Ending Poverty TogetherOne Small Loan at a Time

www.rotarianmicrocredit.org

Thoughts for the day• Every day over 20,000 people die from extreme poverty. This

statistic alone makes a fool of the idea many of us hold onto very tightly: the idea of equality. Deep down, if we really accept that their lives – African lives – are equal to ours, we would all be doing more to put the fire out. It’s an uncomfortable truth.

» Bono

• The war on terror is bound up in the war on poverty.» General Colin Powell

• Since Sept 11, 2001, the United States has launched a war on terror, but it has neglected the deeper causes of global instability.

» Jeffrey Sachs, economist, Director of the Earth Institute at Columbia University, author of The End of Poverty, special advisor to the United Nations, executor of the Millennium Development Goals

What is “poverty”?

1.1 Billion

1.5 Billion

2.5 Billion

1 Billion

Elite – a small fraction of the population with an ever-increasing and disproportionate share of wealth

Wealthy nations – have poor populations but generally not extreme poor, this is described as Relative Poverty

Moderate economic development – now includes much of China and India. In general the standard of living is improving for these populations worldwide

Moderate Poverty – basic needs are met, but just barely - minimum means exist to achieve self-sufficiency

Extreme Poverty – all assets and energy go to daily struggle for survival; exists mostly in Africa, Asia, and parts of Latin America

For more on this subject, see The End of Poverty by Jeffrey Sachs

UN Millennium Development Goals50% reduction of extreme poverty by 2015

and complete elimination by 2025

Decade for the eradication of poverty

                                         

 

                                         

                                         

                                        

 

                                         

                                         

                                        

 

                                         

                                        

 

Celebrating the Founder of Microcredit

2006 Nobel Peace Prize

Winner1998-99 Rotary International

Award for World Understanding

Dr. Mohammad Yunus

Haves and Have-nots

The poor have:• Intelligence

• Resourcefulness

• Community

• Dignity

• Motivation

They lack:

• Assets = collateral = credit

• Experience handling finances and running a business

Give a woman a fish, she eats for a day.

Teach a woman to fish, she eats for a lifetime.

Provide credit and training, she opens a seafood stand, feeds the village, and becomes a leader in the community.

A member is considered to have moved out of poverty if her family fulfills the following criteria:

1. The family lives in a house worth at least Tk. 25,000 (twenty five thousand) or a house with a tin roof, and each member of the family is able to sleep on bed instead of on the floor.

2. Family members drink pure water of tube-wells, boiled water or water purified by using alum, arsenic-free, purifying tablets or pitcher filters.

3. All children in the family over six years of age are all going to school or finished primary school.

4. Minimum weekly loan installment of the borrower is Tk. 200 or more.

5. Family uses sanitary latrine.

Ten Indicators to Assess Poverty Level

Muhammad Yunus, Grameen Bank Bangladesh figures, August , 2006 

Ten Indicators to Assess Poverty Level -- continued

Muhammad Yunus, Grameen Bank Bangladesh figures, August , 2006 

6. Family members have adequate clothing for every day use, warm clothing for winter, such as shawls, sweaters, blankets, etc, and mosquito-nets to protect themselves from mosquitoes.

7. Family has sources of additional income, such as vegetable garden, fruit-bearing trees, etc, so that they are able to fall back on these sources of income when they need additional money.

8. The borrower maintains an average annual balance of Tk. 5,000 in her savings accounts.

9. Family experiences no difficulty in having three square meals a day throughout the year, i. e. no member of the family goes hungry any time of the year.

10. Family can take care of the health. If any member of the family falls ill, family can afford to take all necessary steps to seek adequate healthcare.

The Future of Microcredit

Microcredit as a Platformfor poverty eradication through

Rotarians

“There is no conflict in having microcredit, education, health, empowerment, [and] training together; they support each other.

If you laid out the foundation of the financial system, it makes other interventions so much more powerful. If you come with education, health, and training, everything will make much more sense, and you get much more mileage out of your effort, provided you have the microcredit framework already built into the system.”

