Simona Lanzoni, Fondazione Pangea Onlus/Online, June 2009
Pangea is the organization where I (Simona Lanzoni) am working. We particularly work for women. This is our mission: women's empowerment and development. We use micro finance as one of the tools to achieve this goal, but of course it is just one of the tools. Today we will focus on these issues, and I will tell you about our work.
What is microfinance?
Microfinance is the supply of loans, savings, and other basic financial services to "non bankable people".
Financial services include: working capital loans, consumer credit, savings, pensions, insurance, and money transfer services (CGAP definition).
Microcredit refers specifically to loans, and the credit needs of clients.
Microfinance covers a broader range of financial services, that create a wider range of opportunities for success. Examples of these include additional financial services including: savings, insurance, housing loans, and remittance transfers.
Target of Micro finance:
In general, micro finance targets poor people, whom are defined by the World Bank as those living with less then two dollars a day.
We can divide the approach. We must ask how to approach these poor people, and how many levels of poor we have.
Three approaches exists in micro finance:
The financial self-sustainability paradigm.
This is the approach used and promoted by publications and donor agencies. This model is focused on setting the financial sustainability of the agency or organization. This is done by creating the right interest rate, by using groups to decree the costs of delivery, and by using economical scales to arrive at the highest number of micro-entrepreneurs, among other tactics. This approach separates micro-finance from other interventions, to enable separate accounting. In this paradigm, it is assumed that increasing womens access to micro-finance services will in itself lead to individual economic empowerment, well being, and social/political empowerment.
Poverty Alleviation Paradigm:
This approach underlies poverty targeted programs.
Feminist Empowerment Paradigm:
This approach underlies the gender policies of many NGO's, and the perspectives of some consultants and researchers, who are looking at the gender impact of micro finance programs. Micro finance is promoted as an entry point, in the context of a wider strategy for women's economic and socio-political empowerment.
Microcredit Standard:
A small to medium amount of money is loaned (for Grammen bank, 200 dollars is average.)
Short time loan (six months to one year)
We use a new methodology and simplify procedures. Clients don't need to provide collateral to get loans. We have a peer support system and strive to be client friendly.
We do not only offer financial services. Organizations providing financial services to the poor may also provide non financial services. These services can include business development services like training or technical assistance. They can also include social services, like health and empowerment training.
Service is focused on the individual, or on groups of people. All is based on solidarity and a trustable relationship, as well as a social capital.
Why the Poor?
Many essential problems of the poor can be alleviated by...
- Taking advantage of opportunities to accumulate and buy assets.
- Uplifting their standard of life.
- Protecting them against risks.
We have to consider a range of cash needs.
- Food
- Illness
-Special celebrations
- Education of children
- Macroeconomic fluctuations and seasonal variations in needs/availability
- Crisis
- Climate change
Why food Security?
Many studies, not only Oxfam studies, say the world has enough food for everyone. But how to redistribute it? More and more people go without adequate food supplies every year. There are different strategies economists have put up. For example, we could try rising the price of food, which will help producers make more money. But at the same time, the production and the price of the item is not growing at the same level as the numbers of people that are buying. There is no strategy or theory that solves the problem.
Why women?
85% of world microcredit clients are women, mostly poor.
Statistics prove that women are more responsible then men when given access to financial services.
- Women ensure a higher rate of repayment.
- Women work to maintain and make savings.
- The benefit is not just individual but extends to the whole family due to women's traditional gender roles.
- Micro finance programs send a strong message to households and communities, through women.
Food: A Gender Household Job and Opportunity
Due to women's traditional roles and jobs, women's work from an early age begins in domestic jobs. These jobs include cleaning the house, caring for children and the old, preparing food, cooking, getting water, raising animals and crops.
When women access credit, if they have no specific skills, their food and related activities become their first survival strategy.
Let's look at an emergency situation, as in Afghanistan. A "day by day" assistance in the form of microcredit could be offered, allowing a woman to simply survive. In this situation, we are offering microcredit for survival, not asset building. In a conflict area, the market is very slow, and you cannot do micro finance.
The result is different in a place like India, where the economy is currently in dynamic movement. The situation will be better and results stronger for a woman in India via micro credit for this reason.
