MYTH: Microfinance is a fool-proof way to eradicate poverty. FACT: While we certainly see microfinancing the MPA way as an effective strategy in lifting people up from extreme poverty, microfinance works best in the context of a supportive, holistic approach that includes training, coaching, ongoing support and problem solving.
MYTH: Without microfinancing people living in poverty would have no access to credit.
FACT: People struggling on less than $1.25 dollars per day do face challenges when they seek financial services. Traditional loans require monetary collateral. Banks require patrons to wear shoes toenter. Loan sharks are happy to provide quick loans, but at predatory and shifting terms. Microfinancing the MPA way offers viable, fair and empowering access to credit and financial services.
MYTH: No real collateral is needed for the startup and receiving of a loan.
FACT: Each and every one of our loan recipients have been required to save a certain amount of money or have put in hours of “sweat equity” to count as proof of repayment ability.
MYTH: Microfinance only really empowers women.
FACT: Microfinancing the MPA way is focused on those living in extreme poverty (less than $1.25 a day). The sad fact is that most people in this situation are women. Microfinance does provide extremely powerful ways for women whether single, married or widowed to create a sustainable income. However, Microfinancing the MPA way is open to all regardless of sex, tribe or religion and we have many men involved in our projects working and leading their families out of extreme poverty.
MYTH: The poor only need access to credit to pull themselvesout of poverty.
FACT: While the actual lending of money is a key step to ending poverty, more is needed. With our projects in East Africa, lending occurs through borrowing groups. Groups meet regularly and enforce repayments through peer pressure. Microfinance is a lot more than credit, – accountability is involved.
MYTH: The repayment terms are unreachable for borrowers
FACT: Microfinancing the MPA way provides relatively low- interest loans and with reasonable terms for repayment. Whether the repayment is monitory or as a “living loan” with the passing on of a calf or piglet, the loans are repaid and at a 98% rate!
MYTH: Microfinancing is a deathtrap for the poor.
FACT: Microfinance done well is a benefit to those struggling in poverty. Microfinance for the profit of outside investors or microfinance done poorly, can lead to a potential of limited support infrastructure t