Alastair Stewart OBE is an English journalist and newscaster. He recently retuned from a trip to Srebrenica, Bosnia-Herzegovina which he visited in his capacity as an Ambassador for CARE International UK.
During his time in Srebrenica, he visited several micro-entrepreneurs who are improving their lives with small loans organised through the microfinance company, lendwithcare.org. Watch the video below to see the moving account of how people are rebuilding their lives with microloans and what you can do to help this Christmas.
What is microfinance?
lendwithcare.org is an initiative from Care International UK in association with The Co-operative. The website operates through the principle of microfinance, which is essentially the delivering of credit and financial services to individuals who are too poor to be serviced by regular banks.
In his 2004 paper Microcredit: Sound Business or Development Instrument, Gert van Maanen noted that “banks are for people with money, not for people without”, that the people who need credit most are those without the sufficient collateral to support it. Microfinance is not charity. Charity perpetuates poverty whereas microfinance can enable an individual to build on their skills and deliver them from poverty.
So how does it work?
It all begins when the entrepreneur has an idea. The microfinance institution knows that they have to act quickly to ease the burden of poverty and ensure the success of the project. Therefore, if the idea is good, the loan is granted. The entrepreneur is then assisted in setting up a lendwithcare.org profile and members of the public can then lend their support to the project by making a contribution in increments of £15 or more.
This money can then go back to the microfinance institution to repay the initial loan and free the institution to back another project. The entrepreneur is then able to grow their business and eventually repay the loan.
There is always a risk with microfinance and you may not receive all of your money back from the entrepreneur. Despite the delays and setbacks, most microloans are repaid in full and on time, a sure indication that this system works.
Read about Alastair Stewart's experiences on his blog Bosnia and Microfinance. This short film shown above was shot & edited by Jon Spaull.
Right, this time I will get involved with investing in to microfinance - I mean lending. It's one of those things I have meant to do and never got round to it. I have now got the website up, and so my first new year's resolution is to finally do it. Thanks for this - and have a great 2012.
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