Microfinance visit to India
October 2, 2009 9:33 AM
Annette with some of the Women who have benefited from a microfinance loan
As Chair of the All Party Parliamentary group on micro finance I aim to visit different micro finance projects each year. This year I visited India with Five Talents, a Christian organisation which supports microfinance initiatives in a number of countries. I paid for the trip for myself and so this was definitely not a parliamentary jolly, although it was one of the most interesting and informative trips I have ever undertaken.
Micro finance involves the making of very small loans enabling people to set up small businesses. It is regarded as the most important poverty alleviating tool and has already helped at least 100 million of the poorest people in the world; people who survive on one dollar a day or less.
I travelled to Chennai on Saturday and spent Monday and Tuesday visiting villages which are involved with microfinance and which were badly affected by the 2004 tsunami. Five Talents works with a very outward looking Anglican Church in Chennai. Typically women form groups of about 15 members and paid staff work with them to develop business ideas. The first loan is given of about 20 - 30 thousand rupees and the group will decide on 4 women to start their projects. These included buying a goat or a cow for milk, setting up a snack shop, buying rice in bulk, buying palm leaves to make roofing and much more. The products are sold and there is 100% repayment of loans after 10 months. Each woman in the group aims to save each month and gradually the group's activities expand as more loans are received and savings build up. One enterprise even involved hiring out a very smart marquee and lots of equipment for weddings and other celebrations.
So how does this help? Family income is increased and so life is a little better but most important of all, the extra income enables children to stay on at school longer and hence there are long term benefits for future generations. Some of the businesses will really take off and develop into larger scale enterprises and owners will then be able to borrow future capital from existing banks. But for starting up, training and support is needed and so financial help is required. However, microfinance is a way of giving people a hand up and not a hand out. If you want to give a hand up you or your organisation could contribute to Five Talents or other micro finance organisations.
A small shop that has been set up with a microfinance loan
For more information on the Five Talants please visit their web site: http://www.fivetalents.org.uk/
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