Once there was a group of women who were in danger of losing their livelihoods. They lived off of money made as street vendors, but the space where they traded their wares was privately owned, and the landlords wanted them out.
The women needed land. They needed a plan, and they needed money. But the obstacles were many. Women in their country typically do not own land. The women had no formal education. They had never been to school and couldn't read or write, so the local banks would not help them. What these women needed most was someone to believe -- and invest -- in them. And then they found Oikocredit, a worldwide financial cooperative that promotes global justice by empowering disadvantaged people with credit.
Cocovico -- a women-created cooperative market in Abidjan, Ivory Coast -- began its partnership with Oikocredit somewhat uniquely, with capacity building. Our West Africa office began working with the women to obtain legal counsel to negotiate access to public land. Once the land rights of the women were in place, Oikocredit provided the cooperative with its first investment capital in 2004, during a turbulent civil war when no other funder was willing to lend to the cooperative. With perseverance, the market opened in 2008 and has remained open, enduring the country's unstable political climate. The market serves up to 5,000 customers a day and provides a dormitory for its 200 female cooperative members. And during the most recent civil war, the market provided temporary housing to more than 400 displaced people.
This is the power that social investing can have.
The nature of supporting local economies from the grassroots in this way favors patience and sustained investment as opposed to one-time donations. In other words, placing social investment in emerging economies is not about a quick fix to the global challenge of poverty; it is about development and sustainability with a long-term perspective. This was the vision of Oikocredit's founders who, in the late 1960's, recognized a need for global justice in the face of the overwhelming inequalities of wealth and power existing within our global community.
Money is fundamental to the way that almost everybody in the world lives. Without access to socially funded financial services like microfinance and other services under the umbrella of development finance, many from disadvantaged populations around the world would not have access to capital for their businesses or be able to cope with unexpected financial needs. Even the smallest of loans can ease the challenges of managing day-to-day existence and help families buy nutritious food, pay for medical treatment or their children's school fees.
In a matter of decades, we've seen the microfinance industry become a viable, sustainable business model, which has led to significant increases in investments. At the same time, the microfinance market has become far more vulnerable to criticism, in part due to increased public awareness and in part due to increased profits for some investors.
It is not that profit from development finance is a bad thing -- without profits, organizations cannot achieve sustainability. However, when considering the ultimate needs of the individual beneficiaries, one must consider, how much is too much profit? And equally as important, are services tailored to the individual loan recipients in a way that encourages sustained improvements in their lives?
As one of the largest private funders of development finance -- investing in microfinance, local cooperatives and fair trade organizations -- Oikocredit aims to avoid these potential industry pitfalls by charging an average market price for loans. This allows us to operate in a manner that neither inflates nor undercuts local markets. Our tens of thousands of investors earn a steady 2 percent return. That stable, expected return for our investors allows us to channel patient investment capital in some of the poorest countries of the world.
Most important, social investing in low-income communities must be applied in a way that meets the needs of the borrowers. This means going beyond simply offering a loan. For instance, in 2012, through Oikocredit's capacity-building fund, we supported the implementation of a poverty measurement tool for 24 partners in Central America; a financial literacy radio program in Cambodia; a debt advice center in Bosnia and Herzegovina; and a peer mentoring program for partners in Kenya, Senegal, Tanzania and Uganda.
In this way, current and future social investors can continue to support individuals and organizations in a responsible fashion, one that capitalizes on social good and exhibits a positive influence on the world.
Sharlene Brown is the National Director of Oikocredit USA--the U.S. arm of Oikocredit, which is one of the largest private microfinance funders for disadvantaged populations around the world. The organization recently held its first-ever USA summit on September 5th and 6th in Washington, DC.