Like many other aid agencies, World Relief Canada has embraced microfinance. As part of our organization's accountability to our clients in the field (those hardworking entrepreneurs), our partner organizations and our donors, we are evaluated by external groups to determine if our microfinance programs are as effective as they can possibly be.

The most recent 2009 evaluation by Goss Gilroy Management Consultants, on behalf of the Canadian International Development Agency (CIDA), determined that World Relief is on the right track with microfinance initiatives.

CIDA has encouraged our continued growth in this area because microfinance targets most — if not all — of the Millennium Development Goals, most specifically because of its positive results in private sector development, poverty reduction, health, education and the pursuit of gender equality.

The external review of World Relief Canada microfinance initiatives also confirmed that our emphasis on building up the capacity of local partners to provide microfinance in their own contexts is appropriate and effective. Our partners on the ground are able to respond to the needs of their local populations, most often women, for alternative banking structures.

World Relief Canada's partners also had an opportunity to offer their feedback to the report, which was invaluable for the Canadian office. Our partners shared that they felt continually supported by World Relief Canada and were able to access WRC's expertise on a regular basis as they developed as an organization and as a loan-lender to the poor.

Partners reported that they received their funding from WRC on a regular basis, obviously critical to the loan process. The success of high-level partnerships, particularly with World Relief U.S. in Africa, creating microfinance initiatives in post-war countries was especially noted and affirmed by the report.

CIDA's evaluations confirm to us what we already know: microfinance is one of the most effective and sustainable tools for development that exist, and World Relief  Canada is doing it well.

Traditional banks will not take risks on clients without collateral, without credit, without even a bank account. WRC’s microfinance programs say “yes” to the poor when others say “no”. Our programs work with individuals and solidarity groups that co-guarantee each other’s loan.

Solidarity groups are an important link in the process. They provide accountability, support, guidance, and encouragement for loan repayment. Group members are each provided very small loans. The guarantee on each loan is strengthened by the healthy pressure members place on each other to assure that all loans are repaid on time. Because of that, microfinance loans have one of the highest repayment rates in the world. Groups also choose to bank collectively and pool precious savings, giving hard-working people the opportunity to save for the first time in their lives.

Training is provided to participants ensuring that entrepreneurs are not left alone to struggle with the dynamics of building a business. They are treated with respect, and as the business partners that they are.

Microfinance accomplishes what traditional aid programs cannot. Access to small loans and training can shatter the cycle of poverty in a way that few other programs can. It is, by its very nature, a long-term response to long-standing issues of inequality, inaccessibility and the inertia of poverty and oppression.

The creation of successful small businesses generating on-going income for a family testifies to the strength of microfinance. The ripple effect as one woman, one business, one family, one village and one country grow stronger is immeasurable. In the end, the greatest indicator of the success of microfinance are the changed lives of the hard-working entrepreneurs around the world.

What is Microfinance?

Microfinance is a leader in changing the lives of poor people all around the world. This simple but effective model of development combines tried and true economic principles with the entrepreneurial spirit of the working poor.

Most of the world’s poor — including a disproportionate amount of women — are marginalized by the traditional banking model in their own country. They own no collateral. They have no credit. And so they do not have a chance to obtain a loan to enable them to build a business.

What they have in abundance are solid business ideas borne from their knowledge of their communities and its needs. They have the passion and drive to improve their own lives, to provide for their children and to create stronger communities.

Like any successful entrepreneur, they are hungry for success and can visualize a future that is much better than their current reality.
By its very nature, microfinance has a ripple effect: the entrepreneur builds a business that improves the life of their own family, and hires other community members to provide a much-needed product or service.

Sound and sustainable small businesses are being built around the world because small, collateral-free loans are now available to the poor. Microfinance empowers entrepreneurs to change their own lives with the determination they already have — and with the dignity they deserve.

Meet Martha

Life is much better these days for Martha Andrews. The busy mother was the only member of her family providing for the needs of her family. The odds were stacked high against her in her home country of Liberia, in West Africa. No matter how hard Martha worked, it seemed impossible for her to meet her family's needs, let alone get ahead.

Then she heard about LEAP, World Relief Canada's partner in providing microfinance loans to the poor in Liberia. Martha applied to join a solidarity group. She received her first small loan. Today, Martha runs a successful store selling plastic products like buckets and dishes to her community. Successive loans enabled her to gradually increase her inventory and her profits. Martha is one of over 12,000 entrepreneurs who have received loans from LEAP in a country that has been challenged by repeated civil conflict.

The next year will be an important one for LEAP as World Relief Canada works closely with them to strengthen their management and infrastructure and expand their loan capacity to serve 18,000 clients, each one a hard-working entrepreneur like Martha Andrews. Your donation can help make a difference for families like Martha's in Liberia.

Meet Yon

Where does a Cambodian man with a grade 10 education go for a loan when his family is in need? Yon is 31 and the father of two young boys. He runs a shoe-shine stand outside of a store in Prey Veng Province in Cambodia. Desperate for funds to help pay for medicine for his young son, Yon took out a loan from CREDIT, World Relief's microfinance program in Cambodia. CREDIT was his only option — and it turned out to be an excellent choice for Yon. He was able to repay his loan. That experience with credit gave Yon the courage to apply for a larger loan, this time to help his mother start a small business buying and selling food in the local market.

Yon's entire family has benefitted as more income flows into the family. As of today's date, Yon has almost repaid that second loan. Another is on the horizon for this determined father as he plans much-needed home repairs and expansion. World Relief Canada and CREDIT plan to reach even more entrepreneurs like Yon over the next 12 months. CREDIT will become even more competitive with its loans and a more sustainable microfinance provider as its own infrastructure grows. CREDIT will offer loans to 37,000 clients — the poorest of the poor with nowhere else to turn, like Yon used to be. You can help be a part of the solution by making a donation to CREDIT Cambodia.