The Micro-lending Revolution
Micro-finance was popularized by Bangladeshi professor Muhammad Yunus with his creation of Grameen Bank that loaned money to impoverished women. Although the idea of helping people help themselves out of poverty has existed for several decades, ease of communication via the internet and attention to the matter afforded by Grameen Bank’s success has brought microcredit to the forefront. In the past decade a variety of similar institutions have emerged or become more prominent, including FINCA, Kiva, and Accion. While microcredit is not a cure-all for poverty alleviation, it is a step in the right direction, providing funding opportunities for able individuals who wish to start or expand a small business.
How does microcredit availability lead to empowerment in developing and developed nations? Should this strategy be employed in combination with education and health initiatives? And more importantly, what role will micro-credit likely play in the long term success of People-First Tourism?
Sometimes all it takes to get a business started is a little bit of money to buy materials, like Saima did to start her embroidery business. The best part about micro credit in general and in her situation was that she was quickly able to pay off the small loans after making money right away from the products being sold. Larger loans are much more challenging to lend out in developing countries because it would take awhile to make back the money originally borrowed, if it were even possible to make it all back. In time with small businesses succeeding in profit simply by using micro credit to create products, these businesses can not only take care of debt, but also expenditures on food, housing, schooling, and even communities as a whole. Saima did just this by paying off her husband’s debt, supporting her entire family including her in-laws, and providing jobs for others in the community to help her run the business.
ReplyDeleteIf you mean should small loans be given to individuals for specifically education and health purposes, then I would say that there should be some eligibility requirements considered. I say this because if an individual is given a small loan to pay for her daughter’s education, for example, that individual might not be able to pay it back if she has no income, business, or employment. It’s one thing to give a small loan to start a business, which will eventually generate income to pay back the loan, but it’s another thing to pay for education or health without knowing that profit will be made to pay back the loan. I think the one requirement of borrowing money for education or health should be that the borrower has a steady and consistent income, even if the amount is small. Otherwise, I don’t believe there would be much of a problem to micro credit for education and health; it would actually be a great help in developing and even developed areas.
Micro credit is how poor individuals can get started in creating a small business for tourists. Sure, an individual might want to create maps of downtown Raleigh or provide a list of restaurant specials, but how would a poor homeless person get the money to even create these maps or print them off for tourists. Micro credit is the answer to this. In the long run, individuals who use micro credit to start a tourism business might not even need to use micro credit after awhile because they will be making enough profit to support themselves and pay for future product materials.
Throughout the world it is next to impossible for the poor to get the financial backing that those of us who are better off take for granted. Things like building your credit, and taking out a loan, and even having a banking account is often out of reach for those starting with little to nothing. What’s so amazing to me about microcredit is that someone saw this discrepancy and took the chance on loans for the very poor. By providing previously unavailable access to money, microcredit provides people with the ability to invest in their future. This sees the greatest amount of effect in developing countries, where most of the money goes to women. This new access to money can lead to more say in their household and over decisions that affect them in their communities. The book gives a great example in the story about Goretti. She went from never having held money to being a major source of income for her family, and a leader in her community through the use of a microloan.
ReplyDeleteThough it does great things, microcredit cannot stand alone. Loaning money without providing a support system and information about how to make good financial decisions can actually result in getting deeper and deeper in debt. People will take out one loan to pay another. It’s also possible to use the same support system created by the microloans to form a group that works together to education themselves. Strengthening women’s access to income while also providing them with the ability to read and write will further improve their status in the household, and make it more likely they’ll send their female children to school. Information should also be provided about family planning and proper healthcare to make sure they know what needs to be done to care for their whole family.
All these systems together can create a framework to raise a community out of poverty as long as the community has input from the start. They know their own abilities and interests, and recognize what needs aren’t being fulfilled in their community. Microcredit loans are simply providing them the leg up they needs to change their lives and communities for the better. I feel strongly that People-First Tourism will need microloans to succeed. Using tourism as a foundation for new businesses can’t happen without first being able to compete with already established tourism providers. The very poor will need that little bit of help to get themselves out of the poverty trap they are caught in and begin to work up to a level noticeable by responsible travelers.
