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Dec 23, 2009

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Hunter Farrell

Yes, but...!

Well-planned microfinance interventions can help "empower" the poor IF:

(1) They rely on *providing skills* like basic bookkeeping, microeconomics, how to set prices, inventory control, product development, etc. (otherwise, the intervention propels them into greater debt, as they are "empowered" to invest in an unprofitable product);

(2) They are *coordinated* with the efforts of local/national governments and other NGOs, otherwise, many poor participants wind up using microfunds from NGO B to pay their loan from NGO A-- in some Global South metropolitan areas, NGOs compete for poor clients so they can get the most capital pumped through their programs (the more they loan, the greater the percentage they can use for their own programs); and,

(3) They are paired with strategically focused efforts to address the *justice* issues that often contribute to the conditions of poverty in the first place (many/most microfinance efforts make no long-term impact on the poor because the small progress made is quickly wiped away by corrupt officials, burdensome governmental regulations and unfair competition/practices by larger corporations).

IF you attend to the issues of skill development, coordination with other groups, and the underlying issues of justice, THEN microfinance can supply the missing link to the complex chain of microeconomic development. This is standard microeconomic development theory-- I would also add a faith component: I have seen many poor and oppressed people "empowered" to become oppressors if a Christ-centered spirituality is not part of the holistic development.

Partners for Just Trade, a project begun by the Presbyterian Hunger Program and Giddings-Lovejoy Presbytery, has developed a solid track record in connecting the various links in the chain to help several hundred poor Peruvian artisans increase their income 300-400% in sustainable ways. Check them out: http://www.partnersforjusttrade.org/

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