An snippet from Ecumenical News International:

Presbyterians invest $1 million in church ‘bank’ that helps poor

New York (ENI). The Presbyterian Church (USA) has invested US$1 million in Oikocredit, an organization established by the World Council of Churches that assists people in poor countries start small businesses. The investment is the largest in Oikocredit over more than a decade, the church announced earlier this week, making the 2.4-million-member US denomination the second-largest investor in the institution set up in 1975. The largest is the Church of Sweden.

I’ve looked a bit at the Oikocredit organization, and in generally this does not fit my normal expectations for an initiative by the left-leaning WCC. To be sure, Oikocredit does employ the rather vague criteria of “socially responsible investing” when deciding which groups to fund.

But in general, the microlending approach is much more economically viable and informed than many ecumenical attitudes towards global poverty. Started over thirty years ago, Oikocredit has a track record, and “was created for groups that need credit to develop their productive enterprises, but have difficulties receiving credit through conventional financial institutions, because they simply lack collateral.” For a personal story of how microloans can be a part of the solution (along with property rights, the rule of law, and so on), see this commentary by Rev. Jerry Zandstra.

Despite its shortcomings, Oikocredit on the whole is probably a good thing. And again, when compared to what you typically see from ecumenical groups, it’s positively refreshing.

  • Jack Walton

    Why micro-credit works — I was initially surprised that default rates on micro-credit loans were comparatively low. There may be many reasons, but the two reasons I feel are cardinal are these — the lender and borrower are known to each other and of a common culture, so there is a distaste for any embarrasment which would arise from default. Secondly, micro-credit makes available the means of improved production and living standards and both borrower and lender are advantaged. Decades ago I worked on the restructuring of a U.S. sewing machine company whose primary markets were in Southeast Asia. They lent money to the locals for purchase of their machines and supplies. The default frequency and severity on these loans was very low for the two reasons cited above. A sewing machine in the hands of a Malay or Phillipini provided a much improved economic condition for the family and the opportunity for additional income and discretionary purchases.