Thursday, 12 April 2012

Why I Lend: to re-design the system

Village Savings & Loans group, Sierra Leone      
© CARE/Jenny Matthews
Why do you lend?

Like many of the services available to us in today’s ‘modern’ society, financial services are disproportionately enjoyed by the privileged.

Nearly two-thirds of the world’s adult population are left out from the existing banking world and as such, a system is being perpetuated that suits the needs of the well-off and by consequence excludes those less well-off.

As Muhammad Yunus astutely pointed out at a recent talk on bringing microfinance to developed economies like the UK’s: “Poverty is created by the system and the system imposes poverty on the poor – the system needs to be re-designed.” And this is why I lend. For me, microfinance is one very effective way of trying to change the current system. By re-designing financial services to meet the demands and needs of the poor (i.e making them affordable and accessible) we not only highlight how the current system is faulty but we also give poor people the tools to increase their income, protect themselves against emergencies and ultimately lift themselves out of poverty.

By lending even just a small amount, my money, combined with that of others who are also trying to make a change, can have a powerful impact. Since our money not only directly funds the loan of a working poor person but also enables lendwithcare’s carefully chosen microfinance partners to extend their outreach into more vulnerable communities and expand their services. By transferring interest free capital directly to entrepreneurs seeking funding, lendwithcare reduces the pressure on the microfinance institutions to seek external funding (which often comes with high interest rates) and frees up the capital they do have, allowing them to provide more loans as well as a more comprehensive and tailored financial service.

Nouriatou, a Togolese entrepreneur      
© CARE/Emilie Bailey

For example, Ama Kessenge from Togo lives in a remote neighbourhood outside of Atakpamé. She can rely on loan officers from microfinance organisation WAGES to visit her home rather than make the long and time-consuming journey to their office herself. Or Rosalina Montellen from the Philippines who was able to set up a deposit account with the microfinance organisation, Omaganhan Farmers Multi-Purpose Cooperative. She can now save for her future, protecting herself and her family against financial emergencies. Not to mention the scores of microentrepreneurs who with access to small amounts of credit can start or expand income-generating activities and subsequently create sustainable livlihoods.

It doesn’t make sense to me that the world within which we live does not allow our most vulnerable citizens to create some sort of financial stability for themselves. So in an attempt to address the growing discrepancy between those that have and those that have less needing to rely solely on charity, I lendwithcare.

By Nancy Thomas, assistant at

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