Category Archives: Pre-Trip

Time for Some Fun Facts…

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Hello!

While I have speedy Internet, I wanted to post some fun facts about Ghana. It seems to me that most Americans tend to think of Africa as one homogenous area full of conflict and safaris. While my knowledge of the rest of Africa is pretty limited, I’ve done a lot of research on Ghana. Here’s a bit of the basics:

 

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  • Ghana is a former British colony and was the first colony in sub-Sahara to receive independence in 1957.
  • As a colony, is was called the Gold Coast.
  • Comparatively, Ghana is slightly smaller than the state of Oregon.
  • Ghana is a constitutional democracy and its current president is John Dramani Mahama.
  • The currency is the cedi. It is a closed currency and trades about $1.5 cedis to $1 USD.
  • Gold and cocoa are considered a mainstay of economy in Ghana. Ghanaians recently discovered oil, so that industry is growing.
  • Over 200 languages and dialects are spoken in Ghana, but the official language is English.

 

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  • Elmina Castle along Ghana’s Southern coast was the first European building to be built in Sub-Saharan Africa. It is now a UNESCO World Heritage Site.
  • Ghana’s Lake Volta is the largest reservoir in the world.
  • Accra is the capital and the most populous city.
  • The climate in Ghana is tropical. It’s relatively warm along the southeast coast, humid in the southwest and extremely hot and dry in the north.
  • Ghana possesses a substantial degree of media freedom with the private press operating without considerable restrictions and was described as “one of the most unfettered” press associations on the continent by the Commonwealth Press Union.

 

Microfinance: The Basics

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In my last post, I promised to go into depth about what microfinance is and how it helps combat poverty. But to start with, here’s a short video from Kiva for those of you who prefer a quick version:

Microfinance is a broad term describing financial services for low-income individuals such as credit, saving, insurance, money transfers, and other basic services. The “micro” part of the phase obviously refers to amount of money involved in these services. Someone who is poor is unlikely to take out a loan for $25,000, and having a separate term helps to distinguish these institutions from regular commercial banks.

While credit unions and lending cooperatives have been used for hundreds of years, microfinance wasn’t explored until the 1970s. Dr. Muhammad Yunus is often credited as being the primary pioneer of this field (As well as being a hero of mine). He experimented with giving small loans and financial education to women in Bangladesh. In 1983, Yunus founded the independent Grameen Bank. The Grameen Bank and Yunas jointly won the Noble Peace Prize in 2006. The success of Grameen Bank has inspired similar projects in over 40 countries, effectively spreading the ideas of microfinance throughout the developing world.[i] For more information on Yunus, I highly recommend his memoir Banker to the Poor: The Story of the Grameen Bank.[ii]

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Let’s get back to the definitions. People often confuse the term microfinance with microcredit. Like I stated earlier, microfinance is an umbrella term referring to all of the financial services offered to the poor. Microcredit is a subset of the term as it includes only one type of service. Microcredit refers to the practice of issuing small loans to low-income borrowers with little to no collateral, instable incomes, and unverifiable credit histories. These loans are often given to entrepreneurs, particularly women, to invest in their small businesses.

Microcredit and other services are provided by microfinance institutions (Creative name, I know). Why don’t regular banks handle these services? Well, some do.  However, microfinance isn’t attractive to most commercial banks because its lack of profitability.  It is much less lucrative to handle the small amounts of money found in microfinance rather than larger accounts. MFIs first emerged as non-profit organizations, such as NGOs or credit unions. In order for an entity to get a license to offer savings services, it must have a for-profit status. Thus an increasing amount of MFIs are now for-profit and categorized as non-banks financial institutions.[iii]

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Source: givewhatwecan.org

Now that we all know what microfinance and microcredit are, why is it such a big deal? Well, traditional financial institutions are designed to support people who already have money. So what do poor people do? The poor save informally by buying gold, jewelry, domestic animals, or other liquid assets. The first benefit of MFIs is that they provide a secure and accessible means of savings, which can be essential for managing crises, investing in opportunities, or paying for large expenses such as schooling.[iv]

Next, microfinance is important because people in developing countries rarely have access to credit. Often the only credit available is through pawnbrokers or moneylenders who charge staggeringly high interest rates or use violence against borrowers when they default on payments. Access to ethical credit options helps the poor to smooth cash flows and helps to ensure continuous access to food, clothing, housing, and education. Credit can help with economic shocks or with building up assets, such as land. Lastly microcredit, unlike other credit options, is inclusive to women and has encouraged empowerment and financial independence.[v]

So far all the information I’ve included has been positive. I truly believe that microfinance is important strategy in eliminating poverty. However, it’s naive to think that it is the only strategy. Microfinance has its problems.  As MFIs moved from non-profits to for-profit organizations, some lenders starting focusing on making a profit by charging high interest rates rather than providing services for the poor. As Muhammad Yunus stated in a 2011 op-ed piece, “Commercialization has been a terrible wrong turn for microfinance, and it indicates a worrying ‘mission drift’ in the motivation of those lending to the poor. Poverty should be eradicated, not seen as a money-making opportunity.”[vi]

The other main critique of microfinance is that the lack of financial education provided by some MFIs.  Clients of MFIs are often have limited education, particularly when it comes to money. Financial education helps the poor effectively understand their financial circumstances, choose among financial options and manage the financial resources they have. MFIs that do not help provide this education are generally are less successful and in some cases, harmful.

