As part of the Campaign’s kick-off, FINCA announced it would bring its considerable microfinance expertise and resources to Jordan and the broader Middle East. American International Group, Inc. (AIG) pledged its support to expand financial security for microentrepreneurs through a $1.5 million grant.
Announcement of the campaign was made during an event at New York University in the presence of Her Majesty Queen Rania Al-Abdullah of the Hashemite Kingdom of Jordan, who co-chairs the Campaign and its steering committee with FINCA International Ambassador of Hope Natalie Portman. Students interested in microfinance from public and private universities in the New York area also attended the event in support of the new campaign.
Her Majesty Queen Rania Al-Abdullah, a long-time supporter of microfinance and member of FINCA International’s Board of Directors, said, “I know that creating opportunity in my region is not an option; it is a necessity … [and] it is clear that programs like FINCA can help lay a firm foundation — for employment and empowerment and self confidence and hope.”
The Village Banking Campaign’s goals are to operate 100,000 Village Banks, serving those living on less than $2 a day, annually by 2010. Reaching this goal will allow all of FINCA’s subsidiaries on four continents to be financially self-sustaining, unlocking capital markets, and expanding outreach to millions more people.
Queen Rania spoke of why such programs are so essential. “To my mind, microfinance is both a sound and a smart investment — not only in lifting the lives of the working poor, but in stitching together the fragile, fraying seams of our troubled world,” she said.
Village Banking is a unique and transparent method of microfinance that puts small loans as small as $50 in the hands of very poor families through community financial associations in which loans are guaranteed by the recipients themselves. More than 91 cents of every dollar donated to FINCA goes directly to loan capital, and approximately 97 percent of loans are repaid, an extremely high figure compared to commercial loans, and one of the highest repayment rates in the industry.
Village Banking Campaign Co-chair Natalie Portman hopes to energize the next generation of leaders to become active in the fight against global poverty.
“My goal for this campaign is to galvanize my generation to support Village Banking, and take a leadership role in the fight against poverty,” said the 25-year-old, Harvard-educated Portman. “We have the ability and the responsibility to make our shrinking world a more hopeful, stable and peaceful place. With all the tools we now have at hand — new anti-poverty approaches like microfinance; technology that helps us mobilize even greater numbers of people; and a growing understanding of the imperatives — we have no excuse to miss this opportunity.”
Ms. Portman has produced a documentary which will be released later this year about FINCA’s work in Mexico with Sundance Film Festival Grand Jury Prize-winning documentary director Juan Carlos Rulfo.
The Campaign’s goals also include expanding into new regions including the Greater Middle East and Asia. As the first step toward that expansion, FINCA announced its entry into Jordan, extending the delivery of the organization’s best practices to a region still in its infancy within the microfinance community, but one that is currently outpacing outreach in Central Asia and Eastern Europe.
Executive Director Rupert Scofield said, “Our commitment in opening a microfinance program in Jordan is to introduce a broad array of products and services that will be rooted in the needs and regional customs of the people of Jordan. We bring more than two decades of best practices and technical assistance to this fledgling program, and are excited about introducing new products and strategic alliances to the country.”
For the past 10 years, FINCA and AIG’s groundbreaking strategic alliance has provided the working poor with a range of insurance products which reduces their vulnerability to economic shocks such as risks from natural disasters; loss of income due to injury, life-threatening illness and death of the main income provider; and destruction or loss of business assets, which threaten to push them back into poverty. This additional $1.5 million grant from AIG will enhance FINCA’s capacity to meet the demand of the world’s working poor for innovative products and services that help ensure long-term security for their businesses and their families.
“AIG and FINCA share a commitment to working across barriers to invest in underserved markets,” said Martin J. Sullivan, AIG president and CEO. “We are building upon our ten-year partnership to support FINCA’s efforts to create risk management tools that meet the demands of poor entrepreneurs, providing a safety net for hard-working families around the world.”
The AIG grant also provides education and training for Village Banking staff and clients to ensure microinsurance clients are properly prepared to grow their businesses, and strengthen the Village Banks’ institutional risk management programs, building FINCA’s capacity to meet its Campaign goals.
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