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This year’s chosen theme is education and development.
Our society has chosen two NGO’s whom we will be fundraising for; namely Hope for Children and UYDO both of which seek to improve the welfare, education and micro-credit opportunities for young people in developing countries.

We will also raise awareness through talks and seminars on campus throughout the year as well as weekly stalls helping to advertise and inform our student body of our society’s activities.

Our main fundraising events will occur during the LSE Development Week, between the 16th to the 22nd of February, where we will be hosting a range of talks and panel discussions with experts in the field of development and education.
Come and Join!

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by: SABINA A. STEIN & MALVIKA SARAOGI

“Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means.” – Nobel Peace Committee 2006

This year’s Nobel Peace Price awarded jointly to the Grameen Bank and its founder, Muhammad Yunus carries a powerful message. Nobel Peace laureates are men and women who have, with their visionary leadership, contributed to overcome violence, conflict and oppression in their societies. However, few are the laureates who have been honoured for their contributions to bring an end to what is undoubtedly the most destructive and deep-rooted struggle in the world: poverty.

The 2006 Nobel Peace Prize recognizes that aspirations for universal peace must focus on the causes creating a global society in which some 18 million people a year or 50,000 per day die because they are too poor to stay alive. That is 270 million people since 1990, the majority women and children, roughly equal to the population of the US.

The second crucial message of this year’s Peace Prize is that microfinance works; it is an efficient means to fight poverty, one which should be strengthened and extended. As the Nobel Committee explains, “Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development. Micro-credit has proved to be an important liberating force in societies where women in particular have to struggle against repressive social and economic conditions.” So what makes micro-credit so unique and how does it work?

For the 1.2 billion people currently living in a situation of extreme poverty, surviving below the poverty level of two dollars a day, investing in their own economic development remains nothing but an impossible dream. Invest? With what? All resources must be used to insure day to day survival of family and self. With no capital to invest, however, individuals, communities and societies remain imprisoned in what economist Jeffrey Sachs has called the “poverty trap.”

This vicious circle could be broken with the provision of elementary financial services. However, because the ultimate objective of conventional banks is to maximise profits and because they function on the principle of collateral, over a billion poor people today are still without access to formal financial services. Conventional banking functions on the principle that the more you have, the more you can get. In other words, if you have little or nothing, you get nothing.

The financial market, therefore, fails to provide essential services to the most needy. This is particularly true in rural areas since bank branches tend to locate as close as possible to business districts and urban centres. Moreover, when financial services are provided, this is done in an unsustainable manner with interest rates that further impoverish borrowers and usually lead to defaulted loans and legal prosecutions.

Microfinance reverses the rules of the game and builds a system where one who possess nothing gets the highest priority for getting a loan. By providing a wide range of financial services to the poor on a sustainable basis, microfinance helps individuals get a foot-hold on the first step of the socio-economic ladder. Once this first step is made, a self-sustaining process of economic growth is triggered feeding itself off previously unexploited potential. A small loan, usually less than $200, can allow an individual to establish or expand a small, self-sustaining business. With the profits of this “micro-enterprise,” the borrower can begin to earn a decent living and eventually repay his/her loan.

This is exactly what the Grameen Bank does. It began as Muhammad Yunus’s personal initiative in 1974 after the Bangladesh famine in the same year. Grameen bank branches are located in rural areas and has a workforce of 20,223. They believe in a ‘person’s potential, not material possession’ and strive to make women independent through the ownership of assets (based on the principle that the borrower retains the asset’s ownership). A massive 97% of Grameen’s clients are women. Moreover, it is unique in the sense that it is mobile – the bank’s staff sell its services door-to-door to 6.83 million customers every week. Another important feature is that the bank and the borrower are not legally bound. All disputes are solved on a case-by-case basis by the bank itself.

One of the earliest microfinance institutions began in 1961 as a student-run volunteer effort in the shantytowns of Caracas, Venezuela, aimed at addressing the desperate poverty in Latin America’s cities. ACCION International is today one of the premier microfinance organizations in the world, with a network of lending partners that spans Latin America, the United States and Africa.

By the early 1970s, ACCION was becoming increasingly aware that its projects did not address the major causes of urban poverty in Latina America: lack of economic opportunity. The employment situation in urban centers was dire with thousands of rural migrants flocking into cities each year. Unable to find work, and lacking a social safety net, many of these new urban poor started their own small enterprises. They wove belts, banged out pots and sold potatoes. But they had no way to grow their small businesses. To buy supplies, they often borrowed from local loan crooks at rates as high as ten percent a day. Most of their profits went to interest payments, leaving them locked in a daily struggle for life.

