
Qatar’s Purchase Of Manchester United Stalls Due To Family Drama
Upheaval among the football club’s owners, and angry fans, puts a $6 billion-plus deal at stake.
SECTOR REPORT / MICROFINANCE
Some of the world’s biggest banks are taking an interest in lending to some of the world’s smallest potential customers.
After her husband died, Adija Msw was left destitute with an extended family of 12 to support. She borrowed £15 ($30) from the local Microloan Foundation group in her village in Malawi, which she used to set up a stall selling tomatoes. A second loan of £30 allowed her to expand her business, and she now makes enough money to send her daughter to school. Alima John, also of Malawi, has a similar story. Microloans enabled her to support a family of 10 by selling dried beans from a stall in the market in the town of Nkhotakota. The profits allowed her not only to build a new house for her family but also to send her children to school.
These are just some of the millions of people in countries in Africa, Asia and Latin America who are trying to break free from poverty through the use of microfinancing—small collateral-free loans ranging anywhere from $15 up to $200 that are typically used to establish, sustain or expand small businesses.
But can helping a woman in a village in Nigeria, for example, increase her income from $1 a day to $4 be classified as significant progress? “You are talking about basic life needs being met,“ says Alex Counts, president and CEO of the Grameen Foundation. “If 110 million people increased their per capita income by $3 a day, every day, that starts to become more meaningful on an aggregate level.”
The US-based Microcredit Summit Campaign aims to reach 175 million of the world’s poorest families (those living on less than $1 a day) by 2015 through microfinancing for self-employment. By the end of 2004 it had reached 92 million clients, 67 million of whom were among the poorest when they took their first loan. “What is unique about microfinancing is that it has some revolutionaries in it which are breaking the rules,” says the campaign’s director, Sam Daley-Harris.
One of those revolutionaries is Dr. Muhammad Yunus, who won the 2006 Nobel Peace Prize for his pioneering work in Bangladesh as managing director of Grameen Bank, which is considered to be one of the most successful microfinancing institutes (MFIs), serving more than 7 million clients. According to Daley-Harris, Yunus started out in 1976 with no particular strategy in mind other than to do what the banks didn’t do by lending to the poor: “Muhammad Yunus [said], ‘Whatever banks did, I did the opposite. If banks lent to the rich, I lent to the poor. If banks lent to men, I lent to women. If banks made large loans, I made small ones. If banks required collateral, my loans were collateral free. If banks required a lot of paperwork, my loans were illiterate friendly. If you had to go to the bank, my bank went to the village.’”
After spending six years working with Yunus in Bangladesh, Counts set up the Grameen Foundation, which supports a worldwide network of MFIs by providing funding, technical and training assistance. The foundation funds MFIs through direct loans, grants and loan guarantees. Charities such as the UK-based Microloan Foundation uses microfinancing loans of between £25 and £200 to help poor people living in Malawi and the Philippines set up businesses. Executive chairman Peter Ryan set up the foundation in 1998 with one loan manager and a PC in a garage. “International aid has failed to help these people,” he says. “Providing employment gets totally missed out. Some people we have lent to have begun to employ other people and have started to build houses, buy clothes and pay for education.”
This year Ryan estimates that the foundation will make 11,000 loans, helping 50,000 people. While the Microloan Foundation relies on funding mostly from philanthropists, microfinance charities such as the UK-based Fredericks Foundation rely on government grants and business support. Some, however, take a dim view of an over-reliance on government subsidies. “If the basic business model requires subsidies for the long term, we [the Grameen Foundation] stay away from that,” says Counts, adding that the objective for most MFIs is to become self-sufficient.
The Fredericks Foundation’s focus is on the United Kingdom, where it provides loans of between £2,500 and £3,000 to people who have been out of work either through illness, imprisonment or disability to help set up their own business. “We are saving the government something like £3 million to £4 million, as the people we help are not claiming benefits and are living on the proceeds of the businesses we help them establish,” says Paul Barry-Walsh, founder and chairman of the Fredericks Foundation.
Profits With Principles
Barry-Walsh says the foundation’s aims are different from a bank’s. “If they were just profit related, that wouldn’t work for the kind of clients we assist,” he says. That is not to say that most MFIs are not profit-oriented. Counts says half of the MFIs the Grameen Foundation works with are profitable, and the others will break even in the next two to three years. “There is nothing wrong with making a profit,” he says. “However, there is something wrong if you are trying to earn quick profits and get out.”
![]() |
Adija Msw with the tomato stall she started using a microloan |
![]() |
![]() |
||
|
|
Anita Hawser