When Aimee Ivy Ansod’s husband died, she was left to raise five children alone. Later that same year, her home burned down and she lost the sewing business she had started ten years before. She was left with nothing.
Fortunately, Aimee was an experienced and talented seamstress; with an initial loan of just $65 from a micro- finance institution in Ghana, she was able to restart her business. To increase her productivity without increasing costs, she began to take in students who were eager to learn her craft. With her profits, she has purchased several machines, increased her inventory, and expanded her business. She paid back her loan and now has six students and one part-time employee. A number of Aimee’s children have already graduated from high school, and the youngest is able to attend a private school. With a small loan from a micro-finance institution, Aimee successfully started life over.
The institution which provided Aimee’s loan describes itself as “being motivated by Jesus Christ’s call to serve the poor.” But how could micro-finance relate to the Christian faith? What exactly is micro-finance? What does it do? And why has it received so much attention from the developed world, media, and academy? This essay will provide an introduction to micro-finance as a form of poverty alleviation, survey what the Bible teaches about poverty and Christian responsibility, demonstrate that micro-finance is one way in which God’s charge to serve and provide for the poor may be carried out, and advocate a holistic Christian approach to micro-finance.
Micro-Finance and Poverty Alleviation
Over the last thirty years, micro-finance has become increasingly favored as an approach to poverty alleviation. Micro-finance institutions operate in many different developing countries providing small loans – often as little as $100 – to very poor clients. These clients typically do not have the collateral to receive loans from commercial banks, so the loans provide them with the capital needed to start businesses. Some micro-finance institutions help with business development, often supporting entire families and providing for basic needs including food, education, and simple health care services. In certain cases, the micro-entrepreneurs running these businesses will go on to hire a few employees, thus generating income for additional families; after a series of loans from a micro-finance institution, a garment business (for example) might eventually provide a stable income for five families in its community. Unlike most traditional banks in developing countries, micro-finance institutions lend to the poor rather than the rich, and to women as well as to men; they offer small loans rather than large ones, and their loans, which require no collateral, are available even to those who are illiterate.
Thankfully, micro-finance institutions have reached over a hundred million clients, over fifty million of whom were living on less than one dollar a day when they took their first loans. Many more, however, need to be reached: over 1.2 billion people worldwide still live on less than one dollar a day. For these people, a small loan can have an enormous impact: In many countries, giving a family a few more dollars a day can allow children to go to school and have access to some simple health care and basic nutrition. In contrast, those living below one dollar a day likely do not have these opportunities, nor even (on many occasions) what is necessary for survival. Consequently, more than 29,000 children under the age of five die each day from largely preventable disease and malnutrition, and over 100 million children of primary school age are not in school. Sadly, the needs of the world’s poorest are far from being met. Some micro-finance institutions provide not only lending services, but also other activities and programs that aim to empower poor clients to become agents of transformation in their own communities. In particular, individuals working within Christian micro-finance organizations often have the opportunity to share the gospel of the kingdom of God with clients. Their vision is thus more holistic than their secular counterparts; as a result, they may be involved with activities such as business training, Bible studies, values formation, linkages with churches, and group discussions on HIV/AIDS and other health issues.
Although the practice of micro-finance can and does provide substantial poverty alleviation, it is not an entirely comprehensive solution to poverty. Loans may not be effective for those who are too ill to work or who have no entrepreneurial capacity; other development and relief efforts are clearly also needed. Nonetheless, for those who might be able to start a business, these tiny loans can often be the pathway out of poverty.
The Bible and the Poor
What does the Bible have to say about the poor and poverty, and how does this relate to micro-finance? Jesus, Paul and the writers of the Old Testament all emphasized the importance of caring for the poor. Jesus instructed the rich young ruler and all his disciples to give generously to the poor (Mark 10:17-33, Luke 12:33); in parables, he admonished the rich who hoarded an abundance of possessions and those who lived in luxury without caring for the poor (Luke 12:13-21; 16:19-31). He demonstrated his solidarity with the poor in the Beatitudes – Luke 6:20 reads, “Blessed are the poor” – in the Parable of the Great Banquet to which the poor, crippled, blind, and lame are brought (Luke 14:16- 24), and in the story of the Sheep and the Goats – “As you did it to one of the least of these my brothers, you did it to me” (Matthew 25:40). However, throughout his teaching, Jesus made it clear that only a renewed relationship with God could lead to the generosity and care which he asked of his followers; indeed, “[w]ith man it is impossible, but not with God. For all things are possible with God” (Mark 10:27). Jesus advocated both care for the poor and stewardship, as indicated by the Parable of the Talents, in which he encourages the faithful use of one’s gifts and talents (Matthew 25:14- 30). Likewise, Paul wanted Christians to give generously to those in need (2 Corinthians 8:13-15) but also instructed everyone to work diligently (Ephesians 4:28, 2 Thessalonians 3:7-10). (Interestingly enough, Paul himself was a micro-entrepreneur who worked as a self-employed tentmaker.) God’s concern for poor people is evident also in the Old Testament. The Law required that part of the harvest be left for those in need (Leviticus 19:9-10, Deuteronomy 24:19- 22), that debts and the enslavement of fellow Israelites be canceled every seventh year (Deuteronomy 15:1-15), and that ownership of the land revert to the families that originally owned it every fiftieth year in every fiftieth year — the year of Jubilee — so as to prevent multi-generational cycles of poverty within families (Leviticus 25:10). Furthermore, several prophets clearly express God’s opposition to social injustice and the exploitation of the poor (Isaiah 10:1-2, Jeremiah 5:27-28, Micah 2:1-4, Amos 6:1-7); the prophet Isaiah went so far as to announce that religious practices would pass unnoticed by God if issues of injustice were not addressed (Isaiah 58:3-9). Thus, whether in the Law, Prophets, Gospels, or Epistles, we see the following principles emerge from the testimony of the Scriptures: God desires that man be a productive steward of creation; God commands that provisions be made for the poor; and God hates injustice and oppression of the poor, powerless, and defenseless.
