Date: May 21 2012
THE $10 cow changed everything for Josefina. She already owned a cow and a chicken but the produce was barely enough to nourish her and her family.
However, with a $10 loan, she bought a second cow and was able to produce additional yoghurt and cheese to sell on the roadside in her village of Cajamarca, Peru.
''In two months,'' says former Melbourne University student Fernando Tamayo, ''she had earned enough to pay off the loan - then she borrowed again and bought a third cow.''
It's hard to imagine in prosperous Australia how $10 could have such an impact. Furthermore, Josefina's son until then had been begging on the streets, selling oddments to raise cash, but - thanks to the two-cow income - he was now able to attend high school.
Ten dollars - it seems so paltry but, says Tamayo, there are billions of people in the world who have no access to any sort of finance. They have no assets, no collateral, so the banks' doors are shut to them. Tamayo met Josefina when he led a tour group of five American students in his homeland of Peru to see first hand the benefits of a funding system that mostly flies under the developed-world radar - microfinancing.
It is the system that supplied Josefina's $10 but it is not charity - the loans must be paid back with interest. However, the sometimes tiny amounts involved have changed countless lives for the better.
''We don't ask for collateral but we have had 99.5 per cent repayment,'' says Tamayo, who is now employed by the Lima branch of the US-based Root Capital social investment fund. ''In the past 10 years, the fund has lent $668 million.''
Some of the money used by such microfinancing funds has been donated but much is borrowed by the funds themselves in the same manner as banks.
The origins of microfinancing can be traced back to India in 1974 when a woman named Ela Bhatt established the Self-Employed Women's Association, which with its first loan provided $1.50 to a woman who sold herbs.
Fernando Tamayo comes from a family that values education. ''My mum's father was a bus driver in Lima and worked 18 hours a day to put her through a good school.'' His mother Maria and father Fernando senior are both engineers and enrolled their son at one of Peru's top schools, Markham College, for the last two years of his education.
He came to Australia four years ago on an Australian scholarship to study commerce at Melbourne University, intending to become an investment banker, a financially comfortable career.
However, his life changed track after he attended a lecture by young humanitarian Hugh Evans, founder of the Oaktree Foundation.
''Then I went on an exchange trip to Penn University in the US and heard about microfinancing,'' says Tamayo. ''When I returned to Melbourne I set up the Melbourne Microfinance Initiative. There were 60 people involved. Now the membership is 300.''
The student-run MMI is based in Melbourne University's business and economics faculty and provides advice and consultation to microfinancing bodies in countries such as Ghana, Kenya, Cambodia and Vietnam. Much is done remotely, although a team hopes to travel to Ghana this year to help farmers improve their loan management.
''Altogether in those countries MMI is impacting more than 14,000 people,'' says Tamayo.
He recalls that, in the Hugh Evans lecture, he learnt that 1.4 billion people live on less than $2 a day, the poverty line.
''I calculated that when I was born in Peru, I'd had a six in 10 chance of being poor. It gave me a sense of urgency to do something.''
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