More about income generation
HOPE International Development Agency initiatives throughout the developing world are community-driven and serve as the starting point for comprehensive transformation that reaches beyond the initial initiative.
One-sixth of the world’s population lives in extreme poverty.
A person earning less than a dollar a day cannot afford basic human necessities such as food, clean water, clothes, shelter, health care and education – necessities HOPE believes all people are entitled to. Eight million people die every year because these basic needs are not met. Countless people will live in poverty and die needlessly until appropriate solutions are found.
Microfinance is one such solution. When small low- interest loans are extended to the motivated poor, profound transformations can result. Through their participation in microfinance groups, poor individuals are given the opportunity to become self-employed and self-sufficient. With the money earned from these income-generating activities, they will be able to afford basic necessities, pay back the loan and finally overcome the cycle of poverty.
The microfinance concept is an exciting one to people who have been ignored or abused by traditional economic structures. For example, conventional money lenders in developing countries are exploitive and charge inflated interest rates – 10%, 15%, even 20% or more per month. Elevated interest rates force the borrower to pay more than three times the initial borrowed amount. This makes no sense at all – especially for desperate people who are already unable to afford the basic necessities. Yet the poor continue to rely on money-lenders because the banks are not interested in offering small loans to serve people with such little or no savings.
Giving families the opportunity to live and to support themselves with a sense of dignity.
Microfinance programs offer the motivated poor the capital they need to initiate income generating activities that will allow them to escape from poverty. HOPE is working throughout the developing world to provide hard-working individuals with small loans that, once repaid, will be loaned to others in the community.
There is safety in numbers. HOPE encourages small community groups to pool their monthly savings. These groups manage their savings in addition to the start-up capital provided by HOPE. By pooling individual savings, the group is able to provide small loans of approximately $100 to individual members. Importantly, these groups benefit from a consistently high repayment rate that exceeds 90%. The savings and loan groups have a vested interest in the success of the borrower, not only because they benefit as a group from loan repayment, but also because the borrower is often a neighbour and friend. These savings and loan group members, with help from HOPE, are then provided with literacy and business management training.
By extending credit to the poor, HOPE is helping hundreds of thousands of people escape the cycle of poverty.
After being repaid at a manageable interest rate, the borrowed money will then be made available to other members of the community. Following a successful repayment history, larger long term loans at low interest rates will be made available to individuals within the group.