Microfinance and Global Poverty

Or, the really bad news.

PovertyPoverty Today

The State of Global Poverty80% of humanity lives

on less than $10 a dayAccording to UNICEF:

26,500-30,000 children die each day due to poverty

The GDP (Gross Domestic Product) of the poorest 48 nations is less than the combined wealth of the world's 3 richest people.

Why should we care?If you want to have a world that is at peace with itself, you have to start with poverty. Poverty, I mentioned again last week, is the most powerful weapon of mass destruction. Poverty usually is accompanied by lack of good governments, by oppression, and oppression ends in people feeling humiliated, angered, losing hope and faith. When you lose hope and you lose faith, this is a breeding ground for violence, civil war, interstate wars. When you have conflict that has been raging on for a hundred years, 50 years, 60 years, the temptation to acquire the big stick—which is nuclear weapons, like the major powers—it is very tempting.--Mohamed ElBaradei

Why should we care?Shared povertyIf developing countries

win, everyone wins

How we fix it

Development

Microfinancehttp://www.pbs.org/frontlineworld/stories/u

ganda601/video_index.html

MicrofinanceMicrofinance is the provision of financial services to

the poorThe poor are excluded by financial service providers

because:• No collateral, or credit history• Illiterate

The poor need financial services, so they are forced to:• Borrow money from loan sharks with such high interest rates, that it may be impossible to pay back•Keep their life saving in their home which is vulnerable to theft• Invest in livestock which is vulnerable to disease

The Benefit of Microfinance•Microfinance works to provide the poor with these financial services•Using microfinance institutions that provide safe and controlled financial environments

Give a man a fish, feed him for a day.

Teach a man to fish, feed him for a lifetime.

What if he knows how to fish,but just can’t afford a fishing net?

Why loans rather than charity?Dignified Business

TransactionSpreading

opportunity, rather than charity

SustainableA Hand-up not a

hand-out!Spreading

opportunity rather than spreading wealth

Success StoryStudies have shown that during an eight year

period, among the poorest in Bangladesh with no credit services available, only 4% pulled themselves above the poverty line

But people with access to credit from a microfinance organization, more than 48% rose above the poverty line during those 8 years

The Microcredit Summit Campaign estimates that as of 2006, over 3,100 MFIs were providing financial services to more than 113 million poor people worldwide

General repayment rates of over 95%

What can you do tomorrow?

Action

Kiva and Kiva High School

What is Kiva?http://www.youtube.com/watch?v=GWgAEJ

E1FuM&feature=channel_page

More about KivaKiva is the world’s first

microlending websiteKiva’s mission is to

connect people, through lending, for the sake of alleviating poverty

With Kiva, you can become a micro-lender to people who just need a hand up

Kiva allows real people to make a real difference in the lives of the poor

The Social Network of Microlending

Kiva posts profiles of entrepreneurs in the developing world, and allows you to choose where your money goes.

Creates a personal relationship between the lender and the entrepreneur

What can you do tomorrow?Make a loan!Get involved with Kiva High School

Start a chapter at your schoolHave a Kiva week!

Raise awareness about global povertyRaise funds to invest in entrepreneursStart a Lending Team at your school