How microfinance is making a big difference in the developing world

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How microfinance is making a big difference in the developing world

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Marie Claudine Musabyimana had a choice: make a decent living in the light, or earn a pittance in the dark.

Three years ago, Musabyimana opened a roadside stand stocked with tomatoes, carrots, and green peppers. She served local Rwandans in a small town near Kigali. A single mother, she worked daily to provide for her six-year-old daughter. But it wasn’t ever enough. In the evenings, her earnings meager, she could either close up shop at dusk—which would cut into her revenue—or attract further business via the light of hazardous kerosene lamps.

To compound the problem, Musabyimana’s situation was just as fraught at home. Left open, the door would let in enough light so that she and her daughter could study, cook, or play. But it would also invite intruders or thieves. A closed door meant using costly kerosene lamps that posed a fire hazard, and it would emit soot and coat the room in a thin layer of grime. (This is a common problem in Rwanda because, by and large, most of the population is not on the electrical grid. According to the most recent statistics from the World Bank, as of 2012, 82 percent of the country was left in the dark.)

Musabyimana made up her mind; she went to Urwego Opportunity Bank and took out a loan for US$320 to purchase a solar lamp. This may seem like a small sum, but in fact it’s slightly less than half of Rwanda’s 2014 per capita income. Musabyimana then received assistance on two fronts: encouragement from the local trust group—a coterie of women who met weekly to guarantee each other’s loans and share their business challenges—and support from Opportunity International, a global non-profit focused on helping people in the developing world work their way out of poverty.

The recipients are not given no-strings-attached gifts, said Vicki Escarra, Opportunity International’s Global Chief Executive Officer. “We create a partnership, a relationship with clients, by providing them with financial resources and/or capital,” she said. For her part, Musabyimana was given both. “The majority of people that we work with don’t have any collateral, so access to capital is really important.”

Michele Sullivan, President of the Caterpillar Foundation, which supports nonprofits like Opportunity International, says that Opportunity International’s efforts allow women like Musabyimana a leg up in a country that, to some degree, seeks to oppress them. In Rwanda, she noted, women are oftentimes undermined in their attempts to do something as simple as owning land.

The Caterpillar Foundation helps Opportunity International by providing financial resources and helping to strategize on which areas of the globe are most in need of assistance.

“These small business loans cannot be overstated in the importance of the development of these countries,” Sullivan said. “Entrepreneurs are the key and the number one thing they need, they will tell you, is capital. Opportunity International does that.”

Thanks to the loan, Musabyimana—now armed with a solar lamp—converted her temporary food stand into a more permanent shop, filled with new items. This, in turn, attracted more customers and she was eventually able to repay the loan. Then, Musabyimana took out another loan—this time for double the amount—and made further improvements to her store.

Musabyimana also installed a solar lamp at home, so her daughter, who had fallen behind her classmates because she was unable to do homework at night, could study in a safer environment every night.

More money also meant Musabyimana could afford to send her daughter to a better school and pay her school fees on time. Meanwhile, sales at her food stand have tripled.

Ever-ambitious Musabyimana has a new goal: to build a solar-powered supermarket. At the very least, thanks to a small amount of money and a great deal of ingenuity, she no longer has to choose between her livelihood and her safety.