An Emotional Oxygen Tank For Our Team

For almost 50 years, Opportunity International has applied the principles of microfinance to address global poverty. The essence of microfinance is financial inclusion. 

Families trapped in ultra-poverty are marginalized at the fringes of society.  Often illiterate and without equity, they are excluded from access to basic financial services that most take for granted — savings, mortgages, business loans, and insurance.  Without such access, there is little opportunity to improve the quality of life or change the trajectory for the next generation. 

Ethical microfinance provides financial inclusion to basic financial services such as micro-loans, savings and insurance, along with mentoring in business and life skills. This opportunity is all that is needed – clients take it from there to start a microenterprise that will provide a sustainable livelihood.  Millions of clients have taken this journey of hope, providing for their families and often creating jobs for their neighbours. 

In addition to sustainable livelihoods, a quality education is one of the most powerful pathways out of poverty.  At Opportunity International, the power of microfinance has been applied successfully to Education Finance, with school loans combined with training in best practices to provide millions of kids with affordable access to a quality education.

Microfinance has also been applied to the agriculture value chain, with smallholder farmers seeing dramatic increases in crop yields, providing the financial stability to provide for their families and feed their communities.   And the catalyzing power of microfinance has been successfully applied to other sectors such as community health services, clean water and sanitation projects, and safe housing. 

The entire system is as sustainable and resilient as it is transformative.  The basic transactional unit is a repayable loan with fair and manageable interest rates and repayment terms.  For almost 50 years, the average repayment rate has remained consistently between 95% and 98%.  This means that loan funds injected 20 years ago remain in circulation, loaned and paid out again and again in a virtuous cycle of poverty reduction. 

However, the poorest families are also disproportionately impacted by local and global crises, such as war, political turmoil, natural disasters, climate events and pandemics. The Covid-19 pandemic and its associated economic crisis is no exception. 

The World Bank estimates that COVID-19 will push between 71 million and 100 million people into extreme poverty, as measured by the international poverty line of US$1.90 per day. [1]

The crisis has closed or shrunk client enterprises, with an associated reduction in loan disbursements and loan payments.  Clients literally ate through their savings and equity and will need access to new loans and loan extensions to move forward with their enterprises.  Schools were closed and there are real fears that many kids, especially girls, will not return once schools reopen, as they will need to work to help support their families.

And our Partners on the ground, the microfinance institutions or Bankers to the Poor, are caught in the middle of this dynamic.  Earlier this year we recognized the liquidity challenges they were going to face as a result of the emerging crisis and embarked on a strong and focused Covid-19 Response fundraising effort in an attempt to get ahead of it.

Our donors responded generously, and we have already been able to send two tranches of funding to help our Partners and clients cope with these challenges.  We recently advised one of our Partners about funding to be sent in September due to a few very generous gifts.  The CEO of this Partner emailed me with the following comment (translated from Spanish):

We thank God for such excellent news! My heart is truly touched by this news and truly GOD IS GOOD. So, we do not stop giving thanks for you and the entire Opportunity International Canada team.  With God’s help we will help many micro and small entrepreneurs who need a financial boost in order to get ahead. About 70% of employment is through entrepreneurs and a loan actually helps to generate a job for 3 people, which in terms of social impact is great.Thank you, really so much thanks! This is an emotional oxygen tank for our team.  Greetings and blessings!

We are not out of the woods yet – the crisis remains very real and serious.  We will continue to focus our fundraising efforts on providing our Partners with the additional funds that are deeply needed to respond to the challenges of Covid-19. 

Our Fall fundraising campaign theme will be THRIVE.  Our goal is to ensure that our Partners and clients not only make it through this pandemic but that they thrive into the future as they rebuild.  We can only get there in partnership with our donors – those key supporters who have helped to build this solid and resilient foundation over the past 20 years. 

Microfinance was one of the most transformative and sustainable pathways out of poverty pre-pandemic, and it will prove to be one of the best ways to regain the lost ground in the fight against poverty post-pandemic.

Our Partners and clients need us now more than ever.  Help us continue to be an oxygen tank for our Partners and clients as they work their way through the Covid-19 pandemic.

Dan