Over the next two weeks we are bringing you a series of informative and creative guest posts on microfinance from Sarah Haig of HOPE International. Before joining HOPE, Sarah traveled extensively and experienced the developing world first-hand. She joined HOPE in 2005 with a desire to find solutions for families trapped in spiritual and physical poverty. In 2006, she moved to Beijing where she currently serves as Asia Associate Regional Director.
Once upon a time, there was a perfect town. Some people in the town were Strong, and they could build the houses of the Delicate. Some were Listeners and they enjoyed laughing at the tales of the Conversationalists. There was not total equality, since people were different. But there was something better: universal opportunity.
In this perfect town, some people had more money than others. The Dentist had a much larger clientele than the Abstract Painter and could charge more because of the higher demand for her work. The Car Dealer had no problem getting a generous loan from the bank, since the automobiles on the lot were secure collateral in case he did not pay back the loan. But the Clothing Shop Owner had a more difficult time: what would the bank do with a pile of jeans? A local Chef ran into the same difficulty: he dipped into family savings to buy cooking equipment and ingredients, and began serving the best lunch in town. He needed additional money to purchase tables and expand his service, but had little to offer as collateral beyond his extensive reserve of recipes.
However, this was a perfect world, and the contribution of every individual and business was recognized as lending crucial value to the collective. Where the bank could not provide working capital to keep the business healthy, the microfinance institution stepped in. This company had a narrow but crucial niche. It presented opportunity to the periphery of the local economy—essentially saying “your business and your contribution to local trade are important, so show us what you can do.” In this perfect town, the Entrepreneurs were able to use the micro-loan to make the most of a market opportunity and turn their gifts into a business much larger than they could build out of their own resources. Others used the services of the microfinance institution as a gap-filler. The Farmer, for example, knew that his rice harvest would supply food to the town but leave him short of cash for his son’s school fees. So he bought some pigs with the micro-loan, not beginning a porcine empire, but managing to provide for his family during that year of poor crop prices.
The perfect town was not an economically level town. Some had more. Some had less. But all had gifts, and all had the access to capital required to turn those gifts into income. Neighboring towns misunderstood the situation. Some assumed that the microfinance institution was responsible to provide income to people whose businesses weren’t healthy. Others were angry that the microfinance institution charged interest on the loans it gave, thinking that its services should be free to those that needed them. Still others expected the microfinance institution to make the town economically level—raising the income of the flower seller to equal that of the manager of the shoe factory. In the perfect town, however, there was peace. All saw that the microfinance institution was a manufacturer not of economic miracles or effortless wealth, but of opportunity. Its service was supporting the ideas, gifts, and dreams of its clients and its product was a loan to fuel the economic engine of these gifts. The end result was a town where the bank provided opportunity for the larger ideas and the microfinance institution opened opportunity for the fledgling ideas.
And they all
lived in harmony, paid back their loans, and lived happily ever
--Sarah Haig, HOPE International