AI’s work is guided by the age-old adage, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” It’s a simple enough idea: we are constantly given opportunities to help others, but, if we think about it, by doing the work for them, we are really perpetuating further helplessness—or so the thinking goes.
According to the World Bank’s most recent projections, 1.29 billion people (or for better effect, 1,290,000,000) are below the poverty line. This ten-digit number represents 22% of the total world population. Close to a quarter of the world lives on $1.25 a day! In perspective, that’s the price of the daily croissant and coffee I pick up on the way to work. Within this group, a subset exists that is capable of helping themselves and their communities, whom I like to think of as the “enterprising poor.”
I think their request for help, when given, is often not met in the most constructive manner. This is where organizations such as AI offer, through various means, the proverbial fishing lesson to the enterprising poor. The help they need to launch their ideas comes in the form of microloans. But what exactly are “microloans?”
A member of the enterprising poor community lacking in collateral cannot walk into a local bank and request a business loan because the loan’s risk (however small) would fall squarely on the bank. A microcredit bank (MCB) presents itself as a solution—it takes away the need for collateral. The money that is lent out by MCBs is in small amounts (>$1000) and at higher but sustainable interest rates. However, the money isn’t the most important part of the transaction. With the loans comes the knowledge base of the lenders: their know-how for launching and running a small business. This enables the enterprising poor to become qualified and ready to help themselves and their communities. Without the knowledge base, the money is essentially a fishing pole without bait.
It’s no secret, even amongst the marginalized, that there is little equality. AI’s mission is to provide both bait and pole, equitably, specifically by focusing on: women. The women helped by the foundation are encouraged to use their skills, whether it is basket weaving, papermaking, bead making, or even garment production. Their skills are leveraged with the money they receive in the form of loans to fulfill several needs of the community: baskets are made, more women are employed, self-sustenance is strived for, and eventually a successful micro-economy is achieved.
The best part of this process, though, is the recyclability of the loans. As the money is returned to the MCB (and it is returned; default rates are just 4%), the money can be reinvested in yet another venture, not to mention the further capital that has been raised through the AI nonprofit. With that, the fishing lesson begins again.
Our goal for 2013 is to start 20 new MCBs (at USD $1500 per bank). You can contribute towards a MCB individually or combine your efforts with friends. No contribution is too small, and we hope that you will.
– by Kanishka Khanna.