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edsi Makes A Difference

Small loans make a huge difference in developing countries, local charity finds

GUELPH — Like so many charitable ventures, this one, Economic Development Solutions International, started in a coffee shop. Or perhaps it’s more accurate to say it started with a read of Nobel Prize winner Muhammad Yunus’s book Banker to the Poor, where Yunus outlines the concept of micofinancing.

It’s a fairly simple concept: entrepreneurs in developing countries, who are too poor to qualify for a bank loan, get a modest loan from Economic Development Solutions International and with that can buy the equipment or raw materials they need to start a business. Once business gets rolling, they pay back the loan and that money funds someone else.

The loan recipients meet regularly as a group to discuss business and other matters, and if someone can’t make a payment, it’s up to the group to cover it.

Philanthropic types pony up the initial funds for a charitable tax receipt, but costs are low and the venture becomes self-sustaining.

The worry is that these individuals — many uneducated and unschooled in business — will renege on their loans, or that they won’t be able to make their business profitable. So a pre-requisite for the loan is to take a basic Business 101 course that’s also run by the charity and to present a business plan that includes loan repayment with their application.

The organization favours women because statistically, women are more likely to repay their debts and are also more likely to spend their income on their families.

“It’s now running smoothly,” said John Verdone, chair of the Guelph-based Economic Development Solutions International, that formed about three years ago. “We have a 100 per cent loan repayment rate and when you read the comments, they are all positive.”

Verdone, David Ranalli, the organization’s president, and Guelph MP Frank Valeriote, who is also a founding board member, sat down with the Mercury last week to talk about the charity. Clearly it’s a labour of love for these men, who fund their own trips to Swaziland and Peru to check on operations and to follow through with the loan recipients.

“There’s a perception that poor people aren’t smart and that’s not true,” said Ranalli. “They self-identify the businesses that are needed and that will succeed. On top of that, they pay back the loans.”

Staff on the ground in these countries vet the applications and build a rapport with the applicants. There’s a strict reporting procedure so board members in Guelph can be assured the money is going where it’s supposed to go.

Ranalli said the groups don’t only discuss business issues.

“They talk about maternal health, sanitation, school for their children. They support each other emotionally too, and in this way it strengthens communities,” he said. “Our hope is to plant the seed and allow them to make it grow.”

“How inspiring it is to see women borrow money and doing well. We’re not just creating livelihoods, but creating lives,” Valeriote added.

Verdone said he was on a mission trip with another organization and learned that the daughter in the household had been accepted to a prestigious school but couldn’t go because the family couldn’t afford shoes for her. It was a requirement at this school that students wear shoes.

“So my wife gave her some shoes and that girl went to school and went on to become a dentist. All that from a pair of shoes. It’s so simple, really. How can you not help out?” he said.

“God put it in my heart that I needed to serve internationally. It’s very fulfilling.”

“To me, it would be a much better place if every one of us served in some capacity,” Ranalli said. “We’d have better leaders and better citizens.”

About 80 loans have been granted since the group’s inception; 52 are outstanding but still meeting the terms of repayment.

More information can be found at

Source: http://www.guelphmercury.comView Original Article:

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