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FINCA helps people help themselves

by Rose McKenney, associate News editor

“Deidai” grew up in a rural village in Mexico. The town was in the poorest part of the country. Sadly, Deidai’s husband died while trying to get his family to the United States. Left with six young children, Deidai struggled to take care of her family. She could only make $2 U.S. a week sewing at a nearby garment shop, which wasn’t enough to support her children. Then FINCA entered her life, and offered her a chance to support her self and her family by opening her own garment business. Deidai was offered a loan with a 6 percent annual interest and payments every month. She took it. Today, Deidai owns her own sewing business,earning enough to take care of herself and her family and repaying the loan.

 

The names and situation may be fictional, but the story is real. Women around the world are in similar situations and FINCA boasts many similar true stories of women who have succeeded in situations like Deidai’s. According to the FINCA Mexico website, the foundation opened in 1989 and today is helping more than 8,000 people. Most of the businesses are small, but their owners are able to send their children to school and buy food, shelter, and medicine.

The Foundation for International Community Assistance (FINCA) provides women a way to support their families. Instead of being offered charity, women are offered loans to help start up their own businesses. FINCA tends to help more women than men, since women are the poorest in the country and are responsible for their family. In Mexico, according to an article on the New York Times Web site, the men are often gone or dead, leaving women alone to support themselves and their children.

FINCA International, today, has networks in 20 countries. It resembles the model of The Grameen Bank, developed in 1976 by Professor Muhammed Yunus and his colleagues, which provides credit to the poorest rural parts of Bangladesh. From this model, FINCA’s founder, John Hatch, developed Village Banking, which provides loans to poor women who guarantee each other’s loans with “moral collateral,” since they have no physical collateral. Unlike the Grameen Bank, Hatch’s method allows all the women to take out loans at the same time, rather than rotating a single loan to one woman at a time.

Through the loan assistance, women and their families are given a chance to earn their money instead of being given charity.

The banking groups are collectively running credit and savings associations of 20 to 50 women. The typical member is a mother who lives off $3 or less a week to support herself and her children. Joining the Village Banking group, she is eligible to receive $50, a self-employment loan.

The loans are given in a four-month cycle and are paid in weekly installments. A minimum of 20 percent of the loans is required to be set aside for savings. After paying off their first loan, they are able to borrow again. The amount of the second loan depends on the saving that they have accumulated.

According to FINCA, loans are rotated over and over again, and this multiplies the resources. In the course of five years, each dollar invested creates $15 in loans and $3 in savings.

According to FINCA’s findings, as a business grows, so does the family’s income. Their health and nutrition begins to improve. Home repairs begin and self-confidence grows.

Through FINCA, it is said that women become more empowered. Their initiative and creativity are strengthened as they choose and run their own businesses. Also, they are able to participate in running their group, keeping their books, and deciding how to invest their savings.

Today, Village Banking consists of 21 programs that serve more than 194,000 families worldwide. FINCA provides women the chance to borrow money, start or expand their business, and become financially independent through the process.

In Africa, many women are left alone to financially take care of their young children, after their husbands die of AIDS. According to FINCA Uganda, Lukia Ssemmaobe was left to support her three young children after her husband, the financial supporter of the family, died of AIDS. Ssemmaobe sold clothing door-to-door and at the marketplace. The $2 to $3 that she made every week wasn’t enough to feed her children.

With a FINCA loan, Ssemmaobe rented a kitchen and worked day and night making food. Today, Ssemmaobe is able to send her children to school, and she adopted a little girl who lost both her parents to AIDS.

FINCA repeats this story in poverty-stricken villages around the world. For more information visit www.villagebanking.org.

 

2004, Kalamalama, the HPU Student Newspaper. All rights reserved.
 
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