Dr. Muhammad Yunus, Founder of Grameen Bank and Nobel Peace Prize Winner 2006

Rotary Microcredit History

Since the early 1990s, through matching and 3H grants The Rotary Foundation (TRF) has funded microcredit projects worldwide.

Latin America: Mexico, Guatemala, Honduras, El Salvador, Costa Rica, Panama, Ecuador, Chile, Bolivia, Peru, and Dominican Republic

Asia and the Middle East: India, Philippines, Bangladesh, Sri Lanka, Egypt,People’s Republic of China, Indonesia, Afghanistan, Eastern Russia, Nepal

Africa: Kenya, Ghana, Niger, South Africa, Zambia, Nigeria, Uganda.

Note: this list does not include microcredit projects that were funded directly by Rotary clubs (working independently or with MFIs) that did not include TRF funds

How a “typical" Rotary Microbank works

There is no such thing as a “typical” Rotary microcredit project, since customs and business practices vary by region and country, but here are some generalities that apply:

• Small groups of 5-30 within a village, usually women

• Collective decision-making, internally elected officers and directors

• First loan of $75-$500 per borrower depending on the location and needs

• Frequent repayment, often weekly - depending on the cash turnover cycle of the operation

• Loan cycles vary from three (3) months to two (2) years, but typically 3-6 months, depending on the nature of the particular business

• No group member may receive a new loan until the entire group is up to date on all payments

• Personal development and basic business education

• Loans recycle to current and new borrowers

• Interest rates vary on a per program basis

• Borrowers develop savings accounts

• The fund keeps growing!

Microfinance is changing

• Microcredit/microfinance is reaching a state of maturity• There are >4000 NGO Microfinance Institutions (MFI)

worldwide• There are effective regional models• Automation has greatly improved• Infrastructure has made a difference; villages are

connected• Large charities such as the Gates Foundation and many

others now getting involved• The is a healthy ongoing debate between

commercialization and philanthropy

NGO = non-government organization MFI = micro finance institution

Extreme Poverty1.2 Billion

Poverty1.5 Billion

Moderate wealth2.5 Billion

Wealthy1 Billion

EliteA sophisticated Commercial Microfinance sector is emerging to serve the “poor”, providing banking, savings, insurance, and other integrated financial services to those on the “first rung of the ladder”

Commercialization

Those left behind, who cannot break the cycle of poverty with microcredit alone, also need assistance with basic nutrition, clean water, healthcare, and education – this remains the domain of strictly philanthropic efforts, hopefully leveraging the infrastructure developed by the commercial sector

Why RAGM?

Microcredit projects can be complicated and long-lived, and the details vary by culture and government. Effective projects often involve partnering with MFI’s (Microfinance Institutions) that have developed best practices and field resources in the target country. Since the early 1990’s, RI and TRF have modified their approach to revolving loan grants as a result of many lessons learned. However at this time there is limited practical information readily available for those wishing to start new banks.

Information sharing is just one reason why we

have formed the Rotarian Action Group for Microcredit (RAGM) – we’re here to help Rotarians and their Rotary clubs around the world launch more microcredit projects, easier and faster, with measurable results, and in a way that capitalizes on Rotary’s unique strengths!

Rotarian Action Group for Microcredit (RAGM)

• RAGM application filed December 2006, approved February 2007

• RAGM will identify key Rotarians in each of Rotary’s 529 districts, that will provide outreach services to Rotarians worldwide

• Our mission is to:

– broaden and deepen Rotarians understanding of Microcredit

– enable Rotarians to participate in effective Microcredit programs.

Motivate

Communicate

Educate

Coordinate

RAGMLeadership

A Rotarian Action Group is a voluntary association of Rotarians formed for the purpose of conducting international service projects that advance the object of Rotary.

