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Thursday, September 4, 2008

Cow Banks: credit at work for the poorest of the poor

Ever since Grameen Bank founder Muhammad Yunus won the Nobel Peace Prize in 2005 the concept of ‘microfinance’ has become increasingly familiar, if not entirely understood.

It’s not complicated: microfinance means lending the people shunned by banks for being too poor enough money to become self-reliant (by starting a business, for example). The poor can then pay back the loan with a small amount of interest (say, 3%, rather than the extortionist rates that a private money-lender will charge) and the cycle continues with other borrowers. It has become a powerful tool against poverty in HOPE International Development Agency communities. It’s a simple, smart, and sustainable way to help the poorest of the poor to stand on their own.

However, there are families that can’t benefit from this kind of credit because they’re just not comfortable dealing with cash. One day they might become confident enough in their own management skills to take a cash loan, but in the meantime, there is still a very effective way for extremely impoverished people to benefit from credit. In countries like Cambodia and the Democratic Republic of Congo, HOPE International Development Agency ‘Cow Banks’ are bridging the gap for these families.

The concept of animal banks is quite straightforward. HOPE International Development Agency provides a poor rural family with a pregnant female cow or buffalo, and the family is responsible for taking care of it until it gives birth. Once the baby is born and fully weaned, it remains with the family, while its mother is passed on to a different family with whom the process is repeated.

In the long-term, animal banks significantly raise incomes for rural families. Specifically, cows provide labour, manure, milk, and tremendously improved farm productivity. In an age when the poor are finding it more difficult to afford basic food staples, thriving family garden plots can mean the difference between good health and serious malnutrition.

Like in our traditional microfinance schemes, Cow Banks grow exponentially, without additional cost. It’s a truly sustainable means for fighting poverty— and it’s being embraced by families that would otherwise be left behind.

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