Argentine Microcredit Seed Fund

The Argentine Microcredit Seed Fund aims to support microfinance intitutions to expand their loan portfolios and reach sustainability. Fund contributions are from individual online donors, Social Ambassadors and international organizations (during the first year there was a matching grant from the Open Society Development Foundation).

Donate to the Argentine Microcredit Seed Fund following this link.

In the first months of 2007 organizations from Formosa, Tucumán and Buenos Aires were selected, through a competition, to receive the amount raised by the Fund during 2006. To view the first results, see the first progress report (in Spanish) in pdf format.

Why microcredit?

Microcredit is a very simple concept that has the power to change lives by giving the poor access to credit.

Developed in the 1970s, there are now thousands of microcredit organizations worldwide ranging in size from the Grameen Bank in Bangladesh, with close to 4 million customers, to small non-profits in every corner of the world with as few as 50 clients. The majority of borrowers are women who use the profits from their small businesses to improve the standard of living for their families, often using the income for education and improved nutrition.

Most of us can hardly imagine a world without loans or credit cards - we use them to buy our homes and our cars, to send our children to college, when we need to replace the TV or deal with a plumbing crisis. But credit of any kind is an impossible dream for most of the world's poor.

Without credit - without the ability to borrow the small amount standing between the would-be entrepreneur and her dreams - that dream of economic independence, owning a house, or of sending a child to school, can never come to pass. The only option available, if at all, is to go to the local loan sharks who take most of the profits that their impoverished customers can generate. The would-be entrepreneur remains mired in poverty - she and her family, and her society, all suffer because of it.

Microcredit enables a poor individual with a viable business idea to receive a small loan, typically between $50 and $250. This is enough to allow the borrower to start or expand a micro-enterprise which can be almost any kind of business, including; bakeries, kiosks, carpentry, clothing repair, etc. The borrowers form small groups with 3-6 other borrowers and the members of the group provide guarantees for each others' loans. These "solidarity groups" have been amazingly successful and microcredit repayment rates average between 90% and 95%, normally better than the repayment rates for commercial banks in the same areas.

What microcredit is and what it is not?

• It is a nonprofit business: it charges an interest rate sufficient to cover the operating costs of the organization and to sustain the loan portfolio.

• It is a long term capital resource: as loans are repaid the capital is re-loaned, having an ongoing multiplier effect throughout the local economy.

• It is successful: microcredit is currently being used to help more than 80 million people world wide. The UN recognized microcredit as a powerful tool and declared 2005 as the International Year of Microcredit.

• It is not charity: it is a social investment that provides a sustainable resource that empowers the poor and gives them the opportunity to improve their standards of living and build their dignity.

Why Argentina?

The people of Argentina have gone through a deep economic crisis five years ago. The crisis wiped out the savings of the middle class and plunged nearly half the population of this once wealthy country into poverty. Today, even on the most elegant streets of Buenos Aires, families scavenge through the garbage every night to find anything they can eat, use or sell.

Microcredit is a proven tool that can help these new poor lift themselves out of poverty, but in the post crisis environment the small microcredit organizations of Argentina are struggling to find funding to make loans. By comparison, the very successful microcredit programs in neighboring countries like Peru and Bolivia were built in the 80's and 90's with grants from international funding agencies, but these grants are not available today as these international aid organizations struggle to meet their obligations in every corner of the world. In Argentina today there are an estimated 1,000,000 potential micro-entrepreneurs that need access to credit, but only about 40.000 are currently receiving loans. With your help the Argentine Microcredit Seed Fund can make a difference.

Donate to the Microcredit Seed Fund following this link.