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Monday, August 17, 2009

Social Entrepreneurs Using Micro Financing To Promote Change







Be the change you want to see in the world. As We and our children's children get stuck with billions is bailouts by the brain trust in washington for the fat cats on wallstreet, bankers and automakers, Watch this video about how $27 can change the lives of an entire village. Social Entrepreneurs using Micro Financing to make real change.

What is Microfinance? From WikiPedia

Some principles that summarize a century and a half of development practice were encapsulated in 2004 by Consultative Group to Assist the Poor and endorsed by the Group of Eight leaders at the G8 Summit on June 10, 2004:

  • Poor people need not just loans but also savings, insurance and money transfer services.
  • Microfinance must be useful to poor households: helping them raise income, build up assets and/or cushion themselves against external shocks.
  • Microfinance can pay for itself. Subsidies from donors and government are scarce and uncertain, and so to reach large numbers of poor people, microfinance must pay for itself.
  • Microfinance means building permanent local institutions.
  • Microfinance also means integrating the financial needs of poor people into a country's mainstream financial system.
  • The job of government is to enable financial services, not to provide them.
  • Donor funds should complement private capital, not compete with it.
  • The key bottleneck is the shortage of strong institutions and managers. Donors should focus on capacity building.
  • Interest rate ceilings hurt poor people by preventing microfinance institutions from covering their costs, which chokes off the supply of credit.
  • Microfinance institutions should measure and disclose their performance - both financially and socially.
Microfinance can also be distinguished from charity. It is better to provide grants to families who are destitute, or so poor they are unlikely to be able to generate the cash flow required to repay a loan. This situation can occur for example, in a war zone or after a natural disaster.

"In this present crisis, government is not the solution to our problem; government is the problem." - Ronald Reagan

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