How microfinance helps boost standard of living

If you can imagine coming home to find that all of your doors of your dream home have been locked and barred, and that you couldn’t get in, then you would be glimpsing an idea of what being extremely poor is often about. And certainly, the prospect of being denied entrance to your own home is much worse than realizing that your partner installed an all-new security setup and that all you needed was to use a voice code to access a locked door.

To understand a micro loan think of it is a security system owned by someone else, but given upon approval to anyone in exchange for interest. Without the gift, the individual’s dream cannot be accessed. In the vision of the Microcredit Summit Campaign, micro credit is a basis for a community of micro lenders and part of a plan to integrate basic health science into the lives of new micro-credit lenders towards alleviating the detriment that poverty has to offer, particularly to the poorest of the world’s people. The dream may however, potentially be accessed.

According to 2006 Nobel Laureate and author Muhammad Yunus, credit ought to be a universal right. Recognizing that no right is valid without thinking, Yunus points out in an April Forbes interview with Morgan Brennan that, “We are selfish at the same time we are selfless people. Selfishness has a business proposition that is our conventional business. Selflessness can also be expressed as a business, a social business, business to change people’s life.”

Understanding micro lending is key to dealing with poverty using a more dynamic approach. Rather than seeing the Ganges river flooded with garbage in a generally dismal scene of dark, unpotable waters associated with poverty, micro lending has been rising only in the recent past. And only now have its successes begun to spread across the map.

Take a moment, if you will, to imagine what it is like to live in a place where you can start a business for as little as $20 but where money itself is scarce for the getting. It is the story of Fatuma Anawari of Kenya who, illiterate in reading or writing because of a family struggle with making ends meet, was denied the childhood opportunity of any further than two years of primary school education.

Today Fatuma pockets $10 per month in profit from her hen egg-laying business, now breeding she hens from chicks and selling them as egg producers. She has become the village’s premier hen breeder. The scarce but real opportunity for a micro loan has conferred a unique beginning for Ms. Anawari as part of a real dream to finance her three children’s education and see that everyone in her family eats daily.

Often micro loan customers return after paying off one loan to apply for another to expand their business in new ways. As Brennan reveals, even persons formerly considered “beggars” are known to repay their micro credit. Moreover, for the institution of Grameen Bank, an expert in the field of micro lending has shown only a 5 percent default rate on such micro-loans.

Milán Tapia had a case to make for using micro credit where she lives in the Dominican Republic. She sought to take in a small number of children when she found a scene of children slightly short of a gang war, teasing each other and ready to fight. By bringing the children in to her home and telling them stories and sharing some food, she was able to get these children to trade scissors, rocks, and knives for paper and pencils. With only a seventh grade educational pedigree, Milán traded her job selling items of cloth for what amounted to current plans to move to a larger building where she can now teach an additional two hundred children. In her own words she describes her plans:

“I have long-term dreams. I want education quality to improve, I want the kids to have better food, I want kids to feel better and be more confident, and to be treated better. I also want all parents to be educated so that they can help their children with their homework. . . .”

On a modest micro loan, Alice Pallewela of Sri Lanka, a bored but industrious housewife with nothing to do and with restricted farming in a former shire, opted for setting up a career in making candy out of locally available materials with no nearby competition. Her husband, a government employee transferred to work in the community of the Ratnapura District Yodagama farming colony, made scarcely enough to satisfy Alice’s lonely new life.

Spending six months to research the local market before making her decision, and certain that one salary would not afford them the sort of life they needed, Alice went to her credit union to negotiate $100 in micro-credit. “The credit union was there for me from the beginning, offering me both technical advice and the credit necessary to build my candy business.”

Now, Alice hires six women who have since taken on managerial responsibilities as partners, and their product is enjoyed in the community as candy of quality. Alice’s own credit union has in fact boomed to enjoy new growth, helping new entrepreneurs as a direct result of her own word-of-mouth efforts.

In a May 14 interview with Associate Editor Victoria Barrett of, Paul Maritz, now a big-time operator of VMWare after a 14-year stint with Microsoft as a “leader and visionary,” recalls how seeing the micro-credit lending community in action made a profound impact on his own life:

“This was tremendously humbling to me. I suddenly realized that here were people who were debating sums of a few dollars, but treating them much more seriously than I treated million-dollar or 10-million-dollar or billion-dollar deals in my life. Because literally, the decisions that they were making there would determine whether their children would eat next week. It also really convinced me that we need to get out of our cocoon, our bubble. We are privileged to live in a very isolated society, where we only see a small slice of reality.”

Accessibility is looking up for people in a state of poverty. The technology has at long last realized certain need and the means to realize its accessibility. Now the poorest people of the world and women in particular may have a new option to consider: Research and building their own business to gain entry in to in demand commercial opportunities.