I serve on the Advisory Council of the Trade Development Alliance of Greater Seattle, which is a collaboration of local governments and the private sector to promote the Seatte metropolitan area as one of North America's premier international gateways and commercial centers. During the Advisory Council's quarterly meeting held on May 13, 2009, Ryan Calkins, Executive Director of SeaMo, a Seattle-based nonprofit organization, gave a presentation on microfinance. Founded in 2007, SeaMo's mission is to connect the (Seattle) microfinance community through events, online services and opportunities for collaboration by hosting networking events and speakers series, and providing a website that serves as an events calendar, jobs board, community forum, and news source. (Photo courtesy of the Esperanza International Foundation)
According to Consultative Group to Assist the Poor (CGAP), a Washington, D.C.-based policy and research center dedicated to advancing financial access for the world's poor, "'Microfinance' is often defined as financial services for poor and low-income clients. In practice, the term is often used more narrowly to refer to loans and other services from providers that identify themselves as 'microfinance institutions' (MFIs). These institutions commonly tend to use new methods developed over the last 30 years to deliver very small loans to unsalaried borrowers, taking little or no collateral. These methods include group lending and liability, pre-loan savings requirements, gradually increasing loan sizes, and an implicit guarantee of ready access to future loans if present loans are repaid fully and promptly. More broadly, microfinance refers to a movement that envisions a world in which low-income households have permanent access to a range of high quality financial services to finance their income-producing activities, build assets, stabilize consumption, and protect against risks. These services are not limited to credit, but include savings, insurance, and money transfers."
During his presentation, Mr. Calkins said, "Microfinance is a key breakthrough in economic development in emerging markets." He explained that without microfinance, consumers in poor countries have to pay with cash only and businesses have to hold large inventory supplies, which reduces profitability. With an increase in established MFIs, developing economic markets have experienced accelerated growth over the past several years. Mr. Calkins noted that Seattle is a hub for MFIs or supporters of MFIs by listing a few Seattle-based organizations: