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Over the past decade, micro-credit programs have proved
effective at creating jobs and generating income among the very poor in
developing countries. The success of these programs shows that many poor and
low-income people have the potential to become successful entrepreneurs, but
lack access to the necessary credit and skills training.
The focus of the World Job and Food Bank (WJFB) is to
assist poor women and their families through the implementation of
micro-credit programs. Women comprise most of the poor throughout the world,
and their economic positions are often adversely affected by a lack of
access to capital and productive resources. WJFB also works with other
institutions to organize macro-credit programs for infrastructure projects
in developing countries.
A woman’s economic position directly affects:
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her ability to purchase needed improvements in health,
housing, and education
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her bargaining position and power in her family and
community
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her ability to act against violence in her home and in
her world
Economic participation is key in building a woman’s
confidence and capability, and improving her status in the community.
Additionally, access to resources gives a woman the ability to build her
income and assets. This process allows for the creation of an environment
that assists low-income and poor women build businesses, improve living
conditions, keep families well-fed and healthy, educate children, develop
respect at home and in the community, and allow for political involvement.
Microcredit loans provide these women with access to
start-up capital through small loans, but that is only part of the process.
The goal of such microfinance is to bring long-term economic stability to
impoverished areas. Thus Microfinancing also provides other services such as
access to savings, and the NGOs running the programs also help fund the
creation of infrastructure in remote areas, like roads and buildings.
There are four basic types of micro-credit loan models:
Community Banking, Individual Banking, Village Banking and Peer Pressure.
The success of any one model depends greatly on the culture it is applied
to.
Objectives:
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To work in partnership with local Non-Governmental
Organizations (NGOs) on micro-credit financing projects;
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To provide poor women (especially single mothers and
young drop-outs) with skills in small business and financial management;
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To provide funding and loans to poor women so that they
can establish and operate profitable small-scale enterprises, allowing them
to become self-sufficient and improve their standard of living;
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To educate and improve access of poor women to existing
financial systems, government facilities and services;
To establish local infrastructures that will reinvest
profits from these initial loans into revolving credit funds, which will
benefit additional poor people
Methodology:
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Work in partnership with various organizations;
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Participate with partner organizations in the planning of
micro-credit programs;
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Provide financial resources for micro-credit programs;
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Provide skills training in technical and management areas
to the program’s beneficiaries;
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Monitor the effectiveness of the programs.
Key Operation Activities:
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Selecting the group of people (potential beneficiaries)
in the target country;
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Selecting and confirming the local (overseas)
organizations in the developing country;
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Identifying and addressing training and credit needs for
the project;
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Providing the necessary training and access to credit for
the participants;
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Motivating participants to develop financial and business
plans;
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Working with local organizations to plan and establish
the infrastructure for an effective revolving credit fund;
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Monitoring the ongoing effectiveness and sustainability
of the micro-financing group, income generation, and the revolving credit
fund;
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Facilitating workshops whereby various micro-credit
projects can share experiences and learn from others.
Underlying Principles:
The following principles are the basis for successful micro-credit programs:
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Appropriate encouragement, training, and resources allow
low-income or marginalized women to realize their full potential;
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To effectively utilize credit and resources, women
require skills in self-discipline, planning, money management and business
operations;
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Women are motivated to develop and follow-through on
their visions by uniting themselves in peer groups with others who have
similar interests;
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Local women are motivated to initiate and participate in
successful income generating activities when provided with access to credit
to match their increased money management and business skills;
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Women are often underestimated as potential contributions
to their community; therefore, micro-credit programs involving women have a
significant impact, as women play an important role in community life;
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Peer groups and community create and enforce repayment
regulations for loans, which results in repayment rates which are often
higher than traditional banks;
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To establish a beneficiary’s credibility, initial loans
are relatively small, but they can gradually increase as the beneficiary
demonstrates reliability to peers and to the supporting agency;
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To maximize the success of the credit program, it
is crucial that participants choose which activities will be financed with
the loan, and, if necessary, obtain the provided training;
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Several organizations have skilled staff and similar
credit programs, but lack the financial resources to implement or support
those programs on a large scale.
The WJFB works without political affiliations and assists
poor women and poor people, irrespective of religion, race or creed.
Additionally, the WJFB will only associate with other organizations that
practice similar policies of non-discrimination.
Presently, WJFB is participating in micro-credit projects
in: Peru, Bolivia, and Indonesia.
Micro-Credit Project Examples
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