This Chapter discusses micro-credit lending and its affects on women's empowerment. The story of Saima and her struggles is an insight to what many women suffer in poor and undeveloped countries. She was beaten by her husband and brother in law often and disrespected and humiliated by her neighbors and family. Once she received a 65 dollar loan and "invested" in beads in cloth she could create garments and sell them at market. Once her business grew she began to receive respect and praise from her neighbors and mother. Her husband also respected her much more and had a greater appreciation of women. Now she controls the money and could afford to send her daughters to school and repair the home, she was seen with respect and dignity. This example is very important and something that I never realized but makes sense. The reason micro-lending has been successful is that it teaches financial responsibility to women and gives them a chance to improve their lives. It shows just how 'resourceful' women are when given an opportunity and not just a handout. It also shows how women overall are better with spending money than men are in undeveloped countries.
ReplyDeleteInstead of giving handouts you give out loans and make people financially responsible. You give people an opportunity to either improve their situation or not. Micro finance has taught women to "invest" rather than taking money to pay debt or using the money for food or home repairs. I like the idea of having group lending. Where a group is given money and they are financially responsible for the entire group. They have weekly meetings and it creates an environment that influences group concession and bringing ideas to the table. They can all work together instead of a single woman having a loan and no where to go. This "support system" like Jennifer said increases the rate of success, so women can grow their business, pay off loans and apply for larger loans. Jennifer said it is amazing how someone took the leap of faith and gave the poor an opportunity to get lending.
As with the KASHF program started by Roshaneh Zafar. She desperately wanted to help the poor and not help the rich get richer. Her leap of faith and years of trail and error have become a very successful business that continually grows each year. It has shown increases in families moving out of poverty, more respect of women by husbands and less marital fights. However the program is not perfect and many women are still getting into debt and getting into worse situations than before.
The importance of women's control and influence of family spending is defined by the success of the KASHF programs and women involved in government. Overall men are very irresponsible with money in poor countries and studies have shown that when women control the spending more is spent on child healthcare and nutrition and less on instant gratification and wasteful spending. Although the women's influence in government has shown an increase in programs, these women are often resented by the local community. These women in higher governmental position have never seen or experienced the true struggles of the women they are trying to help. How can you truly help someone if you do not truly understand?
ReplyDeleteI believe that as these programs become more popular and the kinks are worked out you will continue to see and improvement in women's lives and the local communities. As more and more women become empowered the shift will continue more in equality with the gained respect from men. As women begin to become involved in government "from the ground up" such as the right to vote given to women in the United States which has shown voting in favor of more health programs across the nation. These women will become involved more intimately with the local community and then with the towns, and cities and to larger levels in government. These women will be able to provide new solutions for the future to continually improve equality and help people help themselves. As the story goes its better to give an opportunity than to give a handout.
Without the financial help of others, it is very hard for the poor to get anywhere in a small business. A little bit of money could go a long for a small business to get off the ground and become successful, this is the premise of micro credit. Saima a woman interviewed in “Half the Sky” was able to start an embroidery business and quickly pay off her loans. Once her business became successful she made a profit and was able to help pay off her husbands debt.
ReplyDeleteI do not believe money should just be given away to anyone who wants it, but to people who prove to have a business plan and model. If money is given to people with no business plan who will not be able to pay back their loans, then it is not helping anybody. “Half the Sky” gives an example in the story about a woman named Goretti. She went from never handling any money to being the financial supporter of her family, through a micro loan. She was smart and used her money well, but if people are not educated about money before receiving the loans, or given the steps to making wise financial decisions.
Educating poor communities about micro lending would aid in the development of successful small businesses that could help boost tourism in the area. When there are successful restaurants and shops and other forms of businesses that tourists would like to go to, it boosts the community as a tourist destination. Successful tourism will then turn around and help the economy of the area.
