WHY CAN'T THE POOR HELP THEMSELVES?

Often times it is because many of the world’s poor have little access to the financial products and services that help those in the developed world use to bridge the gap when times are tough. Without life or health insurance, diseases and illness go untreated and the death of an income earner is a dramatic hardship for a family.

Without access to loans or credit, shop-owners cannot buy products in bulk. Farmers cannot buy machinery or even seeds after a natural disaster or a poor yield during the last growing season. Without access to savings accounts, money is hidden in the walls or floorboards where it can be stolen or lost in a flood or fire.

In many cases, local moneylenders are the only available source of capital. They provide loans to smooth incomes during rough times or to help individuals improve their small businesses, but they do so at exorbitant annual interest rates, often between 300 and 3,000 percent. Under this system, virtually all of a micro-entrepreneur’s financial gains are passed directly to the moneylender. Individuals are unable to reap the rewards of their own hard work.

The traditional banking system requires that a borrower have collateral to receive a loan. The world’s poorest people have no such collateral. Furthermore, traditional banks are not generally interested in issuing small loans — $50 to $150 — as the interest earned does not exceed the transaction costs for processing the loans.

Women are usually the primary or sole family caretakers in many developing countries. Over 70 percent of the world’s poor are women. Women have a higher unemployment rate than men in virtually every country and make up the majority of the informal sector of most economies.

Putting extra income in women’s hands often is the most efficient way to affect an entire family, as women typically put their children’s needs ahead of their own. Children are more likely to complete their education and escape the poverty trap that their parents are still caught in. Consequently giving women access to micro-credit loans generates a multiplier effect that impact and benefits multiple generations through micro-entrepreneurship.

Additionally, a recent World Bank report confirms that societies which discriminate based on gender, pay the cost of greater poverty, slower economic growth, weaker governance, and a lower living standard for all members. By helping women to become micro-entrepreneurs there is additional daily income and the condition of their entire household and society is greatly improved.