Accepted!

Last week, I received some great news -- I was accepted by the Foundation for Sustainable Development to volunteer with one of their partner organizations in Jinja, Uganda this summer! I accepted the offer and am very excited to be spending 9 weeks pursuing what's been a growing passion of mine -- microfinance. We are still working out the details, but it looks as though I'll be spending my time working on both microfinance and organizational development for a grassroots group called the Organization for the Good Life of the Marginalized.

In case you don't know about microfinance, in brief, it is the idea of providing small loans (as little as $20) to the poorest of the poor with the idea that they will use the loans to build or improve their businesses to better their financial situation and eventually begin saving as members of their country's middle class. This idea has proven tremendously successful -- so much so that the Nobel Peace Prize last year went to Muhammed Yunus for developing the concept. It works so well for 2 reasons:

1) The economies in which microfinance institutions (MFIs) operate are extremely poor, so lifting someone out of poverty takes a lot less than in the developed world. For example, Uganda's GDP per capita is $190 ($1800 on a PPP basis) whereas the U.S.'s is $42,000 -- a 220x difference!
2) Each dollar donated to or raised by an MFI can be reused every 4 to 6 months; since repayment rates are around 98% (better than even credit card debt here in the U.S.), each dollar can be recycled as much as 20 times or more over time.

To use Uganda in a simplistic example, in 10 years time, the theory has it that a pool of money equal to a country's per capita GDP -- $190 in Uganda -- could be enough to lift 100 people into the middle class, assuming the money is repaid every 6 months and lent again to a different person, with each borrower supporting a fairly typical 5 person family. This means that it would only cost $1.90 per person to help a person into the middle class! A simplistic example to be sure, but the opportunity is tremendous no matter how it is sliced -- which is why I want to get involved in this type of economic empowerment this summer.