Why Micro is A Big Deal

A few years ago, Chheang Leang worked hard, yet still struggled to make ends meet. She and her husband raised rice and produced palm juice on their small farm in rural Cambodia, averaging only 25 cents a day in income – a  meager but common lifestyle in the third world. Feeding her kids was always a worry, and sending them all to school was out of the question.

Fast forward a few years, and the picture at the Leang house is dramatically different. All of her kids are now in school, and daily food is no longer a concern.

“We have four cows, one bicycle, three beds, and three big water jars,” She points out with pride. In addition to the farming, she now sells ice cream and fruit juices by bicycle.

What allowed her to make this giant leap forward economically?

Microfinance. Instead of grants, cash gifts, or large government programs, microfinance matches low income people to financial services and loans that are normally out of reach. While the size of the loans is small by Western standards, the impacts are impressive.    Chheang received several small loans each year to expand her business, and she responded energetically and successfully to each new opportunity.  Her first loan was for $25 in 2003, which she used for fertilizer. When she repaid that loan, she qualified for larger loans and grew her business in new ways.

Chheang Leang’s story is part of the inspiration behind WorldVision’s new microfinance site, called Micro. World Vision isn’t exactly new to microfinance–it has been working in microfinance for more than 17 years and  combatting poverty and injustice around the world for over 60 years. Now, however, the rest of us can help the next Chheangs around the world to improve their families’ lives.

When SixSeeds recently spoke with WorldVision’s chief catalyst Steve Haas –  a contributor of SixSeeds –he stressed that the promise of microfinance has only started to be tapped. Only three percent of the need for microfinance is currently being met, in spite of all the donor interest in the last few years. WorldVision’s Micro will help meet that need.

How does it work? The site is easy to navigate – you can read about entrepreneurs seeking loans from a number of different countries. You can browse entrepreneurs by loan size, type of business, gender, or country. Because Micro is so new (it launched at the end of March), there are just a handful of countries right now. Eventually, WorldVision hopes to expand the site to reflect all the countries in which it operates — about one hundred all around the globe. Avid SixSeeds followers will note our Tijuana project is part of World Visions’ North Border project, one of the areas where Micro now helps entrepreneurial community building.

World Vision’s microfinance efforts have a few other distinctive features. First, they’re not isolated quick fixes. Wherever the Micro project is working with entrepreneurs, World Vision is working on a bigger 14 -16 year engagement plan with that community. That plan often includes a number of other kinds of development and aid efforts, including heath systems and even child sponsorship.

Plus, Micro donors may write off their entire donation as a tax-deductible charity contribution, since once the money is given, it remains in the community after the entrepreneur pays it back. With the money back in the community, there will be many more opportunities to support new entrepreneurs.

Fundamentally, the Micro site attempts to change the way we think about the world’s poor. Steve Haas explains, “There’s a subtle message out there that the poor are lazy, and that they don’t know how to handle money. Microfinance exposes this as a white lie. It’s like ‘Wait, time out. There really are hard working, entrepreneurial and wise people stuck in harsh environments.’ ” Left alone, poverty can take away a person’s ability to dream and think creatively.  Micro wants to bring these gifts back.

Want to Invest in Someone's Life?

Our friends at World Vision are anxious to have you try using Micro, and to hear your feedback on the product. To that end, we thought we’d help them out a bit, by giving away a couple of $50 Micro Gift cards to two randomly chosen people from the comment section below.

Please leave us a message and tell us what you think of microfinancing, World Vision’s new effort, or any other reflections. Two winners will win a Micro Gift Card just by commenting.  (Make sure you also enter your e-mail address.  This will automatically sign you up for our free weekly e-zine, and allow us to contact you if you are the winner!)

On May 28, 2010 at noon (EST), we'll pick two names in a random drawing from all eligible entries received and send them email notification.

Limit one (1) entry per person; NO PURCHASE NECESSARY TO ENTER OR WIN. Open only to legal residents of the 50 United States and Washington D.C. who are 18 or older as of date of entry.

Comment away!