TALING CHAN, Thailand: The concept of the village bank was brought to the people of Ban Taling Chan soon after the tsunami by Mechai Viravaidya, who became a celebrity in Thailand for promoting the use of condoms, curbing population growth and the spread of HIV. Mechai, chairman of the Population and Community Development Association, has a simple principle for his aid programs: The route out of poverty is business, not charity.
“Charity is a dead end,” he said. “Once your funds run out, you are at a dead end. ” Mainstream financial institutions are taking a greater interest in microcredit, and government and nongovernment aid organizations, long recognizing its importance, are increasingly making access to microcredit an integral part of aid programs. Analysts say this shift promises to give the poor much greater access to affordable financing.
For instance, this year the Thai government is starting to convert a nationwide network of village development funds, seeded with a credit line of 1 million baht, into village banks. Moreover, the list of commercial institutions offering a broad range of finance products to low-income earners is growing rapidly. In a report on the “changing face of the microfinance industry,” the Asian Development Bank argued that the walls between microfinance and the “formal” finance industry were gradually breaking down with the entry of conventional and specialized banks.
“We now say the term microfinance is likely to disappear within a few years because financial services for the poor will be so integrated into mainstream financial operations it won’t be a niche market activity anymore,” said Nimal Fernando, author of the bank’s report. Fernando, a former central banker from Sri Lanka, cites two trends: Some aid groups specializing in microfinance are being transformed into commercial operations, and some of the big names in banking are looking more seriously at microfinance, attracted by the strong performance of specialist institutions.
At the same time, the product range is growing to include insurance and remittance services. Last year, the Association of Cambodian Local Economic Development Agencies became a full-fledged commercial bank. Acleda Bank watched the number of deposit accounts grow to 57,091, totaling $31. 6 million, as of last December, from 3,826 totaling $2 million in 2001. It posted a $2 million profit, a return on equity of about 20 percent. Some major banks, including HSBC, Citigroup, Deutsche Bank and ABN AMRO, are seeing microfinance as less about aid and more as a formal financial activity, albeit still small.
Late last year, HSBC started projects to provide wholesale loans to microfinance institutions. At the end of these pilot projects, HSBC will consider “introducing microfinance into more of the group’s existing businesses,” according to a bank report. The interest has been fueled by the solid performance of banks specializing in microfinance in countries like Indonesia, India and the Philippines. Typically, the level of nonperforming loans is tiny. Acleda reported that its proportion of nonperforming loans last year fell to 0.
31 percent from 0. 57 percent. With many Asians rapidly emerging from poverty, part of the appeal for mainstream financial institutions is the chance to gain what might one day be more desirable customers, even though microloans are generally as much as twice as expensive as standard bank loans, largely because of higher administrative costs. Still, there is a long way to go before banks and specialized institutions can either reap significant rewards or meet the demand.
Microfinance requires a large grassroots network that most institutions have no interest in establishing, meaning bigger institutions are more likely to confine themselves to wholesale lending or to teaming up with local partners. Even with increasing efforts to spread access to financial services, the Asian Development Bank estimates that only 20 percent of the potential demand has been met. It says there are 200 million poor and low-income households in Asia without any access to financial services.
In the hope of galvanizing efforts to widen the availability of financial services and support its Millennium Development goals, the United Nations designated 2005 as the International Year of Microcredit. “We regard access to credit as a human right,” Mechai of the Population and Community Development Association said. “It’s not asset-based lending. It is humanity-based lending. ” . . http://www. iht. com/articles/2005/06/22/business/credit. php Appendix 4: International Organization Model:
Playord, R. (2007) “Lecture 3 – The Trans-National Corporation [PowerPoint Slides]) Retrieved from University of Chester Faculty of Education Web site: http://ganymede. chester. ac. uk/index. php? page_id=1035033 Appendix 5: Ventures by the Body Shop: There are various activities that The Body Shop has established through the running time of the company. It is these different ventures that have helped to justify the company of having a social approach to the economy and globalization.
In 1986 The Body Shop formed an alliance with Greenpeace, campaigning to “Save the Whales”, despite some concerns among franchisees that the head office was becoming too political. By 1990 Roddick had switched allegiances to Friends of the Earth, following disagreements with Greenpeace. This was the Body Shop’s first major campaign. TBS campaigned for a UK-wide ban against animal testing on cosmetic products and ingredients and presented the European Union with the largest petition in history against animal testing.
The Body Shop’s Community Trade (formerly known as Trade Not Aid) initiative with the objective of “creating trade to help people in the Third World utilize their resources to meet their own needs” had started a paper factory in Nepal employing 37 people producing bags, notebooks and scented drawer liners. Another initiative was a 33,000 square foot soap factory in the depressed Glasgow suburb, whose payroll included 100 residents, some previously chronically unemployed.
The Body Shop has a history of making donations to different causes; For example, in 1994, the company sold 3. 5 million shares to organizations that support child abuse prevention, women’s issues and an art museum. The Body Shop Foundation was formed in 1990 to consolidate all the charitable donations made by the company. The foundation supports innovative global projects working in the areas of human and civil rights and environmental and animal protection.
It is the other various events that TBS has carried out that have earned them their reputation and image in the economy to date. In 1995, BSI initiated a campaign against domestic violence. Entitled “Blow the Whistle on Violence against Women”, the program consisted of training for employees, including sessions with experts in the field of domestic violence and sexual assault. Also, the company planned to sell whistles and T-shirts to raise money for the YWCA and Outward Bound’s ‘Women of Courage’ program for survivors of violence.
The Body Shop purchases nut oil from the Kayapo Indian villages. The villagers, who collect the nuts from the grounds of the rain forest, are paid above-market prices. The company says the nuts are the only sustainable alternative to the logging and mining that threaten the rainforests. Also, the company has a history of taking action to address environmental concerns. For example, the company has been a proponent of “green” packaging and they encourage customers to reuse product containers and will redeem them for money.