Fighting poverty with micro-loans

WEDNESDAY, JUNE 6: A pioneering programme to help struggling people become entrepreneurs is set to expand in Bermuda, it was revealed yesterday.

The Coalition for the Protection of Children, with help from the Bermuda Commercial Bank, has brought Martin Burt, the chief executive of a similar programme in Paraguay, to the island to help promote “micro-loans” for would-be entrepreneurs with no access to mainstream banking support.

Mr Burt, executive director of the Fundacion Paraguaya and the English-based Teach a Man to Fish, said: “Some people can’t meet the requirements and conditions that a bank requires.

“That’s where micro-finance comes in – there are people who already owe money and don’t have access to ordinary banking.”

But Mr Burt added that – despite clients being regarded as high-risk by conventional banks – the default rate on micro-finance schemes was generally lower than that for mainstream banking because of good support networks.

He said: Micro-finance education programmes are working quite well in other parts of the world.

“There’s a growing sense that social entrepreneurship can be a mechanism to address intractable social problems.

“Today, it’s easier because of globalization to share what has been happening in other parts of the world.”

He added there was an increasing realisation that governments could not do everything needed to lift people out of poverty – and help cut down on the social ills associated with a sense of hopelessness.

Mr Burt said: “The war on drugs, what to do with gang members and things like that are now challenges in many societies.

“There are micro-finance programmes and youth employment programmes which have been very successful in other countries.

“A 17-year-old chronically unemployed unwed mother in Bermuda is the same as anywhere else – she wants to be independent and look after a family.

“Even though Paraguay and Bermuda are different, some marginalised populations in Bermuda are the same as in other countries.”

He added: “I’m fascinated and impressed by Bermuda, by the country and by the openness of the people. It’s been nice and rewarding.”

Mr Burt is founder of and CEO of Fundacion Paraguaya, which has spent 25 years promoting small loans to help eliminate poverty and creat similar social programmes in his homeland and abroad.

He has been awarded a UNESCO medal for his work, as well as awards from nations from Taiwan to Argentina and has published several books on his work.

Sheelagh Cooper, president of the Coalition for the Protection of Children, said micro-loans could be used to help women and the young.

She added: “We have been providing micro-loans for women to start their own businesses for several years now, but we really felt we could improve our programme by seeking the advice of someone who operates micro-financing on a bigger scale.

“We were hugely grateful to the Bermuda Commercial Bank for referring us to Martin and for bringing him to Bermuda to share his experience with us.

“Our time with him has made it possible to restructure some of our approaches to improve our product and enable us to expand the availability of our micro-loans to more women.”

Mr Burt said: “It’s human nature that there are always people who fall through the cracks in any society, through unexpected circumstances.

“In addition to top down government services to the needy, there are ways of appealing to the energy and entrepreneurial spirit inside people who would otherwise remain beneficiaries.

“People can be challenged to be inspired and motivated to produce income, lift themselves up and become economically self-reliant.

“It’s about motivating and inspiring people who are living below the poverty line.”

He added that government support programmes could sometimes make problems worse by creating a dependency culture, rather than self-reliance.

And he said that cheerleaders for the “trickle down” effect from the wealthy to the poorest “haven’t been looking at the evidence.”

Mr Burt said: “Micro-finance is not socialism – on the contrary, it’s appealing to entrepreneurial spirit. It’s not charity or a government handout, but a conviction that people can help themselves if the conditions are appropriate.”

Horst Finkbeiner, CEO and director of the Bermuda Commercial Bank, said: “It’s helping to bring new ideas - we do a number of things in support of charities in Bermuda and this is another of things we thought might be interesting.”