Tuesday, July 19, 2005

Rural Finance Learning Centre on the "Principled Practices in Microfinance"

Here's an inspirational abstract. Rural Finance Learning Centre discusses a guide for microfinance. It's based on the principles of Catholic Relief Services microfinance work, themselves routed in Catholic Social Teaching. Observe:
CRS's six principles in microfinance draw from their Catholic Social Teaching (CST), their own core values, and their experiences. The principles are to:

* Serve the poorest clients. To forward the CRS goal of advancing social and economic justice, they shape their services to serve the poorest communities. Women make up the majority of their clients, as they generally have the least means to support themselves and the least access to credit.
* Link loans to savings. Credit and savings are both important means to finance the growth of economic activities. CRS connect the amount lent to the amount saved to help clients build wealth as they borrow.
* Use solidarity guarantees. Group guarantees replace collateral as a means to secure loan repayment. Solidarity guarantees link new loans to the repayment of old loans. A group of clients guarantees the loans of fellow group members with the understanding that no one in the group will receive a new loan until all loans are repaid. This strategy keeps repayment high.
Preferential option for the Poor, Solidarity and prudence all form the foundation of these principles. It's refreshing to see. I often envision CRS just doling out money or running clinics. I'm pleased to find out how wrong I am--if CRS puts these principles into practice. If the organization honors it's guidelines, then CRS staff and volunteers truly assist the poor while maintaining their dignity.

Check out the other three principles. It's worth it!