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The MicroLoan Foundation: A Hand Up, Not a Hand Out

This is an extract from a longer article I wrote for The Body Shop Foundation.

The MicroLoan Foundation was created in 2002 by English business man Peter Ryan. After visits to the Philippines and Malawi Ryan decided that he could make an economic difference in the poorest areas of these countries. Started from the back room of a garage in Lilongwe (the capital) the MicroLoan Foundation now covers multiple areas of Malawi, with scope to cover all Sub-Saharan Africa. From scant beginnings the Microloan Foundation has become a system of alternative finance within the impoverished communities of Malawi.

The mission statement of the Foundation is a commitment to helping the poor to help themselves, in order to change their lives for the better. MicroLoan sees this as being achieved by relief of poverty, advancement of education and the relief of sickness in the developing world.

The Foundation works on a principle of six steps to independence. The steps incorporate a mixture of business and social practice geared toward increasing business growth. This in turn leads to an increase in profit and the poverty cycle being broken.

The defining principles of the MicroLoan Foundation are women first and self determination through economic group participation. This means that the foundation focuses on creating female entrepreneurs. Women undoubtedly are the most deprived and marginalised within impoverished societies. The foundation strives to give them a chance to develop their own businesses and their own dignity. To access microfinance through the MicroLoan Foundation those interested must form a loan group. These groups are a vital component in support and loan allocation, ensuring the Foundation is integrated within local communities. In the majority of projects the tribal chief is invited to chair the loan groups, which are crucial in supporting the women who are part of them. They provide business acumen and advice in terms of repayment and

financial management.

Economic fluctuations in the Malawian economy, as a result of the global economic situation and the increased plundering of Africa’s natural resources, have increased the importance of MicroLoan. Many of the clients live below the absolute poverty line (a daily income of $1 a day). As a result of this the majority of the people financed by the Foundation are in a situation where they live from day to day. They cannot cope with economic changes far beyond their control which impact upon their lives; making access to Microfinance essential.

When determining the effects of Microfinance it is necessary to look at the wider impact of the money; not solely at the lives of those directly furnished with loans. The majority of those financed are women with family responsibilities; as a result their dependants must also be taken into account. The impact of the loans is felt in the lives of dependants, especially children, through better diets, education, healthcare and improved living conditions. All of these were previously beyond their means; improving access to microfinance can create longer, happier and more fulfilled lives. The loans empower woman both economically and socially. They create pride and dignity through individual sustainability and the ability to determine their own future and the future of their children. The Foundation provides people with the chance to gain basic human rights which they were deprived of before MicroLoan intervention.

Having a direct and lasting effect in Malawi is central to the ethos of the Foundation but it is a task that is difficult to implement. Poverty has a crippling hold over the majority of the Malawian population. With the introduction of Microfinance to the poorest communities a percentage of these areas have been given the opportunity to personally change their situation. Since the inception of the Foundation in 2002 its Malawian operation has made 50,000 loans to 20,000 women impacting on the lives of an estimated 120,000 people.

Category: Payday loans

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