Overall, the point of microfinance is to provide financial services to the poor, who are often ignored by traditional institutions. While some MFIs suffer from high interest rate and other flaws, I believe that they have done more good than harm by empowering the poor to take control over their financial situations.

More information: For a good overview of microfinance that discusses the positive and negative effects, read this article by YES! Magazine.[vii]

Chimamanda Adichie: The danger of a single story

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When I started telling people about my upcoming trip to Ghana, I received a myriad of reactions ranging from excitement to horror. In this beautiful TED talk, Nigerian Novelist Chimamanda Adichie discusses the cultural misunderstandings that occur when we hear only one story and build generalizations from it.

Going to Ghana

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Hello!

It still feels surreal to me that I’m leaving for Ghana in three days. Just thinking about it produces wild butterflies in my stomach from either bounding excitement or extreme panic. It’s probably a combination of both.  Regardless, for the next four months I will be living and working in Cape Coast, Ghana.

I’m not exactly known as a big traveller. That would be my sister who boasts of travelling throughout Europe and select destinations in the South West Pacific. My experiences are merely limited to chunks of the United States and Canada, as well as a last minute, but lovely trip to Ireland. My most exotic trip to date was Hawaii when I was six.

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My “exotic” vacation in Hawaii, Age 6 

However, my limited experience is not due to lack of enthusiasm, but rather the constrained resources of money and time. The constraint of money is pretty much expected from a college student who relies on her parents and a retail job for cash (though the co-op program helps quite a bit with this). While my parents are more than willing to help me fund some travelling, I would feel too guilty to take them up on this. Time is trickier. Drexel students get very limited vacation, particularly those on the Fall/Winter co-op cycle. Since we don’t get summers off, any trips including ABs or service trips have to happen during the one or two week breaks between terms.  Unlike tons of the Drexel population, I’m not from the tri-state area and don’t get to come home that often. Thus, I need to decide whether to spend my vacations travelling or seeing my family.  So far, I’ve always gone home. I miss my family too much.

So, how did a girl who’s barely left the U.S. manage to get the opportunity to go live in Ghana? Drexel’s Co-op Program (Feel free to skip this paragraph if you’re familiar with co-op). Drexel is one of a dozen or so schools to focus on cooperative education. The program was launched in 1919 and is one of the largest in the country. According to Drexel’s website, the point of co-op is for students to get “paid employment in practical, major-related positions consistent with the interests and abilities of participating students.”[i] In layman’s terms, the co-op program consists of six-month (often paid) internships. Drexel students can either choose a three co-op program taking five years, a one co-op program for four years or a regular ol’ four-year program. Students are then split up into two cycles: Fall/Winter and Spring/Summer. Spring/Summer is most like a traditional school experience. However instead of getting summers off, students have a full time internship. Fall/Winter students, however, intern during normal school months and take classes during the summer. There’s always a debate on which cycle is better, and I firmly believe that Fall/Winter students get the short end of the stick, especially if they aren’t from around Philly. In the summer, the class selection is smaller, facilities all close down earlier, there more adjuncts, and there are fewer activities such as Welcome Back Week. Despite the inequality in cycles, Drexel’s co-op program is a practical solution to hedging against the high unemployment for college grads and I consider it a good investment for my future.

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Class of 2016 🙂

I am in the three co-op, five year program and happen to have the Fall/Winter cycle.  Currently, I am in my third or “pre-junior” year and am an accounting and finance major with a minor in history. For my first co-op, I worked at the law firm Chimicles & Tikellis, which handles class actions. While I discovered that I am not interested in a law career, I enjoyed the autonomy of the position and variety of assignments. For my second co-op, I knew very early that I wanted to go abroad. At first, my search was extremely broad, as I didn’t quite know what type of position I was looking for or in what country. After a bit of thought, the answer was obvious: microfinance.

During the winter term of my freshman year, I took a two-credit class called Social Responsibility in Business. It was a business elective taught by the wonderful Juli LaRosa in which we discussed ways businesses can enrich society and examined successful models of social entrepreneurship. The class that most stood out to me was Professor LaRosa’s lecture on microfinance. The simple definition of microfinance is “banking service that is provided to unemployed or low-income individuals or groups who would otherwise have no other means of gaining financial services.”[ii] Generally, microfinance is considered a means to combat poverty and promote entrepreneurship and fiscal responsibility in developing countries. (See my next post for more information on microfinance).

That brings me to ProWorld. ProWorld is a subsidy of Intrax, which is one of the largest providers of global educational, employment, and volunteer programs in the world. Most importantly, Intrax is one of the few organizations designated as a sponsor by the U.S Department of State.[iii] ProWorld’s first student group was in Peru in 2000 and has expanded to include several other countries. Currently there are programs in Belize, Thailand, Peru, and Ghana that cover many areas such as education, journalism, health, environmental management, and microfinance. I had first heard about ProWorld through my friend Nora, who participated in a program in Mexico. After doing my own research, I came to the conclusion that ProWorld would be a terrific program to be a part of.

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From October through January, I will be interning at a NGO in Cape Coast, Ghana. I will be living with a host family and taking biweekly language lessons to learn Fante. In the next few posts, I’ll give more details, about microfinance, Ghana, and my specific project. Hopefully I’ll be able to add some interesting pictures soon.