Last year, I volunteered for
Unitus as part of the Microsoft Giving Campaign in October.
Needless to say, I would not have taken the trouble had I not been so impressed by the whole idea. It is indeed remarkable. In one of the videos that the Unitus informational session included, Mike Murray, the Co-founder and then-Chairman said a few things that I could identify with and understand. Like most others (pardon the generalisation), I have been sympathetic towards the problem of poverty. And yet I have subconsciously harboured the thought that it is inexcusable for a healthy individual to resort to begging. I appreciate hard work and believe that it is rewarded. What I had not pondered enough about though, is that 'as you sow, so shall you reap' may not always be true. There is a class of people who are NOT rewarded when they work hard. They remain in that quagmire of poverty, constantly striving to pull themselves out of it. We think there must be something wrong in what they are doing. They must not be pushing hard enough, working smart enough... But no. What they lack most is opportunity. The means to a chance to prove themselves. They dont necessarily lack the will, but they are seriously limited by the resources that they do no receive access to.
Charity is a virtue. But empowerment is a boon. Micro-credit is one of the greatest ideas of our time. Dr. Muhammad Yunus of Grameen Bank, Bangladesh won a nobel prize this year for this excellent concept.
There are a number of MicroFinance Institutions (I know of some in India) that take the 'risk' of bringing financial instruments to the 'poor' to whom banks will not otherwise lend. More women than men have taken advantage of this, resulting in upliftment of entire households. Surprisingly, the return rates for the tiny loans that these women procure from these MFIs are about 98.4%. Just to put this in perspective, the return rates for loans from leading banks in countries like India, which lend after thorough checking of credentials, hover around 74%. Loan amounts are typically small, but allow women to concentrate on their small scale industries like rearing buffaloes for milk, running a tea stall, weaving baskets etc.
The mechanism is simple. Women make groups of 4-5 and take loans from an MFI for their specific needs. The loans become collective liabilites for the entire group. This adds peer pressure so that being dishonest can result in being ostracized by the entire village. A volunteer from the lending MFI makes rounds to small villages on weekly or bi-weekly basis and collects tiny amounts that the women are able to repay towards their loans. Only repayment of one loan qualifies the borrower for the next loan. The system works well and many women are now on their 5th or 6th loans with the same MFIs.
However, MFIs were not always as effective as they are now becoming. Here is where Unitus comes in. Unitus makes use of proven strategies from venture capital and stragetic consulting to increase the reach of MFIs. It developes partnerships with selective MFIs and then supports them to achieve impact in organized fashion. On instances, Unitus has stood as the guarantor for loans granted to MFIs in India from larger nationalised banks like ICICI. It works. It has improved the reach of resources to thousands of people who are now able to live self-sufficiently and with pride.
I will be putting in a video link soon about the work of Unitus in these areas.
