by Kyra Coates
April has been named “The Month of Microfinance” around the world, and seeing that Friendship Bridge’s core program is Microcredit Plus, we celebrate this month as a way to join this grassroots movement to bring awareness to the global necessity and benefits of microfinance programs.
Worldwide microfinance products have a huge impact. In 2016 there were 132 million low income clients with microfinance loans, totaling approximately 102 billion dollars. The microfinance industry averages an almost 9.6% growth annually with the number of borrowers, and 9.4% growth annually with the lending portfolio.*
There are several different delivery models of microfinance. One lends directly to an individual, and typically charges high-interest rates and also requires some form of collateral to insure the loan. This is similar to if one went to a bank to get a car loan, however offered on a smaller scale.
Another type of microfinance is the ROSCA model, which stands for Rotating Savings and Credit Associations. In this model a group may come together to make monthly contributions to a common fund which is then given to another group member in one lump sum in cyclic rotations to each member throughout the group. After receiving the lump sum the member then pays back the amount with further monthly contributions to the lump sum with interest.
And then there is the Village Bank, or Trust Bank model, which is the model we offer our clients here at Friendship Bridge. A community group of women come together to form a Trust Bank of 7 – 25 members, in which they essentially co-guarantee each individual member’s loans. If one member falls behind on payments the other members cover them until they can recover themselves financially and reimburse the group. This model also allows us to bring the groups together for informal education and health education sessions, allowing the group to grow together as professionals, strengthening not only individual knowledge but their joint community growth.
In many ways, Microfinance can be synonymous with Women’s Empowerment. As women around the world see a disproportionate level of poverty compared to men, the majority of recipients of microfinance loans are in fact women, with almost 98 percent of borrowers in Asia and some two thirds of clients in Africa, Latin America, and the Middle East. At Friendship Bridge we invest only in women as we have seen that statistically, women make larger contributions of financial gain back to their families and communities.
Further, we believe that giving women the opportunity to empower themselves also creates stronger social bonds within their communities and a brighter future for their children.
* Source: Convergence, a Global Finance Network Group
Kyra Coates is the new US Marketing Coordinator at Friendship Bridge. She is a passionate advocate for Women’s Empowerment and has worked for years to promote equality. Outside her Friendship Bridge working hours she is an artist and gallery owner, a mother of two fierce and fabulous daughters, and a typical Colorado outdoorsy athletic girl.