Thursday, July 06, 2006

Micro-credit introduces Hope

The poor will always be with us, Jeus has said, but that's no excuse to ignore or exploit them. What has troubled people of goodwill since Christ's time, however, has been how to help the poor.

Within the last two centuries, philosophies as diverse as socialism and the Austrian School of Free-Market capitalism have debated the best course of action. The predictable result has been a great deal of heat, little light and even less relief from the poor.

That's why stories like this refresh me.

INDIAN CATHOLIC has the details of how micro-credit has liberated some of the impoverished in India.

Taste and see the hope:
A micro-credit program managed by a Catholic nun is encouraging village women to develop the habit of saving, get out of the cycle of debt and start livelihood activities.

Sister Josephine Moses started the project in September last year in Thaniwa, a village in Padaung township, about 400 kilometers northwest of Yangon. It now has 15 women as members.

The Our Lady of the Missions nun applied to Karuna Myanmar Social Services (KMSS), the local Church's social-action agency, to support the project after she took part in a Community Development Course that KMSS ran in 2003.

Sister Moses, who is responsible for the local Catholic women's group, first formed the micro-credit union with 11 married women, after explaining to them the rationale and policies as well as how it could benefit them.

The members have been saving 500 kyat (about US$0.40 in street value) a month since then. From November 2005, members were able to take out loans of 50,000 kyat to start small businesses such as trading, weaving and pig raising. The money comes from a KMSS grant and money pooled by the women.

The loans are given with an interest rate of 5 percent a month, of which 2 percent goes toward the borrower's savings and 3 percent into the common fund.

Yin Shwe, a member, says farmer families in the predominantly agricultural area have been caught in a cycle of debt.

She told UCA News that in the past they had to borrow money at interest rates of up to 15 percent a month in order to hire additional labor during the planting season and to be able to pay their children's school fees. The start of the school year coincides with the start of the planting season.

With such high interest rates, much of their earnings from crop sales after harvest went back to the "rich people." Now with the micro-credit program, she said, the people are more secure.

Hla Kyi, another member, told UCA News all loans must be repaid within three years, and only members may borrow money from the fund.

Sister Moses admits it was difficult at first to organize the micro-credit union, because people are not used to saving money. On May 19, she shared her experience of starting and managing the project at a session involving alumni of Karuna's Community Development Course. The nun took part in KMSS' second national-level course, March 16-May 18, 2003, conducted partly in Yangon and partly in Liektho, Kayin state.

The micro-credit union in Padaung is participatory in nature and is flexible, according to the nun. She said that making a difference in the grassroots community is a fulfilling experience. "Our future plan is to establish a rice bank by the end of 2007," she added.
Sister Moses free-enterprise adaptation allowed these women to participate in their own solution. By eliminating the usury interest promoted by the questionable regulatory environment of their region, Sister Moses' program helps these women to help themselves out of poverty.

More subsidiarity-in-action and personal-empowerment CST solutions to poverty, please!