Microfinance: a way to invest in systemic change

Does it make sense that people who most need a little seed money often have the hardest time getting it? Is it just and reasonable that people who would prefer to solve the problems of their poverty and who have ideas about how to do so end up, instead, being offered temporary relief to permanent difficulties?

Of course not. But how does a person with maybe $25US to “invest” in the brainchild of a woman in Uganda actually get the money to her? Enter microfinance. The idea that the poor benefit from access to financial services – credit, for example – has been around since at least the mid-19th century. But a wave of innovations makes micro-finance more accessible than ever to borrowers and to small-time lenders such as the person, for example, with $25.

Above, watch a Frontline report about the impact of a very small loan in Uganda. Also, see Nicholas Kristof’s D.I.Y. Foreign Aid column from the New York Times in March, 2007: From my laptop in New York, I lent $25… each to the owner of a TV repair shop in Afghanistan, a baker in Afghanistan, and a single mother running a clothing shop in the Dominican Republic…. So on my arrival here in Afghanistan, I visited my new business partners to see how they were doing. — or watch his video version of the column.These week two important dates will try to focus attention on critical matters. Tuesday Oct 16, marks World Food Day and Wednesday October 17 is the UN Day for Eradication of Poverty. Relief is a critical part of response to these issues. And microlending can contribute to systemic changes that bring about enduring solutions.