Microfinance, as defined by Robinson, refers to ‘small-scale financial services for both credits and deposits — that are provided to people who farm or fish or herd; operate small or microenterprises where goods are produced, recycled, repaired, or traded; provide services; work for wages or commissions; gain income from renting out small amounts of land, vehicles, draft animals, or machinery and tools; and to other individuals and local groups in developing countries, in both rural and urban areas’. [ Robinson, Marguerite S, ‘Microfinance: the Paradigm Shift " From credit Delivery to Sustainable Financial Intermediation’, in Mwangi S Kimenyi, Robert C Wieland and J D Von Pischke (eds), 1998, Strategic Issues in Microfinance, Ashgate Publishing:Aldershot.)
The concept of microfinance captivates me in its focus on empowerment, sustainability and economic viability, and I would thus like to discover more about it, and enable others, too, to learn about it.
In providing financial services to the poor, notwithstanding their limited capacity to provide collateral, microfinance strives for the creation of an inclusive financial sector that allows low and high-income individuals alike an access to credit, insurance, remittances and savings products. Moreover, based on the philosophy of “teaching people to fish” instead of giving them fish, it seeks to enable the poor to employ these financial services to engage in productive and self-sustaining activities. This provides a good balance of pragmatism and idealism which I feel would serve the goal of improvements to humanity well. Thus, I am interested to explore the past, present, and future of microfinance. This being a broadly encompassing idea, I will adhere to the soft geographical bounds of Bolivia.
Bolivia has the most advanced microfinance sector in Latin America and has been a case-study wordwide. BancoSol, globally the first commercial bank for microfinance, was implemented in Bolivia, budding off the non-profit organization PRODEM. Bolivia also has some of the few microfinance organizations that use individual loans to reach people almost as poor as those reached by group loans. Moreover, as the poorest country in South America, with a per capita gross domestic product of about US $800 (World Bank) and about 70% the population living below the poverty line, Bolivia has a significant market demand for microfinance. For one, small-scale agriculture prevalent in rural regions provides a client group of self-employed farmers. A flood of cheap imports has also created a large petty trade sector. Larrazábal (1997) estimates that the number of informal urban microenterprises is about 500,000. This is a place where microfinance has had a significant influence, and will continue to make pertinent contributions, whilst adapting its model based on past learning and changing circumstances.
A multitude of websites dedicated to the discussion of microfinance, and the introduction of various microfinance institutions, have sprung up in recent years, providing a wealth of information for people interested in learning about, and getting involved in, microfinance. In fact, the concept of microfinance has become almost the catchword of today. The rising awareness of microfinance and its potential benefits to society, with the internet as one efficient propagation channel, is a positive development, and through this project, I hope to be able to furnish interested readers with easily digestible information and facilitate the extension of microfinance's impact in the process. My project aims for differentiation in the approach to microfinance in focusing specifically on one geographical region and consolidating the resources pertinent to this area, apart from a general introduction to the subject. I hope to find out more about the most current efforts – both institutional and private-- in place in Bolivia, the direction microfinance is headed, in order to be a point source of actionable information that serves as a springboard for potential microfinanciers and other people interested in learning more.
In my project outline, I plan to have the following segments
1. Introduction to microfinance
microfinance in bolivia
country background: Bolivia
success stories
2. The future of microfinance
scope
strengths/challenges
the role of technology
3. Blog/Forum
(interactive messageboard where users share their experiences and reflections about microfinance, Bolivia, and other related issues)
4. News Updates
5. Links to relevant websites
The first segment provides a background on microfinance for the uninitiated, and allows the reader to glean basic functionable knowledge about microfinance in bolivia that serves as a basis for them to do future work on. In this section, I aim to engage the reader with pertinent issues facing the poor in Bolivia, and provide convincing points as to why microfinance is a worthy pursuit. At the same time, I would like to give a balanced picture, and also qualify that microfinance is not a cure-all solution in order to maintain realistic expectations. The success stories would help to inspire people, even if not into action on microfinance issues, to infuse more passion and determination into their personal lives, a beneficial offshoot of the main objective.
This section would want to build on the foundation established in (1) to encourage further work on microfinance projects. In highlighting future predictions and plausible developmental paths of microfinance, it helps to provide potential microfinanciers with a rough idea of what to expect and envision. Also, it contributes to a fuller picture of microfinance by giving not merely a picture of the present, and past, but also an extension into the future, promoting a forward-looking attitude inherent in the spirit of microfinancing.
The blog/forum section strives to solicit reader contribution to the site in order to enable readers to gain from each others gems of experience, and also to foster greater engagement with the issue and the website. It is hoped that readers will actively contribute current information and interesting snippets that would help to sustain the site. A forum would also provide a potential avenue for collaboration and intelletual discussion.
A focus of this course is actionable information, particularly with the fast-paced, technologically savvy world of today. Up-to-date knowledge is key to successful operations, and to maintaining the relevance of the site.
The wealth of resources available on the web is a rich resource for anyone seeking to learn more or get involved in microfinance. Links to other relevant sites would help to facilitate information gathering, and allow agglomeration of useful information to provide, in a sense, “economies of scale” in the market for information.