Microfinance Business Idea Competition?
Posted on 01. Feb, 2010 by in MFBIC
You may be asking yourself, “what is microfinance and why is it a good thing?” not to mention, ” why in the world would somebody give away $10,000 for some microfinance business ideas?”
Good Questions.
Lets start with the concept of microfinance. Loan’s aren’t generally thought of as a tool that can be used to help somebody out of poverty. In fact, most people associate loans with debt and for good reason. Whether it be a “temporary” loan through a credit card or a mortgage; loans mean debt, and with debt comes interest. The point is, in North America, loans have often resulted in trouble, whether it be skyrocketing credit card debt or the current financial uncertainty.
So why is microfinance different than a typical loan? How does it actually help people rather than just cause them to go into debt?
The majority of the worlds ultra poor have no access to even extremely small loans. Imagine you are an excellent baker and you only needed $1 to buy the ingredients to bake bread to resell at the market for $2, but because you had no savings and your present income went entirely towards providing food for your family, the opportunity to dramatically increase your income was not available to you.
Now if a similar situation occurred in North America with a member of the middle class, the bank would gladly loan them some money to finance a new business, based on personal belongings and other assets they would be able to secure the loan with.
What it boils down to is simple. Without access to credit (a microfinance loan), the world’s poorest are often condemned to a life of poverty. However, given access to even a small amount of capital from a micro-loan, the poor are extremely likely to become “entrepreneurs out of necessity” allowing them to earn additional income and improve their lives.
So why are we giving away $10,000 for some microfinance applicable business ideas?
Well we believe that microfinance is one of the most effective ways to combat poverty. But the availability of credit alone doesn’t solve everything. Ideas that lead to real business opportunities for people to pursue is the other half of the formula. Rather than attempt to brainstorm the next brilliant idea ourselves, we’ve decided to build on the collective creativity and innovation of the “crowd.”
Check back regularly for more discussions regarding everything to do with microfinance. I’m looking forward to an exciting 4 weeks and most of all, ideas!
Cheers,
Caleb Del Begio
P.S.
If you have any questions regarding the contest please feel free to contact me personally at caleb.delbegio@royalroads.ca
