We're cool Wayne. Accept my apology if I made an assumption that put words in your mouth. My bad.
I know of a non-profit organization in San Diego CA that my family has helped to support for many years. Plant With Purpose is a faith-based NGO that does agro-forestry work throughout the developing world (currently in 7 countries). For 32 years they have worked with subsistence-level farmers by teaching
sustainable agricultural techniques and strategies. Like everyone else, 15 years ago (or so), they got into the business of micro-finance loans, and, like everyone else, soon realized that micro-credit isn't all that it's often cracked up to be. Rather than poor farmers being excited to see the NGO's staff walk into the village, once they were issued a loan that they had to repay, the farmers would run away and avoid them. It was particularly bad in Haiti and a few other places they worked. It effectively turned sentiment against the NGO -- "You guys are the loan collectors".
Then the organization heard about the model of the Village Savings and Loan Association (VSLA), where the people in the village basically create their own bank. The VSLA has a steel box into which the members can deposit their money. The box has three locks on it, so one or two people cannot open it up, but all three must be present to do so. Members of the VSLA are just common farmers -- usually women are the first to join. On a weekly basis, they can purchase from 1 to 5 "shares". A share is whatever the group deems it to be: for simplicity sake, lets say that a share is a dollar. So these people come weekly and make their deposit, perhaps as little as a dollar. Then, when one of the members wants to take out a loan, its the group that decides how much they can borrow from the box, what the rate of interest will be for repayment, and all the other terms associated with it. Basically, it's a village bank and they are doing village based capitalism.
There are other capitalists within the village, each offering their own loans. The loan sharks are in almost every village around the world—Africa, Asia, Latin America, the Caribbean. What has happened in the villages where a VSLA exists is that the loan sharks are now going out of business, because people are borrowing from the VSLA at a fraction of the interest rates that the loan sharks offer. Because they have savings deposited in their VSLA, often they don't even need to take out a loan, but just need to withdraw some $$ when times get tough or an emergency happens.
With the money from the loans they take, they are buying
chickens to start an egg business, they are building greenhouses to extend their growing season, they buy bee hives, or a small truck to take their produce to market, or they are doing all sorts of other businesses that they never had the capital to start before. And they are planting
trees -- millions of them. The whole VSLA movement now has spawned thousands of these village-based banks, and that in turn has caused millions of trees to be planted. Because the NGO works on a watershed-by-watershed basis, Plant With Purpose can track how starting (for example) 50 new VSLA's up through a watershed has facilitated the reforestation of the entire watershed.
Capital is like fire or a knife or any other tool. It can be used by one person for good, while another can use it to hurt others. VSLA's put capital into the hands of the people who most desperately need it. But what is wonderful about this model is that it's not outside capital from the West or some American benefactor. It's their own money. They are creating their own banks in places that are hours away from the nearest roads and nearest power line. Way up on the side of a hill somewhere in the interior of Tanzania or the Dominican Repermies, a simple farmer is taking out (and faithfully paying back) a loan from the capital generated by her neighbors. She is able to keep her daughters in school a couple more years, is able to grow a business of her own, and is able to exercise the agency to make her life better. She's earning social capital even as she's utilizing financial capital. The whole village wins.
Most commonly, people AREN'T taking loans, but simply waiting till the end of the year to take out their own capital and invest it in some sort of opportunity. They can't believe that they were able to save so much in just one year.
What is interesting is that there isn't that much money that remains in the box, as that money is loaned out to the group members once it begins to accumulate. The VSLA doesn't want thousands of dollars to accumulate -- as that would make a pretty tempting target for thieves. But at the end of the year, when everything is repaid, everyone gets back whatever they deposited through the year PLUS all the interest that has accumulated. People get back this big bunch of money. Many choose to leave it in the VSLA and roll it over into the new year. Some will take their share and make a big purchase -- a boat so they can fish more effectively, or perhaps a cow they can
milk. Some throw a party. Some send their kids to school for the first time, now having the tuition money they always lacked . . .
Two years ago, the NGO conducted an impact survey of all the villages they have helped start VSLA's in. At that time, they realized that the VSLA's had over 3 million dollars in their "possession" (counting all the loans that were outstanding). That's a crazy amount of money being raised by the rural poor to be loaned to the rural poor. Other than some start-up assistance (training, supplying them with the steel box, ongoing coaching for the first couple of months), the VSLA's are independent and receive no outside funding. I recently asked, "So what's the number now?" PWP staff anticipate that that $3,000,000 number is growing upwards of 20% a year, as the VSLA model continues to be adapted by many new villages. In fact, in places where VSLA's have existed for over 5 years, many of them need to split them: they've grown too large. It's not safe to have so much money in one box, so they'll break the VSLA into two or three new groups, and hundreds more farmers are now able to join.
This is the best of what capitalism offers, changing lives and positively impacting the environment.
https://www.plantwithpurpose.org/
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