Articles on Micro Finance Aid heavily urge corporate Australia to help fight global poverty by offering Micro-Enterprise Development (MED) as a working solution.
The provision of small business loans, training, mentoring and support to people aspiring to establish a small business in developing countries, is recognized by the UN and World Bank as a sound strategy to combat poverty. UN research reveals that for every micro loan made, 1.5 jobs are sustained. Independent studies show that each loan benefits up to 12 people indirectly.
It is estimated that 80% of people in developing countries do not have the necessary collateral to obtain credit from the formal banking sector. People instead turn to moneylenders who charge extremely high rates of interest, forcing them into further debt and continuing the cycle of poverty. Millions of desperately poor people end up working long hours for less than a living. Or worse, many are forced to sell their children as bonded labourers.
MED Programs are successful as they help give a hand-up, not a handout. These MED loans can be as little as $70-$150, which can lift an entire family from poverty. ISAA together with ISAU and their partners in Uganda are facilitating such projects to help make a difference and break the cycle of poverty.
How does microfinance help the poor?
Experience shows that microfinance can help the poor to increase income, build workable businesses, and reduce their vulnerability. Micro-Development Projects give rise to self-empowerment by enabling the poor, especially women, to become cost-effective agents to bring about change. These projects play an important role in the fight against the many aspects of poverty. Income generation from a business helps increase and contributes to household income and assists with all basis needs. Moreover, for women this also builds self-confidence and empowerment.
Micro-Development Projects give rise to self-empowerment by enabling the poor, especially women, to become cost-effective agents to bring about change. These projects play an important role in the fight against the many aspects of poverty.
The typical microfinance clients are low-income persons that do not have access to formal financial institutions. Microfinance clients are typically self-employed, often household-based entrepreneurs. In rural areas, they are usually small farmers and others who are engaged in small income-generating activities such as food processing and petty trade, who have a relatively stable source of income.
Only 10% of chronic hunger is caused by war and natural disasters. For nine out of ten hungry families, food is readily available, however the money to buy it, is not (United Nations).