The Power of Microfinance | Tom Eggert | TEDxMadison

Summary

In this inspiring story, a professor from the University of Wisconsin-Madison recounts how his students launched a microfinance initiative to help the people of Haiti after the 2010 earthquake. Despite billions in aid, many Haitians were not receiving help directly. The students, with the guidance of a local pastor, set up a microfinance program to provide small loans to help families rebuild. With 100% repayment and ongoing growth, the initiative not only empowered individuals but fostered community development, demonstrating how even small amounts of capital can create lasting change.

Takeaways

• 😀 Jurgens was a student who was on the last plane out of Haiti before the 2010 earthquake, which devastated the country, killing an estimated 160,000 to 300,000 people.
• 😀 After the earthquake, many well-known aid organizations were involved, but local communities felt the aid was not reaching individuals in need.
• 😀 A group of students, led by the professor, decided to raise $3,000 to help those affected by the earthquake through a microfinance program.
• 😀 Microfinance, providing small loans to those without access to traditional banking, empowers people to lift themselves out of poverty by starting or expanding small businesses.
• 😀 The goal of the microfinance initiative was to avoid creating dependency on aid and instead empower people to take responsibility for their own economic future.
• 😀 Pastor Wally Eyre Pierre, who had founded an economic development organization in Haiti, worked with the students to identify a community (Bow Masala) to implement the microfinance program.
• 😀 The microfinance program began with 42 loan recipients, providing small loans of $50–$60, all of which were repaid in full, leading to the success of the program.
• 😀 Loans were given with a low interest rate of 1% per month and repaid weekly, creating a revolving loan fund that could continue to support the community.
• 😀 The microfinance model focused on promoting dignity, responsibility, and entrepreneurship, providing a path for people to overcome poverty through their own efforts and businesses.
• 😀 One success story was Noreen, a mother who used a loan to buy a pig and improve her family's financial situation, allowing her to send her daughter to school, which she could not afford before.
• 😀 The program, initially aimed at the Haitian community, later expanded, with over 1,000 loans issued, and has sparked interest from other regions like the Philippines.
• 😀 Wisconsin Microfinance is unique in being student-run, with students like Trevor Fronda and Alana McKeever taking leadership roles, learning by doing and raising awareness through events like fundraisers and runs.

Q & A

What was the initial catalyst for the microfinance project discussed in the script?

The initial catalyst was Jurgens, a student in the sustainability class, who was on the last plane out of Haiti before the 2010 earthquake. After the earthquake, he shared with his professor that aid organizations were not effectively reaching the individuals who needed help the most, prompting the class to start a microfinance initiative.

How did the microfinance program differ from traditional aid efforts?

Unlike traditional aid, which can create dependency, the microfinance program focused on providing small loans to individuals, enabling them to start businesses and become economically self-sufficient. This approach aimed to empower people to lift themselves out of poverty by fostering entrepreneurship and responsibility.

What was the first round of loans used for in the community of Bal Masala?

The first round of loans, totaling $3,000, was used by 42 individuals in Bal Masala to start small businesses. These loans were typically around $50 each and were used to purchase goods such as pigs for breeding and selling, helping the recipients improve their livelihoods.

Why was Pastor Wally Eyre Pierre important to the project?

Pastor Wally Eyre Pierre was essential because he had connections within the community of Bal Masala and was the founder of a local economic development organization. Although he had no experience with microfinance, he was open to the idea and helped facilitate the program's implementation.

What role did women play in the success of the microfinance initiative?

Women were particularly instrumental in the success of the microfinance initiative because they often used the funds to strengthen their families. For example, they reinvested in their businesses and used the profits to improve their children's education and quality of life, as demonstrated by the story of Marine, a mother who sent her daughter to school using income from her microloan.

What was the significance of the 100% repayment rate in the microfinance program?

The 100% repayment rate demonstrated the effectiveness and sustainability of the program. It showed that the recipients were responsible borrowers who were able to repay their loans and, in turn, reinvest those funds into the community, allowing the program to continue growing and helping more people.

How did the microfinance program evolve over time?

The microfinance program expanded over time, having made over a thousand loans and growing a revolving loan fund. It also began to serve communities outside of Haiti, such as in the Philippines after the 2013 typhoon. The program continued to develop, increasing its reach and impact in empowering individuals and fostering economic development.

What is the core philosophy behind microfinance as presented in the script?

The core philosophy of microfinance, as presented in the script, is that poverty is not caused by laziness or lack of effort, but by a socio-economic system that excludes the poor from financial opportunities. Microfinance provides the poor with access to capital, enabling them to become entrepreneurs, take responsibility for their lives, and contribute to economic development.

What role did students play in the success of the Wisconsin Microfinance program?

Students played a crucial role in the success of the Wisconsin Microfinance program. They helped organize fundraisers, manage the loans, and raise awareness about microfinance. The program was entirely student-run, and through their involvement, students learned about social entrepreneurship, making a real-world impact while developing valuable skills.

What is the broader global impact of microfinance according to the script?

The broader global impact of microfinance, according to the script, is significant. While there are billions of people living on less than $3 a day, microfinance provides a solution to empower them. It enables individuals to start businesses, improve their families’ lives, and foster economic development from the ground up, creating a more equitable and sustainable world.