Acton Institute Powerblog

Giving Credit where Credit is Due

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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.

Jordan J. Ballor Jordan J. Ballor (Dr. theol., University of Zurich; Ph.D., Calvin Theological Seminary) is a senior research fellow and director of publishing at the Acton Institute for the Study of Religion & Liberty, where he also serves as executive editor the Journal of Markets & Morality. He is author of Get Your Hands Dirty: Essays on Christian Social Thought (and Action) (Wipf & Stock, 2013), Covenant, Causality, and Law: A Study in the Theology of Wolfgang Musculus (Vandenhoeck & Ruprecht, 2012) and Ecumenical Babel: Confusing Economic Ideology and the Church's Social Witness (Christian's Library Press, 2010), as well as editor of numerous works, including Abraham Kuyper Collected Works in Public Theology. Jordan is also associate director of the Junius Institute for Digital Reformation Research at Calvin Theological Seminary. He has authored articles in academic publications such as The Journal of Religion, Scottish Journal of Theology, Reformation & Renaissance Review, and Journal of Scholarly Publishing, and has written popular pieces for newspapers including the Detroit News, Orange County Register, and The Atlanta Journal-Constitution. In 2006, Jordan was profiled in the book, The Relevant Nation: 50 Activists, Artists And Innovators Who Are Changing The World Through Faith. Jordan's scholarly interests include Reformation studies, church-state relations, theological anthropology, social ethics, theology and economics, and research methodology. Jordan is a member of the Christian Reformed Church in North America (CRCNA), and he resides in Jenison, Michigan with his wife and three children.

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Comments

  • 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.