Thursday, October 31, 2013
Sometimes less is more. That’s the theory behind microfinance as explained by Charleston Southern University economics and business Professor Scott Pearson.
By lending a small amount of money, anywhere from $20 to $50 to $100, to entrepreneurs in struggling countries poverty can be reduced, businesses can be grown and the money can be paid back easily.
Pearson and two of his students - President of CSU’s Market Economics Society Amanda Mulholland and Enactus Club VP Brandon Lorick - are heading up the Fourth Annual Walk for Economic Empowerment.
The 5k walk begins at 9 a.m. on Nov. 2 at CSU. They are looking for walkers to enter at $20 per person. Donuts and a gift bag will be provided, Lorick said.
“We’re also giving prizes to whoever raises the most money and has the fastest time,” Lorick said.
Mulholland said she is reaching out to students and the community to get as many people to join the walk as possible. This will be her third year participating.
“It’s been growing every year,” Mulholland said.
“The walk is an effort to raise money for Christian microfinance all over the world,” Pearson said.
This year the school is sending proceeds to Moldova and the Philippines. The money is sent to Invest Credit, an organization that makes sure entrepreneurs have a solid business plan before money is lent, Pearson said.
The first Walk For Economic Empowerment took place in Boston five years ago. It has taken place at various cities throughout the world now.
The microfinance idea is based the Mohammed Yunus book, “Banker to the Poor.” Yunus was awarded the Nobel Peace Prize in 2006 for his efforts.
“It’s a powerful way to raise money,” Pearson said.
He said in his entrepreneurial action class he teaches about service action in the community. In his economic development class he teaches about the developing world.
“This dovetails quite nicely with that,” he said of how the walk relates to what his students learn.
Pearson has spent time in Moldova and seen firsthand the positive effects of microfinance.
He met one woman who managed goats for elderly people who could no longer take care of the livestock.
“She milked the goats, turned it into cheese and split the profits with the owners,” Pearson said. “Livestock is their life savings. She borrowed to build her business that way - microeconomics.
“Another man raised pigs and made sausage. He built a factory then added on to it while I was there. He had 40 employees.
“All those people have families. There’s a cascading effect.”
Another group started a plumbing supply business.
“We take plumbing for granted,” Pearson said. “They needed capital to buy pipes.”
According to Pearson, many Moldovan businesses and shops start out like a booth at the flea market.
“The lender checks out their business plan,” he said. “The payback return is incredibly high. They’ve had a 98 percent payback rate of their loans.
“We are careful where we dedicate our money. When structured well, it works well, because lending is based on reputation.
“This lends small amounts to people who have never borrowed. Even $50 is important to them.”
“The reason I participate is because this will impact the immediate person and the people to come,” Mulholland said. “I hope to alleviate poverty and this is one of the best ways I’ve found to accomplish that.”
“For me it was, if you give your money (to charities) you never know where it goes,” Lorick said. “With this, it’s proven to help person after person.”
He added that Moldova, the poorest country in Europe, has some of the highest rates of human trafficking and alcoholism due to the nation’s impoverished state. He said he feels passionate about raising funds to help fight these problems.
Pearson said there are an enormous number of Moldovans who leave their families for several years to go overseas to find work. To do this they must often leave their children behind.
“We don’t see all the impacts poverty has,” Pearson said. “That’s one I find kind of striking.”
For more information visit www.w4ee.org.