Microcrediting allows access to money for vulnerable people by providing them funds in return for responsible use of these funds and reinbursement plus interest. If these people utilize these funds in a successful way then they can get more money to be fronted to them with the same intention of paying back on time. Sometimes, espcially in less-developed nations, there can be many set backs including AIDS,poor health and education, and unexpected deaths can lead to people faulting on their loans. This can mean that instead of getting out of debt they get into more debt and have to fight twice as hard to pay off this new debt. Luckily some of the people that are providing these microloans out like Roshaneh have set up systems that can get all the microlenders involved. For example, if a lady in a village can't make her next loan payment because she had to pay extra money tending her sick children then another women in the village who might have had a profitable quarter can provide a little extra money to pay off the other womens loan so that she can sustain and keep operating her business.
ReplyDeleteI think micro-lending should have education and health initiative combined in as well. Like the previous example, some people have unexpected deaths or illnesses that forces these people to tend to the imediate problems before they can start on their longterm goals. If we could help fund for education and health intiatives then these people that want small loans can be more reliable because they are working with more resources and a better quality of life. Also, I believe you would need to incorporate education. If you think about it education is very important and having even just one child educated can benefit millions later in life because if one child gets a chance then he can grow up and start an organization to better life but if he hadn't had that chance then an idea may never be brought up.
I believe micro-lending will be a key compotent to helping the vulnerable become sustainable. It is already becoming a very popular trend and I feel with the levels of inequality still rising and the on going battle for Earth's natural resources the poor are being over looked more and more. Micro-lending can be successful because the intentions are not to make a person super rich, except in cases like Saimas, but to make lives sustainable and better a village or town as a whole. I think there are a lot of people with good intentions out there they just need a chance and a community to work together. It might be hard to trust in micro-lending in the beginning because the world is facing a recession and in order for these vulnerable people to get out of poverty it takes a group effort and a little waiting to let a small idea(loan) grow.
Microcredit is essential for empowerment in developing and developed nations. Micro-credit with hard work and motivation can lead to the development of impoverished nations. The example in the book of a lady taking out a 67-dollar loan and then pretty much becoming the tycoon of the entire village is evidence that this really works. These loans are in an area where most people live on one or two dollars a day, so taking out a hundred dollar loan my not seem much to us, but to these people it is over three months of pay. With everybody being so poor it makes it a lot cheaper to start up a business. The money however should not be trusted with the men of the poor populations. It has been proven that in some places men spend over 20 percent of their income on instant gratification (prostitutes, cigarettes, alcohol, and junk food). Women on the other hand seem to be more focused on education and long-term gratification, thus putting them and their families in a better position for future generations. It is essential that micro-credit and education along with health go hand and hand. It would be foolish to just give anybody and everybody a loan, because then it is more likely that the loan will not be repaid. As Roshaneh Zafar, a Pakistani woman and respected banker, says, “Microfinance is not a panacea. You need health. You need education. If I were a prime minister for a day, I would put all of our resources into education.” Microfinance is also important in making people first tourism successful in helping people come out of poverty. It doesn’t take much to start a company that can cater to tourist. The company can range from a stand selling food in a popular tourism spot or a shop offering bikes to rent. Once these businesses start with their relatively low overhead the people of the undeveloped nations can start immediate repayment of the loan. Not only the lives of the people starting these businesses will be improved but also the lives of the people in the poverty stricken villages as well. It will lead to more schools being built as well as a change the way men treat women in these poor parts of the world. Through microfinance life can only get better for these individuals. They just need a chance and an opportunity to make it and become successful.
ReplyDeleteMicrocredit provides those that are less fortunate that may have a goal or dream, with the money to accomplish it or at least try to accomplish it. But in the areas around Asia, it has not just been a method of empowering people, but women specifically. The use of microcredit by women has really helped them move up in the social ranks when judged by men. If you look at how Saime Muhammad was able to achieve her current status, there must be recognition of the use of microcredit. She received a loan and from there was able to become a successful embroider and becaues of that, her husband stopped beating her and her mother in law accepted her daughters. So the availability of microcredit is a positive in those areas but not everyone is successful becaues of their lack of education.
