Why was it introduced ?
The MICRO FORWARDS model was introduced to provide a better way to assist micro-business start-ups or expansions in impoverished communities. While the formerly introduced microfinance (micro-loans) has greatly assisted and is still doing a great service in poor communities around the globe, the debt burden faced by those poor borrowers is rather high because of the very high interest component included in their pay-back amounts.
The Founder of Givers League – Sherine Genevieve, a strategic visionary, creative thinker and senior finance professional with more than 30 years experience in Accounting and Banking, was burdened with the comparatively high interest rates charged on micro-loans. She observed that it is very much higher than the average loan interest rates that the banks charge from regular corporate or business customers. Hence, there is a great deal of unfairness which however seemed to not have a solution in the microfinance sector. The reason being the high risk the microfinance institutions face due to probable defaults on loans that can never be recovered; they try to cover this risk by charging very high interest rates from the good payers as well. In the normal banking sector, this kind of loss burden that results from bad loans do not get passed on to good customers. Similarly it is only fair that it does not happen in the microfinance sector too. There need to be a better way she thought, and came up with this micro-forwards concept that not only relieves the poor man or woman from the unfair high interest burden, but takes off the interest component totally. Further, they are not even called borrowers, but givers because the moment they become self reliant with the funds received, they themselves are required to become givers and give forward through the organization to help another person.
Although there is another concept in operation called Micro Grants, which has neither interest charges nor giving back required, it has its disadvantages. It does not make the receiver want to do some good in return for what he or she received. As such it can be “taken for granted” because there is no responsibility or obligation on the receiver’s part to show real results or do their best in their business venture. They could just settle for average performance or even low
MICRO FORWARDS compared with MICRO LOANS and MICRO GRANTS :
