Micro-finance: A New Weapon To Combat Global Poverty

In January, New York Times columnist David Brooks wrote a great piece called The Underlying Tragedy. He expounds on what made the Haiti earthquake so devastating. He explains that in 1989 there was an earthquake of similar magnitude in San Francisco, yet the death toll only reached sixty-three. This number is significantly less than the tens of thousands of Haitians that lost their lives in the most recent quake.

What is it then that accounts for such disparity in loss of life? Brooks points to poverty and the weak infrastructure it creates. The recent earthquake in Haiti is just a reminder of the poverty that plagues much of the world today. The tsunami in Indonesia and the floods in Pakistan are recent events that remind us of the need around the world for aid. Poverty is a perpetual problem in many countries and it seems that with the current economic crisis it is only getting worse. It can also easily plague mountain regions of the world that have not fully adapted their economies to their geographies. Some of the hardest hit victims of the current, world financial crisis are those that are already suffering from poverty. Stifling circumstances and inflation have made it difficult for the already stretched or non-existent budgets of these poor.

The citizens of the United States and Utah are some of the most charitable in the world, yet there are still many more people who are aware of world poverty, want to help, but just do not know how to do it. One emerging method of aid to help these people in foreign countries comes in the form of micro-lending. Organizations are beginning to surface that provide micro-lending and micro-finance to people that need money to maintain and start their businesses in foreign countries. Some of these institutions include Kiva, MicroPlace, Grameen Foundation and Accion.

Customarily, and especially as of late, banks and lending institutions are not prone to lending money to poor people of the world because it is usually not economically viable. Without access to at least some capital, people living in poverty-stricken countries are not able to maintain and start up businesses, and therefore the communities in which they live remain stagnant and the problems only perpetuate. This is where micro-lending institutions can bridge the gap.

Many of these micro-lending institutions such as Kiva function primarily through field partners. The way it works is that the field partner will find an entrepreneur that is in need of money and then loan them the principal. The field partner will then, through Kiva or other micro-finance institutions take donations in sums as small as $1-25 (depending on the institution) from generous lenders all across the globe to support the efforts of the entrepreneurs and make micro-lending more viable. Kiva then gives the lent money to the field partner. As the entrepreneurs earn money, they repay the field partner who gives that money back to Kiva and Kiva ultimately returns that money back to the lender. The lender is then encouraged to re-loan that money, but they are able to keep it if they wish. Money is easily and quickly transferred through lenders and Kiva through pay pal. It should be noted that as in all loans there is always the risk of default.

Field partners for Kiva range from a myriad of institutions in different parts of the world such as IMON International in Tajikistan and Fundacion Leon in Nicaragua and Central America. On the lending institutions’ web-sites potential lenders may browse through the profiles of entrepreneurs in need in countries around the world. The potential lenders are then able to choose whom they wishes to lend to, and what amount to lend.

These micro finance institutions are not yet person-to-person lending sites, due to the field partners but they hope to achieve this goal someday. In an interview with the New York Times, Premal Shaw, Kiva’s President said “It’s highly imperfect, but it’s like a 3 1/2-year-old child: it has a lot of potential.”

Kiva and other micro-lending are making it much easier for individuals to easily aid those less fortunate in poverty stricken areas across the globe for an extremely low cost. What makes these programs all the more effective and preferable is the fact that even though many lenders give money in the spirit of charity the recipients of loans are further invigorated to pay them back, giving themselves a sense of greater ownership and personal accomplishment, and the money that was paid back from the loan is able to go out and help someone else. Through micro-lending institutions any entrepreneur has the ability and can be empowered to be successful of their own merit.

Micro-finance is evolving quickly and one day we will see many micro-finance institutions that can help those in poverty better decide their own destiny. For now, many of these micro-finance institutions are a good way for people to get involved and in their own small way combat world poverty.

By Jesse Gray, student at Utah Valley University

Photos Courtesy of:
http://www.dailyworldbuzz.com/haiti-earthquake-duration/14482/
http://www.kiva.org/lend/239941

Kyrgyz Elections: The Birth of Democracy?

Recently visiting Professor at Utah Valley University Baktybek Abdrisaev wrote an article for the online journal Open Democracy entitled Kyrgyz Elections: The Birth of Democracy? In his article he writes of the current political climate in Kyrgyzstan and the potential for democracy. Mr. Abdrisaev makes many good points on how Kyrgyzstan can create a successful nation state and many long term goals they have for affluence and democracy in the short and long term ahead. This is a good case of a mountainous region that, with democracy, could have a prospective future.

Photo courtesy of: http://arabnews.com/world/article40852.ece

Utah's Lessons and Potential

The State of Utah has a rich history due to its location in the heart of the Rocky Mountains. with unique features Utah's location provides it with some of the most diverse landscapes in the United States. When the pioneers arrived in Utah in 1847 it was nothing but a vast wasteland, with Indian inhabitants from Utes, Anasazi, Piutes, and Navajo tribes to name a few. These Indians tribes had learned how to adapt and survive in the rugged environment such as the deserts, high mountains, badlands and marshes they found themselves in.

