Redeeming Microfinance

Sam Daley-Harris, founder of RESULTS, an international citizens’ lobby to create political momentum to end poverty and the Microcredit Summit Campaign which brings small loans and other financial services to those most in need, spoke at a July 2010 TEDx Event about the driving principles and events that lead him to dedicate his life to the alleviation of hunger and poverty. He also discussed what he calls the “pitfall” of his own greatest success story, as well as its redemption.

In 2007, the Microcredit Summit Campaign surpassed its own goal of reaching 100 million of the poorest families in the world and helping to lift them out of poverty. Daley-Harris considered himself a proud advocate of the power of micro finance to alleviate poverty and hungry.

But in contrast to Daley-Harris’ success story, several other micro-financing organizations have been criticized for charging high interest rates. These organizations offer loans and other financial services to the poor, but  end up making  huge profits that outweigh the benefits seen by the families these companies purport to be helping.   “We’ve been so successful that the whole thing is out of control now,” Daley-Harris said. “The profit maximizers have entered the field.”

But Daley-Harris still sees hope in microfinance. He tells a story of a gang leader who was paid, by a small grassroots micro-finance organization in Kenya, to rebuild a market that his gang had destroyed in an act of vandalism during the post-election violence in 2007. The organization paid the gang members to build the market during the day and to guard the building materials at night. And once the market was complete the organization provided the gang leader and about a third of the gang with a loan to create a business.

The gang now produce small metal cases for children’s school supplies and last year, said Daley-Harris, the gang leader approached the micro-finance organization to let them know that he had returned to his home town for the first time in 13 years. Before starting his own business he had been ashamed to face his mother but now she proudly welcomed him to his childhood home.

Instead of micro-finance for profit, this is what Daley-Harris calls “micro-finance for redemption.”  It’s also what he hopes the future of microfinance will be.

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