- This chapter mainly deals with the concept of micro-financing or MF. MF takes business away from loan sharks in the majority world. MFs provide means to credit at a reasonable rate to encourage self-sufficiency through the development of small businesses (usually ten people or less).
- Large-scale manufacturing has been most economists solution to the poverty of the majority world. However, large-scale manufacturing happens slowly, requires infrastructure, etc. Small businesses can be up and running quickly.
- Wealth accumulation that provides a cushion for small businesses can be difficult in the majority world, where culture may dictate that when a person has accumulated anything, it should be shared with the community. Therefore, there is a desperate need for savings that are secure and private.
- One mode of MF is to put borrowers into borrowing groups that require members to guarantee each other’s loans. This leads to a high rate of repayment.
- Difficulties in MF include problems in providing savings services, failure to reach the extreme poor (who may require loans in the five to twelve-dollar range), failure to reach the rural poor, exclusive focus on businesses, and lack of evangelism and discipleship activities.
- Any church or ministry that gets involved with MF needs to do their homework and know what they’re getting into.
- One model is the SCA, or Savings and Credit Association that encourages fellowship and discernment among the community. The provide affordable loans and a means for savings.
- People may view MF as a cure-all for poverty, but it only addresses part of the need. Never forget that we have poverty of relationship with self, the community, and God. Holistic poverty alleviation must address all areas of poverty.
- Business as Missions (BAM) is another model. Entrepreneurs start businesses in the majority world, providing jobs, education, and increased productivity through their investment.
Micro-financing is fascinating. It’s amazing what a few well-placed loans can do to encourage economic development and self-sufficiency in the majority world. What relevance does this have for the poor in the United States?
In my ministry, I mainly deal with men who are released from prison. For the majority of them, they have no job. They have no housing. Many don’t even have a supportive family. When they apply for a job, they will have to share with the prospective employer that they are a felon. It takes a special business owner to extend employment to a felon. So, their job prospects are not good.
Wouldn’t it be wonderful if these men could start their own businesses? They would get off public assistance, move out of subsidized housing, and become productive members of society that give back for what they’ve taken. Unfortunately, very few of the men that come out of prison have the necessary skills to run a business. So, MF would not be a good solution for most of them, but the few that are willing and able to run a business could make a dramatic change in other returning citizens’ lives by taking them on as employees.
It seems to me that many drug dealers are already entrepreneurs. Why? It’s the avenue of business that’s open to them. The startup costs are minimal. The product is in high demand. The profit margin is tremendous, but the cost to the community is tremendous. Also, there’s a reason the profit margins are so great – the risk of failure means years of incarceration.