Microfinance, or microcredit, is the lending of small amounts of money at low interest to individuals in the developing world who have very little collateral. The idea is that microfinance uses the free market to alleviate poverty and gives the poor and other disenfranchised groups, such as women, the opportunity to earn a living for themselves.

As a development model, micro-finance gained exposure on a global scale in the mid-2000s as a better alternative to traditional aid.

However, recent research has explored some of the pitfalls of the microfinance model. Many of these problems stem from the pressures that are inherent in the for-profit credit market. According to a recent article by Business Insider, borrowers who take out a loan encounter issues:

  • Individual entrepreneurship itself is risky, and the odds of succeeding to the point where you are able to pay back your loans (with interest that can be in excess of 40%) are low.
  • Global investors demand growth and return on investment, which pressures microfinance providers to seek out more borrowers and apply pressure to the borrowers when their businesses are not performing.

The article praises the effectiveness of “socially-embedded microfinance institutions that organize entrepreneurs, provide them with training and then deploy them in larger ventures” and “charitable, interest-free” lending.

She Is Safe uses an empowering approach. We gather women to learn, save and support each other to succeed in self-help groups called Transformation Groups.

She Is Safe trains and supports local co-workers to assist 12-15 women to create and manage savings and lending pools. Group members meet weekly to gain financial, social, and spiritual development. These gatherings incorporate prayer, scripture, original songs and dramatic presentations.

As women who have borrowed from the group begin generating income, they repay the loan to the group, the small interest is added back in, and the group savings account grows. Rather than paying interest to an outside entity, the group uses the interest repayments to grow their own account – and their dignity. Women are also empowered as they learn about bookkeeping and rotate as officers within the group.

Transformation Group leaders also provide training in literacy, leadership skills, health and hygiene, vocational skills, and basic human rights. Members support each other through the successes and challenges of life.

When these women are empowered, they create a better, more secure future for their daughters and others. Groups often become a force for abuse prevention, recourse and development for their entire community – resisting child marriage, female mutilation and trafficking.

Through She Is Safe Transformation Groups, 5,462 women in received skills training, peer support, and heard the gospel in 2013. The Transformation Groups are currently changing lives in India, Indonesia, and South Sudan, and we hope to multiply them in high-risk communities across the least-reached world. Support them today!