We are continuing to read through Tending to Eden by Scott C. Sabin.
I’ve skipped chapter four. It’s a great chapter, but you’re just going to have to buy the book. Buy some for your church’s library while you’re at it.
Chapter Five is important for those interested in micro-credit — the use of small loans, usually less than $1,000 — to encourage the formation of small businesses. It’s a very popular idea for helping the poor lift themselves out of poverty. It’s a loan — as commended by the Torah — coupled with guidance on starting a small business or improving a family farm.
Sabin cautions that it’s a tool that must be used with care.
One key to success is the willingness and ability to enforce the collection of the loans. If the organization begins to forgive loans, or becomes lax in collection, the loan program will quickly fail. However, creditor-debtor relationships can be a hindrance to ministry. One rarely has a warm fuzzy feeling for his or her creditors.
Plant With Purpose found that people went into hiding when they visited, fearing they were there to collect their loans! As a result, they developed a do-it-yourself credit union. The villagers were encouraged to invest their savings in a community “bank” run by the villagers. The villagers made and enforced the loans themselves. This made them very accountable, and the depositors were careful to make good loans.
With the pattern established, Plant With Purpose invested additional money in the credit co-op, allowing the community to finance additional business start ups. This was all accompanied with instructions on how to start and run a business. As a result, these co-ops have five times as many investors as borrowers, allowing the poor to build up savings.
