By Erin Nealer
Microfinance was the trendiest new player in economic development for the first decade of the 2000s. In 2004 Vinod Khosla, founder and CEO of Sun Microsystems, called microfinance “one of the most important economic phenomena since the advent of capitalism.” In 2006 Muhammad Yunus, founder of the Bangladesh-based Grameen Bank, was awarded the Nobel Peace Prize for his work in establishing micro-loans for entrepreneurs struggling to rise out of poverty. Microlending programs such as Kiva, World Vision Micro, and Zidisha have sprung up to take advantage of the internet, creating peer-to-peer lending programs where individuals can supply small loans or pool funds for larger loans for entrepreneurs all over the world. The ability of microfinance institutions (MFIs) to reach those experiencing the greatest need and to provide long-term solutions for extreme poverty, however, remains uncertain.
The term “microfinance” refers to a broad umbrella of economic opportunities with one common objective: increasing access to financial services for those who are unable to access traditional banks. The theory is that small loans, savings accounts, insurance programs, and other basic financial services will provide the structure necessary for low-income individuals to lift themselves out of poverty, begin businesses, and provide for their families. MFIs that focus on underserved populations – particularly women, those living with HIV/AIDS, and populations in inaccessible rural areas – have the potential to enact great change in the lives of individuals, enabling them to participate in the local and global economy.
Women submit applications for microloans in Ghana. While microfinance is a popular and relatively new vehicle for increasing access to financial services, the lasting impact of microloans on business profits and overall income is negligible. Photo by Rachel Strohm via Flickr.
Students attend a math class in Bosso, Nigeria. Thirty Nigerian refugees are studying at the school in addition to 300 Niger children. Photo taken from UNHCR’s flickr photostream used under a creative commons license.
By Nicole Goldin
Economic opportunity is a critical driver of individual and family security, and national growth, development and social progress. Harnessing the capacity of youth in particular, as producers and consumers, can be a boon to both national and the global economy alike. Yet around the world, youth in developed and emerging economies continue to face significant barriers to fulfill their economic promise and prospects. Around the world, young people are up to 4 times more likely to be unemployed than the general working population, with global youth unemployment rising above 13%, up from 11.5 percent in 2007. Less than 40% of youth worldwide are banked.
The Global Youth Wellbeing Index, released in April by the Center for Strategic and International Studies (CSIS) and the International Youth Foundation (IYF) with principal funding from Hilton Worldwide, economic opportunity was one of six domains and sub-indices included. The Index considers the state of youth in 30 countries around the world, which hold nearly 70 percent of the world’s youth population. Of the forty indicators that comprise the Index, seven make up the economic opportunity domain: GDP per capita; economic climate and competitiveness; youth lending from a financial institution; youth involved in early-stage entrepreneurial activity; youth unemployment; youth not in education, employment, or training (NEET), and youths’ income and wealth expectation. Continue reading