RAGM Goals(Among & For Rotarians)

1. Promote and Communicate 

2. Motivate and Gain Commitment

3. Educate and Transfer Knowledge

4. Coordinate Partnerships and Evaluate Progress

5. Increase the number of borrowers served

6. Increase the opportunity to support other RAGs who also work with the “poorest of the poor”

RAGM Key Objectives

• Develop a handbook of Rotary Microcredit Best Practices by January 2009

• Encourage 5% or more of Rotary clubs worldwide to start their first microcredit project by January 2009

• Double the number of Revolving Loan Matching Grants by January 2009

• Develop standards for partnering with NGOs on Microcredit projects

RAGM Board of Directors

Chairman Vice Chairman

Steven Rickard, PDG Fabio Carballo, PDG

Calgary, Canada San Jose, Costa Rica

403-229-1933 506-384-7007

steve@propertytaxes.com fabiocar@racsa.co.cr

Treasurer Secretary

Deniel Banks Steve Bell

Portland, Oregon Portland, Oregon

503-227-0212 503-789-8627

bankspdx@aol.com steveb@steadyimprovement.com

RAGMOrganizationBoard of

Directors

District 1

Liaison

District 2

Liaison

District 529

Liaison

. . .

Advisory Board

Seventeen Rotarians, one non-voting member from each of nineteen Rotary International Zones

One Rotarian member from each ofthe 529 districts, responsible for coordinating communication andactivities within their respective districts

Honorary Advisory Group of Cooperating

Partners

Representatives from NGOs actively involved in microcredit programs

General MembershipRotarians in good standing

HonoraryMembers

RAGM Teams

• Communications

• Marketing and public relations

• Membership

• Training

• Models and best practices

• Technology

• Event management

• Speakers bureau

• NGO/MFI Partner liaisons

• VIP/honorary member liaisons

• Finance and fund development

RAGM Channels1. Club to Club - RAGM provides (through our Website and our

growing network of District Liaisons) valuable information on microcredit including: frequently asked questions, grant-writing tips, best practices, project listings, discussion groups, education tools, and more. RAGM will work with other Rotarian Action Groups (clean water, health, literacy, etc.) to coordinate delivery of projects to communities.

2. Club to Foundation - RAGM works with Rotary International (RI), through the President's newly-formed RI Microcredit Advisory Committee, and directly with The Rotary Foundation (TRF) to recommend improved microcredit grant policies and procedures (Revolving Loan Matching Grants and Health, Hunger, and Humanitarian Grants).

3. Rotarians to NGOs - RAGM develops partnerships and working models with NGOs worldwide, making it easier for Rotarians to quickly develop effective microcredit partnerships in the field.

RAGM Membership is growing daily

RAGM Outreach

RAGMBoard

OtherRAGs

Team Leaders

530 DistrictLiaisons

Fabio

Strategic PartnersRotary International & The Rotary Foundation

Rotary VIPs

FinanceCommittee

Deniel

CommunicationSteveB

TechnologySteveB

MembershipSteveR

Delegate

NominatingCommittee

Fabio

Models and Best

PracticesFabio

Team Structure

Outreach

TrainingFabio

MarketingPR

Deniel

StrategicPlanningSteveR

Pres Advisory Board MFIs

FundingSources

VIPsNGOs

PartnerLiaisons

EventsSteveR

Delegate

· Presentations· Training webinars· Media interface· Best Practices docs· FAQ docs· Links

· Dist Liaison Interface· Email· Skype· Phone· Fax· Events· Public/Open Q&A

· Dist Liaison Interface· Website· Discussion Groups· Newsletter· Email broadcast· Blogs

PUSH PULL

Club Club RCC

District Liaison

MFI NGO

Starfish / Cell

Club Club RCC

District Liaison

MFI NGO

Starfish / Cell

Club Club RCC

District Liaison

MFI NGO

Starfish / CellSuggested Reading:

The Starfish and the Spider

The Unstoppable Power of Leaderless Organizations

By Ori Brafman and Rod Beckstrom

How You Can Get Involved . . .

• Join RAGM www.rotarianmicrocredit.org

• Share this presentation at your next Club or District event

• Volunteer for a committee

• Help us identify and recruit District Liaisons

• Find other Rotarians that have a passion for Microcredit and get them engaged