Most of the people living in extreme poverty today are running their own small farm or business, and they don't make enough money. To increase their incomes, they need to grow the productivity and/or profitability of their farm or business. To grow, they need to invest — in equipment like a greenhouse, an oven, or a saw, or in inventory like fertilizer, flour, or wood. Like us, to invest in their businesses, they often need a loan.
For over 30 years, we've helped people lift themselves out of extreme poverty by providing microfinance services, like small business loans. World Vision's microfinance subsidiary, VisionFund International, is a significant part of our Economic Empowerment ministry. This is not only because microfinance works, but also because lending to the poor is a commandment for God’s people. See our verse of the month below!
Lastly, I hope you'll join us for a special briefing about our microfinance work on Tuesday, June 27. See details below.
Mark your calendar: Special briefing June 27
Update on our microfinance work
Join us as we share our new models, evidence of impact from external evaluators, and the exciting new opportunities for serving families and communities through THRIVE 2030.
For people well acquainted with our economic empowerment work, this will be an opportunity to dive deeper into the great successes we are seeing around the world. For those new to our work in this space, this will provide insight into the great power that microfinance puts into the engine of economic empowerment.
The call link is https://zoom.us/j/92105371328. Add it to your calendar now and feel free to invite friends, family, or co-workers to join on Tuesday, June 27 at 7 p.m. Eastern, 6 p.m. Central, 5 p.m. Mountain, and 4 p.m. Pacific.
In focus: Designing products to serve the most economically vulnerable
Most initial microfinance loans start at $500 or more. A loan of that size is simply far too large for people just beginning their journey out of extreme poverty; it's many times their annual income, and they have not yet developed the skills to manage it. Starting with smaller loan amounts gives them the chance to grow their managerial and financial skills gradually. World Vision's model begins with Biblical Empowered Worldview training and transitions into savings groups. A special financial product for people who are members of a savings group is needed for the next important stage in their financial journey.
The good news is that World Vision has developed a groundbreaking financial product for this need: "lending to savings groups," also known as FAST (Finance Accelerating Savings group Transformation). Instead of lending to the individual members, this product is for the group as a whole. This preserves the group's internal rigor of working with peers in a disciplined, structured way to save money together, lend money to members, and coach one another on business issues. A bonus benefit: Because women make up roughly 80% of the members of a World Vision savings group, this is a very powerful tool for women's economic empowerment!
Because this product is only offered to mature groups who have solid repayment and savings performance, we are able to effectively make "nano-loans," with the average loan being $45 per person. Loans of this size allow savings group members to effectively and rapidly grow their small businesses and farms, taking advantage of economic opportunities in line with their capabilities. For people making the move out of extreme poverty, that starting loan amount is neither too small nor too large. It is just right.
The "lending to savings groups" model uses digital tools like mobile phone loan applications, digital loan analysis and processing, and mobile money transfers to the group. These digital tools provide cost and time savings, meaning our costs go down and our efficiency goes up, allowing us to serve a larger number of groups and do it sustainably — covering all of our operating costs.
Click here to read the latest external impact evaluation of our "lending to savings groups" approach from Rwanda.
In focus:Ellen's story — Moving out of extreme poverty in Zambia
In 2018, Ellen (age 43) helped form the Kulijamia Savings Group in Zambia to help herself and others in her community who needed capital to expand their struggling businesses. At the time, she had a small garden that yielded enough to feed her family and sell at a small grocery store she operated on her property.
With World Vision's introduction of "mobile money," the group gained access to secure accounts and the ability to move money digitally, eliminating the worry about moving precious cash physically within the community. They also received financial literacy training, where Ellen learned how to use money, borrow wisely, and invest in livestock as an asset and earn larger profits. And the Biblical Empowered Worldview training that the group received promoted a shift in Ellen's mindset. She said the training “helped her think outside the box” and she began seeing opportunities to start new businesses in her community.
When VisionFund introduced "lending to savings groups," the Kulijamia Savings Group was able to take a loan. This provided the group with the capital they needed to make bigger loans to its members. The average member’s loan grew from 1,000 kwacha ($63 USD) to 5,000 kwacha ($313 USD).
Ellen used her bigger loan to scale up her garden, start making and selling school uniforms (see photo at right), and purchase five goats to raise and sell at the international border, where prices for goats are $93 — much higher than the local price of $25.
Ellen’s income has now greatly increased. She recalls how she once struggled to put food on the table for her five children and pay their school fees. Now her children enjoy three nutritious meals each day. Even the children’s living conditions have improved with the purchase of a mattress for them to sleep on.
Ellen is happy and proud that her family’s life has been transformed as a result of her hard work, and she is not finished yet. She hopes that with the expansion of her livestock business she will be able to pay for all her children to go to university.
Verse for the month
If there is among you anyone in need, a member of your community in any of your towns within the land that the Lord your God is giving you, do not be hard-hearted or tight-fisted towards your needy neighbor. You should rather open your hand, willingly lending enough to meet the need, whatever it may be. — Deuteronomy 15:7,8 (NRSV)
To partner with us:
Give to the Economic Empowerment Global Fund: THRIVE 2030 to help us reach 10 million people in 10 countries with the tools they need to lift themselves out of extreme poverty. Tools include Biblical Empowered Worldview, savings groups, market knowledge and access, and "lending to savings groups" (i.e., FAST loans).
Praise that after six failed rainy seasons, rain has finally come to the Horn of Africa.
Pray for wisdom in helping to build both improved and resilient livelihoods across the Horn of Africa. While the region is receiving much-needed rain, the hunger crisis is far from over. Crops need to be planted, and some of the rain has been quite intense, causing significant flooding.
Prayfor resources and favor for World Vision's emergency response to the impact of Cyclone Mocha, which made landfall in Myanmar on May 14. This disaster affected an estimated 25 million people, with the majority of extreme damage in Rakhine state, where the already vulnerable Rohingya population lives. The full extent of the damage is still being assessed, and recovery challenges are compounded by conflict within the country. World Vision is mounting a strong response that includes VisionFund.
Thank you for your faithful partnership!
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