor

$100 GIVEN

Capital Mobilization

$81

Bank Development

$62

Bank Management

$49 Bank

Equity

3:1

Debt to Equity

$200

LOAN FUNDS

98% loansrepaid

2x rotation per year

$2000 in

hands of

the poor

Make an Impact…

• Give• Pray• Learn• Share• Work

Any Questions…?

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_20070124104753/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_cure_against_poverty