Why World Vision? In today’s Q&A, Jose Figueroa, senior director for Economic Development, explores the variety of ways in which World Vision works to economically develop communities to better support their children.
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1. What is the greatest challenge to a community’s economic development?
There are several challenges that limit a community’s economic development capacity, but the main roadblocks are lack of financial education, lack of access to financial services, and limited understanding of market dynamics.
2. How does World Vision work to help address these challenges?
World Vision helps group people together and develops their financial literacy, promoting savings practices, entrepreneurship, access to capital, and market knowledge.
3. With child sponsorship as the core of World Vision’s work, how does sponsorship tie in to a community’s economic development?
Sponsorship serves as the base through which World Vision develops community organization and volunteer networks, and it strengthens long-term relations at the grassroots level. It also allows for building relationships with local and national stakeholders that have a presence in the community.
4. How does economic development help children?
Economic Development is not an end to itself, but a means to achieve child well-being. World Vision’s Economic Development projects target and measure the following outcomes: children have enough food at the table (three square meals each day); children of school age attend school (parents pay school fees, supplies, and uniform costs); parents care for the medical needs of their children; and parents are able to improve shelter conditions for their children.
Economic Development’s sole purpose is to increase income and assets at the household level so children’s lives benefit directly. Our microfinance institutions track the household use of additional income generated from business loans through its loan application cycles (starting with the second loan requested).
5. What is microfinance, and how does it help communities develop economically?
Microfinance is the provision of financial services to micro-entrepreneurs and small businesses that lack access to formal banking and loan capital. All businesses, big and small, require capital to operate, since household income is insufficient to start or expand a business. For small-scale producers, formal financial services are not available due to the high transaction costs and the lack of collateral to guarantee the loans. World Vision works with VisionFund (a microfinance institution) to organize small-scale producers into groups, to strengthen their financial and business literacy, and to provide loan capital for them to start and operate their businesses.
By supporting local small-scale businesses — in agriculture, commerce, and industry — jobs are created and sustained, income and assets increase, and household well-being improves.
6. What’s the difference between microfinance and economic development?
Microfinance is a component of economic development and at the heart of entrepreneurial development; however, economic development includes other products, such as savings and access to markets, which are equally important.
7. What does World Vision do in these other financial product areas?
By organizing neighbors into savings groups, World Vision introduces and builds financial literacy in the community. Group members save weekly and lend to each other, setting their own interest rates and multiplying their resources collectively. Savings groups are an excellent way to introduce the power of financial discipline to low-income families, since it allows for a multiplying effect of their own money with low risk. Not every person is comfortable becoming an entrepreneur, but everyone can benefit from saving. We expect approximately half the savings group members to venture into accessing microfinance services.
Another equally important economic development product is access to markets, since having a good product and work capital are not enough to guarantee higher market sales. To access more profitable markets, producers need to strengthen their market knowledge, so World Vision conducts market studies that define the most profitable products for the micro regions where small-scale producers are located.
A second step is to help farmers organize into producer groups and learn about improving packing methods and using more advanced but locally applicable technology. Organized and trained producer groups then work together to negotiate better prices with suppliers and buyers.
8. As a Christian organization, how is World Vision’s work in economic development motivated by faith?
As an organization made up of faith-inspired people, World Vision knows well that worldviews motivate a great number of behaviors. A modern biblical worldview, beginning from the concept that humanity is created by God and redeemed by Christ, sees that all people have the ability and responsibility to lead their own development. This involves roles and responsibilities around work, finances, family relations, and natural resources.
The most vital force for social development comes from within, as people seek to know how God is calling and empowering them to change the world around them for the better.
Child sponsorship is the cornerstone of World Vision’s approach to community development. Join us! Change a child’s life for good. Sponsoring a child provides life-saving basics and helps break the cycle of poverty. Consider sponsoring a child today!
You can also help change the life of an entrepreneur like Nalangu. Visit World Vision Micro to choose your entrepreneur today!