By Isaac Hopkins
One of the best ways to encourage economic growth in poor areas is to provide affordable small loans to farmers and small-business owners. Called microcredit or microloans, these programs can inject capital into communities that lack the collateral required by conventional banks.
Today, Nourishing the Planet introduces five innovative microcredit programs that are encouraging economic growth in poor communities.
1. Farmer-to-Farmer Programs: Microcredit programs tend to be most sustainable when they promote cooperation between residents of a community. Encouraging farmer-to-farmer support can be an effective technique because it allows participants to be less reliant on outside financing and guidance.
Farmer-to-Farmer Programs in Action: When Africa’s Sustainable Development Council (ASUDEC) connects farmers with microcredit loans, the recipients have several expectations placed upon them. ASUDEC requires farmers to not only pay back the loans, but also to offer equally affordable loans to their neighbors. This policy generates a ripple effect, helping communities increase their incomes and fund their own progress, rather than relying on ASUDEC. As the trust and cooperation between farmers builds, it “helps the poor transition from subsistence to entrepreneurship,” says ASUDEC’S Director, Dr. Salibo Some.