Corazón Endonela lives in Makati, Philippines, with her husband and three children. The road to her home winds past streams of raw sewage. She used to work in a slipper-making factory, earning about $117 a monthnot enough to support her family. She wanted to go into business for herself, manufacturing and selling her own slippers with help from neighbors and family members.
Endonela had persistence, creativity, initiative, and business sensebut no start-up capital. Traditional banks would have considered her unreliable because of her lack of sufficient income or collateral. Local loan sharks would have lent her money, but at steep interest rates.
Endonela received a loan of less than $100 from a local microfinance institution, which enabled her to start a self-sufficient slipper business and generate a decent income. The institutioncalled the Tulay Sa Pag-unlad Inc. Development Corporationwas able to provide funds to Endonela because of money lent, in part, from churches and individuals in the United States. That money came through an organization called Oikocredit.
Oikocredit provides hundreds of such loans to women and men from 67 countries in Asia, Africa, Latin America, and Eastern Europe. Through the shared investments of churches, individuals, and community organizations in wealthy nations such as the United States, cooperatives like the one in the Philippines are able to empower and improve the lives of the formerly "unbankable"the poorest of the worlds poor.
Oiko-what? "Oikos" is the Greek word for community or household. It refers to a system in which people share mutual benefits and responsibilities. Oikos is the root of "eco," as in "economy," "ecology," and "ecumenism." The word "credit" means more than a loan. Derived from the Latin "credere" (to believe), it manifests itself in words like "creed" and "credible." So "Oikocredit" refers to belief in fellow members of the world community.
Oikocredit began as the Ecumenical Development Cooperative Society, founded by the World Council of Churches in 1975. Oikocredit now has offices in the United States, Canada, Europe, and Japan that work with investors and offices in Asia, Africa, and Latin America that work with cooperatives (called "project partners"). Today, Oikocredit provides loans to 400 project partners. In 2001, Oikocredit USA sent more than $380,000 in loans to Oikocredit International. In 2002, that amount was more than $750,000. The goal for 2003 is $1,000,000 in loans.
Unlike grants or donations, which can promote dependence, loans to the poor encourage self-reliance, empowerment, and community development. In a credit relationship, the lender and the loan recipient are equally respectable business partnersloans are about confidence, not charity; about dignity, not hopelessness.
"Credit gives people much more control over their money than grants do. When people apply for credit, they apply for what they want to do," says Terry Provance, executive director of Oikocredit USA. "When people apply for grants, too often they have to meet the requirements of the grant, rather than developing their own projects and businesses. Credit has fewer strings attached."
Oikocredit works with the Calvert Foundation, which has partnerships with various international development organizations. In order to provide a loan through Oikocredit, investors in the United States send checks to Calverts offices in Maryland. Calvert transfers the money to Oikocredits U.S. office in Washington, D.C., which sends it on to the offices of Oikocredit International in Amersfoort, Netherlands. Every two to three months, Oikocredit International transfers the funds to project partners in the Philippines, India, C"te dIvoire, South Africa, Peru, Romania, Brazil, and 60 other countries around the globe. These microcredit institutions, in turn, grant loans to women like Corazón Endonela.
Lending organizations have various criteria to assess loan requests. The business must benefit the local community and respect the surrounding environment. Cooperatives and women are favoredthe latter not only because womens entrepreneurship tends to be overlooked, but because women have a better repayment record and are more likely to contribute money to their communities. Entrepreneurial projects must be economically viable, and the local microfinance institutions must see a clear need for the loan.
SHARE (the Society for Helping Awakening Rural Poor Through Education), in India, is one such institution. SHARE, which has more than 82,000 membersall of them womendistributes loans from Oikocredit to local entrepreneurs. Because only two of every five SHARE members can have an outstanding loan at once, the women encourage one another to repay the loans on time. Loans range in amount from $75 to $500; the maximum loan period is 10 years. After repaying one loan, recipients can take out another, eventually increasing the loan amount to accommodate projects such as housing improvements.
High Risk? Conventional banks usually refuse loans to the very poor because they lack securities or collateral, but Oikocredit has found that even very poor recipients of loans are reliable and committed to repayment. Loan recipients have a 91 to 92 percent pay-back rate, and a loan-loss provision financed in the Netherlands covers a large percentage of those risks. Even if loan recipients cannot repay their loans, investors will be repaid in full. "Credit is so vital to the poor that they are very good at paying back their debts," says Provance. "In 28 years of operation, we have paid every investor their entire principal, plus interest. Everyone who has asked for interestbecause not everyone doeshas received it. Its a very solid investment."
The minimum amount of an initial investment is $1,000, but subsequent installments range from $250 to $2,000,000. The current interest rate for loans is 2 percent. Investors who need their money repaid before the end of the one-to-five-year loan period can sell their shares back to Oikocredit.
People of faith can demonstrate their trust in the "unbankable" by investing a small loan in the work of an entrepreneurbe it a potato farmer in Bulgaria, a coffee farmer in Peru, or a stationery vendor in India. Even small loans for short periods can make a life-changing difference in the lives of others, "so the poor have hope, and injustice shuts its mouth" (Job 5:16). n
Katherine Paarlberg is an organizer for Sojourners.
Who Can Invest?
Individuals Individuals can request an Oikocredit USA investment form or download the "world partnership certificate" from www.calvertfoundation.org. Write a check to the Calvert Foundation, and mail it to Oikocredit USA, PO Box 11000, Washington, DC 20008.
Churches Congregations can invest church funds in Oikocredit. Contact the U.S. office at (202) 265-0607 or e-mail firstname.lastname@example.org. You can 1) Invite Oikocredit staff people to conduct workshops or educational programs or preach at your church. 2) Order Oikocredits free newsletters and informational bulletin inserts. 3) Borrow one of Oikocredits four educational videos to show to your congregation.
Denominations Many denominations invest funds in Oikocredit. Find out how your church can sponsor a resolution of support before your denominational governing body. For example, the United Church of Christ passed a resolution, sponsored by the Pleasant Hill Community Church of Tennessee, encouraging all of its congregations to consider investing money and disseminating information about Oikocredit (www.ucc.org/synod/resolutions/ es24-7a.pdf).
Community Organizations Investments are accepted from all kinds of community and development organizations, not only churches. Bring Oikocredits literature to the next meeting of an organization in your area, and encourage them to be invested in the worlds poor.