Microfinance in America: A Need for Economic Prosperity
Microfinance in America.
A Need for Economic Prosperity.
An article by Jenelle Madrid.
Microfinancing, used to help poor entrepreneurs living and working in developing countries, is slowly making its way into the urban-ruled cities of America.
Microcredit lending, in general, is a way for people to work themselves out of poverty, and why not include Americans?
Grameen, a Nobel Prize winning microfinancer that was once founded to help poor entrepreneurs in Bangladesh, has established microcredit sites in cities such as New York City, Omaha, San Francisco and Boston.
Time Magazine is one of several publications writing more frequently about microfinance. A more recent Time Magazine article about microcredit displays a scene of immigrant women borrowers, paying their monthly installments as a group. If one woman falls short, then the credit will be discontinued for the entire group. Peer pressure seems to be more effective, according to the article, thus leading to a 99% repayment rate in the U.S.
Whole Planet Foundation, in collaboration with Banrural Grameen Guatemala, funds the microcredit loans dispersed to the Guatemalan artisans of Aldea.
The difference between the entrepreneurs in America and those in Guatemala is that each Aldea artisan is given her own microcredit loan to invest in an artisan business, as opposed to a group loan that funds a variety of businesses, such as Altagracia Familia from the article, who runs an empanada business from a cart on the street.
Although it is an individual loan, the women at Aldea also face a degree of peer pressure from other group members. They are given loans as a group and the money is dispersed evenly. Each group leader collects on a biweekly bases, if an artisan falls short than the others will chip in to help. Also, the women are viewed as having a higher socioeconomic standing in the community.
Maintaining their status, while preventing others from falling short, could be factored into a repayment rate of 97%.
Government-funded social programs in America are more prevalent than in Guatemala. Every state in the U.S. has a health and human services department provides food stamps, Medicaid, Medicare, etc.
Whether the need for microcredit is more important (or even just as important) in America than in other countries is a topic of hot debate, but in any case, it is important to provide a fighting chance for less fortunate entrepreneurs to participate in the economy.
Thank you. Contact Aldea if you have any questions.
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