Hyeona Im Kevin Ding Katie Russell Poverty and Microloans

Do You Know? At least of humanity lives on less than $10 a day. A) 20% B) 60% C) 80% D) 40% C

Do You Know? people worldwide do not have enough food to eat. A) 170 million B) 320 million C) 610 million D) 870 million D

Do You Know? is the number one cause of death in the world. A) Hunger B) HIV C) AIDS D) Malaria A Hunger kills more people than HIV/AIDS and malaria co mbined.

Poverty in Canada 2009 statistics: 1 in 10 Canadians are considered poor. The poverty rate increased from 9.4% to 9.6% from 2008 to In Ontario, the richest 20% enjoyed 44.3% of total after tax incomes, compared to poorest 20% which had 4.7% of the after tax income. Cost of poverty to Canada is around $72-$86 billion; 6% of GDP.

Poverty in Canada Cont’d In Hamilton, there is a 21-year difference in life expectancy between people living in high and low income neighbourhoods. In 2010, 59% of Canadian’s lived paycheque to paycheque. The average annual income of Canada’s best-paid CEO ($6.6 mill) is 155 times higher than the averageworker’s income (42,988). By the end of 2009, 3.8% of Canadian households controlled 67% of the total household wealth.

Poverty Line in Canada Low income cut-offs (poverty line) in 2009: 1 person: $18,421 2 persons: $22,420 3 persons: $27,918 4 persons: $34,829

Poverty Measures in Canada Absolute poverty is defined as lacking the basic fundamentals to survive, such as food, shelter and clothing. Two types of absolute measure: basic needs poverty measure and market basket measures. Relative poverty is defined as lacking the conditions to enjoy life as compared to others in the same country. One type of relative measure: low-income cut off Canada has several methods to measure poverty.

Basic Needs Poverty Measure Developed in 1992 and is based on a variety of data sources e.g. Statistics Canada. Information is collected and put into a list of the cost of household necessities. Based on family size, the list helps determine how many households have sufficient income to afford these needs. Note: most measures are taken into consideration the after-tax income as a household well-being indicator. In 2004, the basic needs poverty rate was 4.9%, equaling 1.6 million Canadians.

Market Basket Measure Created by the Government of Canada’s Department of Human Resources and Skills Development in Analyzes a broader range of essential goods and services compared to the basic needs measure. Takes into account community size and location. Also determines a disposable income required to meet these basic needs to live.

Low-Income Cut Off The most “accepted” measure of poverty, which is usually quoted in the media and has been used since the 1960s. A measurement used to identify income levels, which a household is classified as being in a relatively limited income situation. In 2008, 9.4% of Canadians were apart of a family whose income was below the after-tax LICO.

Social Welfare Programs Government programs that are created to assist citizens outside of what the market provides. The emergence of a welfare state in Canada occurred after the Great Depression. Microloans is a concept that is used to combat poverty. Becoming a very popular poverty alleviation tool in developing countries.

Microloans Small loans to impoverished borrowers. Support entrepreneurship and alleviate poverty. Empower women and uplift entire communities by extension. A division of microfinance. Known as a structural strategy because it focuses on the long-term changes needed to combat poverty.

Muhammad Yunus 0 Born 28 June 1940 Bangladeshi banker, economist and Nobel Peace Prize recipient Developed the concepts of microcredit and microfinance In 2006, received the Nobel Peace Prize His objective was “to help poor people escape from poverty” "Banker to the Poor“

Grameen Bank After Yunus witnessed the devastating effect of the famine in 1974 in Bangladesh, he had a desire to help anyway he could. He created microfinance in Bangladesh and lent out $27 US dollars to 42 women in a village. From there, he created Grameen Bank and it supplied $6.38 billion dollars by 2007 to impoverished people. Some criticisms: microcredit can bring communities into debt that they can’t escape.

Microfinance Organizations A microfinance institution is a company that provides microfinance services; range from small non-profit organizations to large commercial banks. Microfinance organizations such as FINCA organization have been created in Canada. In 1980, John Hatch, the founder of FINCA, created a small loan program targeted towards low-income farmers in Bolivia; known as village banking. In El Salvador, the weekly income of FINCA clients increased on average by 145%. Another advocate for microfinance programs is the organization Plan Canada. Companies teach the borrowers how to save their money, repay their loan etc. (Youth Economic Empowerment video)

Microloans in Canada 0 MOSAIC ( is a multilingual non-profit organiz ationhttp:// Its micro-loans range from $500 to $5,000. The Micro-Loans Program offers three types of loans to help individuals with different needs: Back to Work Loans: With These Hands Loans: Peer Lending (Circle Lending): Be My Own Boss Loans:

Divide class into two groups: disadvantages and advantages of microloans. Duration: five minutes

Microloans- Disadvantages Microcredit doesn’t end poverty Microcredit rarely transforms lives some people do better, some do worse, but “very few” climb to middle class popular in public due to story-telling promotion - popular, but not representative according to luck/pluck, people get different outcomes American economists Dean Karlan and Jonathan Zinman say: microloan has no effect on poverty for family 1/2 years after they receive loan

Microloans- Disadvantages What microloans miss in 2010, suicidal occur among over-indebted borrowers microloans often used to “smooth consumption”, tiding a borrower over in times of crisis what poor countries need the most is “small-to-mediu m-sized enterprises “Missing middle” phenomenon

Microloans- Advantages Improve people’s living standards. (health and welfare) Mitigate the awful toll of HIV/AIDS Help nations to recover from wars Helps create a sense of community Betters the future generation (families have more money to support children to go to school etc.) Tool to empower women Job Creation “A little can go a long way”

Connections to the Course Chapter 9: GDP growth (microloans indirectly boost country’s GDP) Full employment (microloans help to reduce a country’s unemployment rate) Chapter 13: Welfare State Distribution of wealth Chapter 15: Income Distribution Absolute and relative poverty Low-income cut-off (poverty line) Before-tax income and after-tax income Structural Strategies Chapter 17: Comparative and absolute advantage (people start small businesses using microloans)

Conclusion Overall, microloans are a great tool to help eliminate poverty in developing countries. The advantages of microloans outweigh the disadvantages. " Today I'm a very respected woman in the community. I ha ve come out of the crowd of women who are looked down upon. Due to the loan that I received... you have made me to be a champion out of nobody.” -Rose Athieno, Produce Reseller, Uganda