Leveraging equity is critical to the financial success and sustainability of VisionFund
affiliated MFIs and the micro entrepreneurs served. Donations received by VisionFund
are responsibly leveraged to provide the working funds needed to lend to the entrepreneurial
poor. By using these donated dollars as equity to borrow commercials funds, VisionFund
is able to have a greater impact on many more families, children, and communities
than the original donation ever could.
Once a donation is leveraged, it is provided to MFIs as capital to be used to supply
loans to the entrepreneurial poor. With a high global repayment rate (over 93 percent
in 2010), most of these initial loans are recycled back into the MFIs, which can
then, in turn, lend out additional funds to more hardworking individuals.
This recycling effect has an exponential impact on donated capital. For example,
one loan to start a single business will affect more than two dozen jobs and individuals
throughout its lifespan.
The global impact of microfinance is staggering. With over half of the world living
on less than $2 a day, an average VisionFund loan of $555 is a conduit to a changed
life. By providing access to small loans, VisionFund supported entrepreneurs from
40 countries in 2010.
Microloans are powerful, and the demand is great. The World Bank estimates that
nearly 600 million people request microfinance services on a yearly basis. But a
lack of capital means only about one-third of them will be served.
"Microfinance is a life changer. I recall a recent experience in Mozambique, amongst
the poorest of the poor. The little microfinance project they had in their community
brought a joy and dignity in our conversation that was palpable -- though for many
it was hardly more than what we would pay for a small coffee. That was the beginning
of their move out of abject poverty to having some opportunity and hope. The results,
even with these small amounts, meant their children were in school. They had money
for an adequate diet and even the ability to purchase basic medicines."
Dave Toycen
President, World Vision Canada
