Microfinance Project in the Dominican Republic
POSTED ON Nov 19, 2009 / UPDATED ON Jan 27, 2011
What is microfinance?
If you have been reading your monthly Praise and Prayer newsletters, you may already be praying for the success of the Microfinance Project in the Dominican Republic. But you may not know exactly what the project is.
Microfinance is a system which makes small loans—“microloans”—to entrepreneurs in order to allow them to start their own businesses. These microloans get repaid in a relatively short amount of time, after which the business owner is eligible to borrow a slightly larger amount to invest in the business.
In this project, we have partnered with Esperanza International, whose mission is “to free children and their families from poverty through initiatives that generate income, education and health, restoring self-worth and dignity to those who have lost hope.” Esperanza brings years of microfinance experience to the table.
“Their role is to provide us with the skills, staff, software and knowledge,” said COTN Development Liaison Peter Drennan. “They will teach us how to run the program properly, efficiently and sustainably. Our role is to provide the ‘clients’, the training facilities, the finances and the locations. Eventually, we hope to own the whole program, but not until we understand how to run it properly.”
According to Peter, we will be providing about 40 loans with repayment periods of either six months or one year to children who have graduated from our program or caregivers of our current children. Esperanza has developed an effective business model of loaning to groups, which they call Banks of Hope.
Each Bank is loaned a certain amount, and members of that Bank are jointly responsible for repayment of the loan. In this model, Bank members are encouraged to support each other’s businesses, enabling entire communities—rather than just individuals—to climb out of poverty together.
If the Dominican project is a success, said Peter, “we will start up microfinance in all of our countries.” Malawi, he said, will be most likely next, as the project will “expand and enhance the Widows Program that already exists.”
Estimated costs of the Dominican Microfinance Project are set at $25,000. We ask for prayer for finances, growing expertise of our staff in this program, and success of this project in the Dominican Republic. DONATE TODAY to the Microfinance Fund.