Global Poverty

Poverty is an issue of global scale. It is estimated that one half of the world population, almost 3 billion people, currently live on less than $2 per day.

The causes of poverty are many, but the consequences are infinite. Unemployment, illiteracy, hunger, homelessness, unsafe drinking water, and disease have an immeasurable impact on the lives of the poor around the world.

Women are perhaps the most adversely affected by poverty, as they make up 70 percent of the population living on less than $1 a day. Globally, women earn only 10% of the world’s income.

Poverty in Nicaragua

Although rich in culture and intellect, Nicaragua is economically impoverished. According to the UN Human Development Report, nearly 80% of the Nicaraguan population lives on less than $2 per day. Under such circumstances, families often rely on agriculture or resort to informal activities such as street vending to earn a living. To succeed, they need capital to buy inputs and supplies, but the disadvantaged have little or no access to commercial banks.

During the 1980s, Nicaragua's state banking system emphasized making low-cost credit available to the majority of the population. At that time, 63% of long-term credit went to small producers and coops.

This changed dramatically, however, with the privatization of the banking system, which began in 1990. Structural adjustment programs, initiated by the World Bank and IMF, imposed policies that completely restructured the national banking system. Only large industries and agribusiness producers of non-traditional crops for export qualified for credit thus leaving small business owners and producers of consumption crops (i.e. rice and bean farmers) with no access to loans or banking services.

With limited resources and no access to credit, it was often impossible for people to earn enough to support their families. Realizing the gravity of this situation, WCCN has committed itself to offering disadvantaged Nicaraguans an alternative mechanism through which they could access credit.

Poverty Alleviation in Nicaragua: WCCN and Microcredit

Microcredit, a tool to help alleviate poverty, emerged in the 1970’s when Nobel Peace Prize winner Muhammad Yunus introduced the economic development model in Bangladesh. Through microcredit, small loans are issued to micro-entrepreneurs and small-scale farmers, so that they may grow their operations and ultimately pull themselves out of poverty.

With the restructuring of the Nicaraguan economy in the early 1990's, the vast majority of Nicaraguans had no access conventional sources of credit. Poverty had become epidemic. WCCN has always believed Nicaragua’s working poor should be afforded the opportunity to live and work with dignity and equitably participate in their own economic decision-making. Therefore, in 1991, it began working in microcredit by channeling funds from socially responsible investors in North America to Nicaragua’s working poor. Currently, WCCN’s loan fund project, the Nicaragua Credit Alternatives Fund (NICA Fund) [1] is lending over $8 million to 15 microfinance “partner agencies” [2] that specialize in providing financial services to the poor.