ReplyDeleteI definitely believe that microcredit should be employed with health and education initiatives because there are people that may want to change their life but cannot because of lack of knowledge and health. I am not exactly sure how the education and health would be distributed but there does need to be an effort to incorporate them so that everyone can learn and not suffer from preventable diseases.
In the sense of longterm microcredit in people first tourism, I believe that if it is continued to be studied and applied to areas around the world, it should overtime help those that need the loans and educate them on how to manage their money and business. With the expansion of knowledge and understanding about different professional areas, and the adjusted beleif in equality, then sometime down the road, many of the suffering areas and people should be better.
Microcredit availability leads to empowerment in developing and developed nations because women have an opportunity to take advantage of a loan and start their own business, therefore having their own income. Women are able to do something for themselves and start a business and have means of taking care of their families. It is not the perfect solution though because studies have shown that womens' business grow slower than mens' because women are expected to work from home so they don't get nearly the support they should. Even though microcrediting has been successful in Asia, it has not done so well in Africa.
ReplyDeleteThis strategy should be combined with health and education because according to Half the Sky, microfinancing can only work if you have health and education.
In the long-term, I don't believe microfinancing or microcrediting is as successful as it needs to be in order to really make a difference. I believe this system does have hope to become bigger and better. If microcrediting does become more successful, then there would be a larger impact on the people of people-first toursm.
Microcredit gives people an opportunity that not many people would. A bank more than likely would not lend money to impoverished people. If there is little or no money impoverished people have little to no chance of digging themselves out of the hole they are in. The chapter starts off by telling us Saima's story. She took a small amount of money and made a huge difference without that opportunity her family and community would not be in the position it is in today. I also found it very interesting how different the statistics and break down of spending was depending on who controlled the money. The Kashf Foundation is a good example of a successful microfinancing organization. By lending money to different women they have empowered them and in most cases seen very positive impacts and the money is being put to the right use. I do think linking it with education and health initiatives is a good idea. Over and over again we have talked about the importance of education. If a person is poorly educated it does not matter how bad they want to make a change if they do not know how to go about it. This chapter discussed the importance of education and emphasized that not only boys needed education, but also the girls. If the women in the family control the money studies show more money goes to food, education, and other beneficial things to the family, instead of it being wasted on alcohol, tobacco, and other things that are not beneficial or necessary to insure ones health.
ReplyDeleteI think microlending could potentially be very successful in people first tourism. People tend to take pride in what they have accomplished and are more likely to give back to others in need if they become successful. Microlending gives a person who other wise could not afford or imagine creating a business a chance to make a better life for themselves and family. I think that educational programs need to be implemented to go along with the loan. This way people have a better idea of how to manage their money and what are good investments.
Getting a business started without investment capitol is a challenge for anyone not only those in poverty. I think microlending is a fantastic way to help lift those in poverty out of it permanently. Instead of giving them momentary monetary supplements such as food stamps this gives them a chance to continue to earn money for themselves through their own strengths and beliefs. Our beliefs after are all what we typically work hardest for. However the will to succeed isn't always enough. In reading half the sky microlending is typically only successful over extended periods when those using it are educated. So those who first receive micro fiances to start the original business need to be educated and education needs to be provided for those who are to follow.
ReplyDeleteSmall businesses are a crucial part of people first tourism and what better way to promote the culture of an area than through small businesses owned and ran by the locals. Ideally one day not only will micro-lent investors have their own network of successful business but they will know how to appropriately market and communicate their business to visiting tourists.
Many able bodied individuals have the strength and intellect to start a small business and simply cannot do so with the lack of necessary funds. Micro-Lending is a wonderful things for these individuals because giving these people the money they need to start a small business could enable them to pay back these loans and possibly make a successful business they can live off of.
ReplyDeleteThese loans should also be used to help fund health and education. We can educate these individuals in these under developed countries so that they will have the knowledge to run some sort of business. This could also have a great effect on Tourism in the future. People from many different cultures will have the ability to share their customs and lifestyles with many tourists by providing them with the proper facilities in which they need during their visit. If these Micro-loans continue to be given out, it will improve the lives of many people around the world.