In 1973, ACCION staff in Recife, Brazil noticed the prevalence of these informal businesses. If these small-scale entrepreneurs could borrow capital at sustainable interest rates, could they not lift themselves out of poverty? ACCION’s Recife program coined the term “micro enterprise” and began issuing small loams thus launching the field of micro credit.
It is estimated that nearly $ 2 billion is spent annually by investors, international finance institutions and donors on microfinance. However, much of this is ineffective as it does not reach the people who need it most. Over a third of today’s global population consists of children and teenagers. These future clients will be digitally savvy and informed. Harnessing technology may thus be the way ahead. In a world that is becoming increasingly mobile, even corner shop owners with cell phones can be used to conduct financial transactions in remote areas. Such experiments have shown positive results in countries like Kenya and the Philippines.

The challenge to reach those who cannot afford even the basic necessities still remains. Over-reliance on technology may leave those without access even worse-off. By 2010, demand for microfinance services will reach nearly 600 million, although only a third of this number will actually receive aid due to lack of capital. This is where small-scale local initiatives can come into play. They are likely to be familiar with a client’s circumstances as well as her potential to use funds. Microfinance is simple yet extremely powerful. Each one of us can contribute in our own small way. Websites like http://www.kiva.org help you support small business in developing countries. Remember – one of the first microfinance initiatives was undertaken by a group of students. This is a perfect solution for students who are always on a tight budget!

Development Week at LSE

Lots is lined up during the Development Week, Feb4-8, 2008, at LSE. From panel discussions and talks to career fair and auction.

 The theme of ‘Development Week’ this year is public private partnerships. It is interesting how there has been a gradual shift and rising awareness about the importance of corporate social responsibility. So there is an increasing realisation among the corporates that they exist for more than just generating profits. They exist within a social system and they need to contribute to the same. Another recent trend has been the increasing presence of social enterprises.

So indeed corporate going social and social going enterprise way clearly is a reflection of increasing public private partnerships.

So ‘Development Week at LSE’ will try and answer some questions relating to development like the role of government vs. role of private sector, the role of private sector in BRIC countries and importance of microfinance.

Look forward to seeing you all.

As the first post on discussion my idea is to challenge the concept of development itself. Express your ideas , arguments and opinions wih your comments.

To analyze anything, we must examine the 4Ws. It included: What, When, Where, Why? I have been thinking of the 4Ws with respect to development. I am posting my ideas with respect to the same and invite you to comment with whatever ideas you think are relevant with respect to the same.

What? What is development? It is more income and wealth or better education and health. Those are the broad parameters, in my understanding often talked about as the indicators of development. It relates to standard of living. But I have a fundamental issue – what is the end result of development? Do better standards of living lead to a better life? Is a globalizing economic system becoming unsustainable better than a self sustained small village? Is urban better than rural?

When? This is the temporal dimension of development. It is a question of when did the concept of development really came into existence. In academic world it might be referred to as question of epistemology! But indeed it’s an important question. When the idea of development did come into existence? It is of importance to understand if there is more than what meets the eye – if development isn’t just social but more political and economic matter.

Where? The spatial dimension of development will help to determine and define the space where the idea evolved. This will also help us examine the politics behind the idea.

Why? I guess the above questions will direct us towards the why of the concept. The reason for examine the idea of development itself is to really look into not what development is but what it does as an end result and if it doesn’t do much then are being regressive rather than progressive in our understanding of development, as we see it.

The environmental changes, the social divides, the economic busts, the political chaos – there is surely something that is amiss. Is it the concept of development?

The Development Society is one of the newest and most vibrant student societies at the London School of Economics, organizing forums for discussion, speaker panels, fundraisers, movie screenings, Development Week, and more, all centered around raising awareness and stimulating dialogue between students and with experts on issues facing countries in the developing world. This year, we hope to cultivate a more nuanced understanding of issues–such as microfinance, the private sector in the developing world, media and development, careers in development, and education, to name a few–through dynamic, engaging events for our members and the LSE community. We will also hold multiple fundraisers and are planning a service trip to Asia.

We are open to suggestions and input from our members in order to create events centered around issues that you are passionate about. Please send us an email listing development-related issues that interest you, countries you have worked with or are intrigued by, past involvement in development, ideas for events, and CVs to developmentLSE@gmail.com so that we can…

  • form discussions and forums based on your interests
  • guide the focus of our future speaker events
  • create a members database so you can interact based on shared interest in development-related issues

OR, please fill out our online form! Click here now!
We look forward to seeing you at our events and to receiving your input!