Here is a recent article from The Economist regarding microfinance and the role it plays:

Microcredit may not work wonders but it does help the entrepreneurial poor

MICROCREDIT looks like a miracle. It involves providing unsecured small loans to poor people in developing countries whom most banks would turn away. Yet these small borrowers almost always repay their loans (and the fairly steep interest charges) on time, which suggests that they find productive uses for the money. The industry’s backers make some big claims as a result: Mohammad Yunus, the founder of Grameen Bank in Bangladesh and the father of microfinance, reckons that 5% of Grameen Bank’s clients exit poverty each year. Yet economists point out that there are surprisingly few credible estimates of the extent to which microcredit actually reduces poverty.

This would not matter too much if all microfinance funding were raised via the market (as an increasing proportion is). As long as investors were satisfied with their returns, there would be no cause for concern. Yet despite growing interest from private investors, 53% of the $11.7 billion that was committed to the microfinance industry in 2008 still came at below-market rates from aid agencies, multilateral banks and other donors. Given that there are other things that aid money could be spent on, and that the rationale for subsidising microcredit is its effectiveness as an anti-poverty tool, it is important for donors to know whether it has the advertised effects.
Read the full post…

Many of our entrepreneurs are hungry for knowledge and desire to grow in their abilities. The Paradigm Shift business training focuses on transferable business skills such as marketing, budgeting, record keeping, etc. But there are plenty of individuals within our partner churches that have specific trade related skills that could really benefit the entrepreneurs. Hence, the Business Development Workshop was created. This is a one-time event led by a South African volunteer to teach a specific business skill to microentrepreneurs.

A workshop includes a tutorial portion taught by the volunteer followed by a practical portion where the microentrepreneurs practice their newly-learned skills. A spiritual component consisting of opening/closing in prayer, scripture reading, or Biblical examples are incorporated whenever possible.

The first Business Development Workshop centered around the concept of packaging and the need to present our products in a visually appealing way. It was a great success and a few weeks after the event, the entrepreneurs are experiencing greater demand for their product because it looks professional and finished!

Here are some photos of it:

Like starting anything from the ground level, there is much hard work, longer hours, creativity and a certain amount of inertia that goes into getting things moving and off to a great start.

For Paradigm Shift, the program here in South Africa started on January 20th, 2009 when our first field team members arrived. Then during February and March, we welcomed our other team members and started looking at the strategic plans for 2009 and 2010 and worked towards creating the curriculum, the processes and the core infrastructure to see Paradigm Shift’s model be easily replicable in a variety of communities.

Here we are six months later and now that the curriculums are nearly finished, processes are in place, and now we are focused on replicating and retooling what has been created. So, for the next six weeks, we are training and launching new groups of entrepreneurs in multiple communities and it is invigorating!

Once we train a local partner in a specific community, we have then replicated ourselves and the program. It is then over the next year and a half that we are building core teams to see the outreach sustained in the long term.

So the effort of our field team is then multiplied across communities and churches where it would take years to build relationship and trust. So, in other words you could say the field team grows something like this: 2-4-5-11-15-19-23 – not to mention all the mentors and students who are participating!

In a recent blog entry, I talked about how Paradigm Shift sees poverty through a four dimensional lenses: spiritual, relational, motivational, and material.

The following excerpt is taken from Transformation by Ed Silvoso. After reading the chapters entitled “Systemic Poverty” and “The Early Church and Poverty”, Paradigm Shift cemented the  mentoring component as key to seeing poverty overcome by the rich and the poor.

“It will be helpful to point out how the rich and the poor succeed in the two categories that the other group does poorly at. Generally speaking, the poor score higher on the spiritual and relational dimensions, because faith in God is often the only source of hope available to survive the hopelessness that engulfs them, and relationships are a vital part of that survival mechanism.

On the other hand, people of wealth fare better on the material and motivational aspects. They have resources and the attitude and the know-how to leverage them so as not to approach the future with desperation, but they tend to score lower on relationships, and their faith in God is usually more “professional” than personal, most likely due to the fact that they are less dependent on Him to manage their affairs than the poor.

By coming together, both groups are able to minister to each other in their respective areas of need. The rich found fellowship and are inspired by the resilient faith of the poor, while the poor benefit from material things made available by the rich and by their sense of hope for the future. The key to all of this is the heart.”

For a few weeks at least! Blake, an American college student, joined our team for the next few weeks to work alongside us as we launch into the busiest two weeks we have had so far. Blake is a finance major in his senior year at Grove City College and we’re happy to have him join the Paradigm Shift team!