Week 11: Micro-financing and Development Models

Grameen Foundation Logo (source: OFA)

Grameen Foundation Logo (source: OFA)

The Grameen Foundation aims to connect the world’s poor to their potential by uniting their determination and skills with the resources they need. Focusing on financial services, health, agriculture, and anti-poverty since 1997 the Grameen Foundation has made an impact in Sub-Saharan Africa through the creation of mobile-based solutions and access to financial services.

Muhammad Yunus (source: grameen-info)

Muhammad Yunus, founder (source: grameen-info)

The bank model refers to a ‘village bank’ for the poor that is based on principles of trust and solidarity (Grameen-info). ‘Micro-loans’ helped poor, small business owners in an attempt to harness entrepreneurial spirit. The Grameen Bank, a microfinance organization values community development and won the Noble Peace prize in 2006. They target the rural poor in countries such as Ghana and Kenya via mobile technology that delivers information services and financial assistance. In Ghana, the Foundation works with the Ghana Health Service, endeavoring to develop maternal and neonatal care in communities where health care is lacking. The Mobile Technology for Community Health (MOTECH) initiative has delivered health information to youth and rural farmers. The mobile-based system in Kenya helps farmers properly store crops and connect the to markets for sale of their product (Grameen Foundation).

(source: KIVA)

KIVA’s mission is to connect people through lending to alleviate poverty. As a microfinance institution, they partner with microfinance institutions to provide loans to people who don’t have access to traditional banking systems (KIVA). Here are some of the partnerships:

KIVA logo (source: Epiphany Channel)

KIVA logo (source: Epiphany Channel)

“It’s time to stop pretending that the aid-based development model currently in place will generate sustained economic growth in the world’s poorest countries,” (Moyo 144).

Moyo’s Dead Aid proposal for development consists of three stages:

  1. Economic plan which reduces a country’s reliance on aid
  2. Choose a finance alternative
  3. Strengthening of institutions
    • Accountability and transparency

Sachs’ suggests a slightly different solution, calling for the reform of globalization. “Enlightened Globalization” includes a globalization of democracies, multilateralism, science and technology, and a global economic system designed to meet human needs (Sachs 359). He also provides nine steps towards the goal:

  1. Commitment to ending poverty
    • Halving poverty by 2015 and ending extreme poverty by 2025
  1. Adopt a plan of action
  2. Raise the voice of the poor
  3. Redeem the role of the US in the world
  4. Rescue the IMF and the World Bank
  5. Strengthen the United Nations
  6. Harness global service
  7. Promote sustainable development
  8. Make a personal commitment

Both Moyo and Sachs highlight the importance of an alternative plan of action, as well as the strengthening of institutions, including the IMF and the World Bank. Corruption, disease, poverty, and war can all easily cross international borders, making the necessity for intervention even stronger. For example, stolen money sent to a European bank can fund terrorist activities in other parts of the world. On the other hand, poverty and war prompt refugee flight and unchecked immigration, placing burdens on Western economies.

Many argue over whether or not Africa really needs aid, including Andrew Mwenda, who suggests we focus on the opportunities for creating wealth and happiness on the African continent.

(source: TED)

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