A Christian Approach to Micro-Finance
The preceding biblical material clearly shows God’s holistic concern over both spiritual and physical aspects of life. Where does micro-finance fit into this picture of God’s will for the economic relations of mankind? Micro-finance, through small business loans, enables entrepreneurs to acquire assets in order to form businesses; successful businesses provide income for entrepreneurs and their families, thereby alleviating or eliminating poverty. In this way, micro-finance is one means of carrying out God’s charge to serve and provide for the poor. Additionally, it provides assistance in a manner that allows the poor to maintain their dignity; because clients are repaying the loans which they receive, they are not accepting handouts and are therefore improving their lives by their own efforts. Yanill Espinosa, a woman in Columbia confined to a wheelchair who was able to start a leather-making business because of a micro-finance loan, reports, “My self- respect grew. I began to feel more confident…. Seeing that I was able to make my loan repayments every week, on time and in full, was an enormous boost.” Moreover, micro-finance, unlike many forms of aid, both counteracts poverty and fosters productivity. The creation of these small businesses creates work and employment while providing useful products and services to poor communities. Hence, micro- finance enables some of the world’s poorest people to utilize their talents and resources in productive and creative activity.
However, an approach to micro-finance which is Christian and holistic goes even further to fight poverty and maintain economic justice. Organizations that offer a variety of non-lending services — such as business, management, and leadership training, spiritual guidance and counseling, and values formation — in addition to their lending services go above and beyond those organizations restricted to lending services alone. These holistic non-lending services can be of benefit in a number of ways. First, by developing the skills of entrepreneurs, they promote business sustainability and increase the likelihood of success for those who receive loans. Training can provide an important bridge between the provision of loans and the reduction of poverty.
Second, Christian holistic micro-enterprise assistance can help meet spiritual as well as physical needs. If an organization is motivated by “Jesus Christ’s call to serve the poor,” a holistic approach to micro-finance is necessary because of Jesus’ understanding of service: Jesus cared about the whole person and addressed both humanity’s physical and its spiritual needs. True service, therefore, will seek to provide support both physically and spiritually; from a Christian perspective, to meet someone’s physical needs while neglecting his spiritual needs is to leave him in poverty – “[f]or what does it profit a man to gain the whole world but lose his soul?” (Matthew 16:26). Through linkages with churches, assistance from pastors, and Bible studies for clients, the ministry of a Christian micro-finance organization can accomplish spiritual transformation.
Third, holistic Christian micro- finance better equips entrepreneurs to use their incomes and abilities in ways that will contribute to the prosperity of their communities. Zambian Alice Jere, for example, expanded her chicken farming business through a series of micro-finance loans and then used some of the additional income to take four AIDS orphans into her home; had her increased income been spent on alcohol instead, there would have been no true increase in wealth or reduction in poverty. (In fact, entrepreneurs may temporarily rise above poverty levels only to return to poverty because of crime or indulgent spending.) True poverty reduction requires the transformation of the person and the entire community — and, though insufficient for addressing all manifestations of poverty, a holistic approach to micro-finance can go a considerable way toward achieving true change on the personal and communal levels. In summary, a holistic Christian approach to micro- finance (like a secular approach) can foster small business growth in developing countries; in addition, however, it can increase the likelihood of poverty reduction, provide for the spiritual needs of the poor, and potentially transform entire communities and help them prosper. The poor we will always have with us (Matthew 26:11) — but few things hold as much promise for the world’s needy as Christian micro-finance.
Tyler VanderWeele is Associate Professor of Epidemiology at the Harvard School of Public Health. Kenneth VanderWeele is president of the investment services division at the Opportunity International Network, an organization that provides microfinance loans to people in developing countries.