The example of the Indian slums is a good one. Day to day consumption also occurs through micro credit, even in peaceful places.
Food business related to the environment.
If we are situaded in a urban or rural area, businesses approach related to food production and sales change completely.
In Kabul, the emergency/development situations in 5 years of work have resulted in:
- 5% of business is related to the production of food.
-15% of women in business are bakers, a typical female job.
- 58% of these are businesses related to food sales, like bakeries or groceries.
In rural areas, activities are divided into farming and non-farming. In rural Nepal, farming makes up 80 to 90% of business. Non farming activities like grocery shops or restaurants are 10 to 15% of business. 5% are other: beauty parlors, tailoring, decoration making and so on.
In every place in the world, there is a typical food. In Afghanistan, women make dough for flat-bread, and bring it to cook to other women.
Non-conventional food resources are needed. We must create a sustainable approach to combat malnutrition combined with micro finance.
Luckily, there are specific projects linking the micro credit system with food for nutrition. Let's look at a few of them.
MISOLA: Millet, soja, Lait (mother's mlik), Arachide (Nuts)
- The MISOLA project was born in 1982 in Burkina Faso.
- In the region of West Africa, local cereal processing by associations is working well. The project is based on women's work as constituted through UPA micro-credit. This activity of income making produces socioeconomic promotion for women, and gives value to local cereals.
Spirulina
- Spirulina is a cyanobacteria, originally hailing Nigeria, and with the scientific name of "Arthrospira Platenis". It is edible and very nutritious, and can be easily produced in warm areas. It is rich in micro-nutrients and is easily digested by people. Spirulina is rich in beta-carotene, the basis of Vitamin A, iron, Vitamin B12, and in gamma-linolenic acid and other important nutrients.
One to three grams of spirulina, taken during a duration of 4 to 6 weeks, are enough to complement the meals of children 0 to 5 years of age, saving them from malnutrition. Due to the ease of growing spirulina, it has become a great business for women from areas like India, Brasil, and the RDC.
From Microcredit to Micro Insurance:
Microcredit reaches a diverse set of borrowers with different income levels, providing smaller but more frequent payments. This option could be a great alternative to standard government credit programs, as part of a larger, more complex solution.
Microcredit or micro saving sometimes is not enough in rural areas with climate change instability.
A famine in one country could kill more then a million because of sudden unexpected disaster, or because of erosion due to poor rains.
Micro Insurance on Climate Change:
There is a need to tie microfinance tools and programs to knowledge of future climate conditions. The food and security on small farms depends on this. We also hope to connect microfinance to technologies and institutions that can help farmers survive in hard times.
Many NGO's and UN agencies are working with insurance companies to develop different "climate insurance" tools to provide support for small farmers in the event of droughts, hurricanes, or other natural disasters. These may become more common in a changing climate.
Best Practices:
Malwai is a good example. In response to climate change reports suggesting the occurrence of more regular floods, farmers switched from chickens - which drown easily - to ducks, which are good at surviving floods. With access to small loans, farmers could purchase ducks, and make more money by selling ducks to other communities.
Another pilot project targeting farmers, within collaborations with banks and insurance companies, is working to give farmers drought insurance. Beneficiaries will use the loans bundled with the insurance to get good seeds. When rains are good, improved seeds increase yields, and farmers can use a fraction of the additional profits to pay back the loans . The loans are the costsof seeds plus insurance premiums plus interest. In bad years, insurance companies will repay the loan.
Pangea Credo:
A Woman is a multiplier of well-being
in the society in which she lives;
she is the center of a social web of solidarity.
Too often, however, being a Woman
means being a victim of politically unstable situations,
of religious writs and of social prejudice.
Too often being a Woman
means being deprived of your own rights.
For this reason we of the Fondazione Pangea Onlus
want to be in solidarity with Women,
to expose and denounce every
form of violation of their Rights in Countries
experiencing situations rooted in suffering and poverty.
But Pangea is more than DENOUNCEMENT . It is, above all, ACTION .
Because it is important to help every Woman build a life full of security and hope for herself and for the community in which she lives.
Because a Woman can become a multiplier of Peace.
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