Utah has not become the state it is overnight. It took hard work and many years of persistence and determination to build the great state of Utah. After the pioneers arrived in Utah Brigham Young, the religious as well as political leader of the State sent out members of his faith to settle in many places and were not restrained to just the state of Utah as we know it today. The pioneers faced many problems after settling in Utah. There were incursions with Indians, severe friction with the US government, especially during the Buchanan years and during the Utah War, and properly adapting to the new geographic environment they lived in. Orson F. Whitney described it in such way, “Aside from its scenic splendor there was little to invite and much to repel in the prospect of their [pioneer's] view. On all sides a seemingly interminable waste of sagebrush bespangled with sunflowers, the paradise of the lizard, the cricket and the rattlesnake.” Refining agriculture techniques for for crop cultivation and working with stone from the mountains coupled with great faith and perseverance the pioneers began to build Salt Lake City and Utah into a beautiful place to live.

Utah became a popular spot and at times, a place to settle for those seeking to gain fortunes in the California gold rush. With the completion of the railroad at Promontory Point on May 10, 1869 many more people and goods flowed into Utah. Mining was increasingly enhanced inasmuch as it could be easily shipped abroad. Many stayed to make and to lose their fortunes in mining. From the 1860s to the 1920s hundreds of copper, silver, gold, and lead mines were opened in nearby canyons, including Bingham Canyon. Gigantic smelters were later built to refine the ore.
During the twentieth century Utah began to expand exponentially economically and demographically. From 1900-1930 the state Capitol was built along with many other historic buildings in Salt Lake City. Public transportation, which included a trolley system that was eventually phased out by buses and infrastructure were built to take people all throughout downtown Salt Lake City. Streets were paved and sewer systems were installed. The population of Salt Lake City tripled. The great depression hit Utah and construction slowed during the depression years. During the 60’s construction was let loose again. This time however, many businesses were built in the suburbs outside of Salt Lake. Steps were then taken to revamp the downtown area to keep up and stay competitive with what was going in the suburbs. This contributed again to population increases. In the 70’s many beautification projects were undertaken, augmenting the quality of the city and creating a delightful atmosphere in Salt Lake City. During the 80’s and 90’s the skyline was improved with the expansion and remodeling of many of the buildings downtown. The airport was also updated. These decades preceded the Winter Olympics in 2002, which brought the world to Utah.

Utah’s success can be attributed to many hardworking people who over the years have been governed by proficient principles creating an affluent atmosphere. Utah has an exceptionally diverse economy that has adequately adapted to its unique geography. These include financial services, general services, manufacturing, mining, farming and military and government jobs. Utah’s unemployment remains well below the national average and enjoys a relatively successful standard of living for its citizens. Many people from various states have sought residence in Utah due to its economic opportunities, low cost of living and familial atmosphere. Utah is also a hotspot when it comes to tourism and recreation. Utah’s mountains contain adventure from skiing in the cottonwoods to hiking the subway in Zions National Park. Many people also come to Utah to hunt, fish, rock climb, hike and tour the many great sites that Utah has to offer.

Utah’s success can be shared with other mountain regions of the world that are striving to replicate what Utah has done and the vibrant economy it has created and one way to do this is becoming part of the Mountain Partnership. The Mountain Partnership is an international group of Non-government Organizations, mountain nations and communities and other relevant groups. Their goal is to enable global activities under an agenda of sustainable mountain development help mountain communities to work together, create networks, exchange ideas, and exchange best practices. The Mountain Partnership also seeks to coordinate efforts of mountain communities and together with the on-line Mountain Forum facilitate important dialogue and cooperation. Utah is an international exemplar for success in a mountain region. In a short period of time Utah has been able to do amazing things. Utah now has the potential to lead and teach other mountain communities to do what it has done. Countries that have had trouble developing strong economies with similar geographies include many nations such as Tajikistan, Kyrgyzstan, Nepal, Algeria, Sri Lanka and Bolivia. These countries have been plagued with civil wars, economic stagnation, poverty and deprivation, this fosters an environment that breeds terrorism and compounds the initial problem. As we have seen in Afghanistan this can result in the cultivation of illegal drugs and despotic, radical regimes that can negatively impact the global community. Utah has the capability to teach these nations how to effectively implement principles that create an ambience for not just economic growth but greater quality of life also.
The former Soviet state Tajikistan is a perfect example of this. With cotton being its most important crop and having the potential to provide jobs, to an already suffering economy. Some of the bigger challenges facing the agricultural sector are extreme debt and methods and equipment are outdated. Just as Utah, Tajikistan also has incredible mining opportunities in silver, gold, tungsten, uranium, but this sector is also antiquated not being able to realize its full potential. Many of these economic complications stem from the Tajik civil war from 92-97. Tajikistan has economic potential, it just needs good guidance and direction. It has a similar geography as Utah, and Utah is qualified to help.

Through the Mountain Partnership Utah has the ability to network and share ideas with these nations through an organization called the Mountain Partnership. One of the main goals addressed by the Mountain Partnership is to “address the challenges facing mountain regions by tapping the wealth and diversity of resources, knowledge, information and expertise, from and between one another, in order to stimulate concrete initiatives at all levels that will ensure improved quality of life and environments in the world’s mountain regions.” There are many nations that are desperately seeking to enhance the quality of life in their countries through reform and economic stability. Many of these nations just need a leader. Utah has a unique opportunity to be this leader and aid these countries productively with knowledge and experience.

By Jesse Gray, Student at Utah Valley University

Photos Courtesy of: http://utahwaterboys.com/utah-water-the-purest-in-the-world/
http://forum.skyscraperpage.com/showthread.php?t=93987&page=72http://www.asianews.it/files/img/TAJIKISTAN_Farmers.jpg