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Students Study Microfinance Economic Development During India Trip

A group of 17 University of Iowa students recently visited India to get an up-close look at microfinance, an economic development method that provides small loans to impoverished people to start or improve existing businesses.

The students traveled to the Indian state of Tamil Nadu from Dec. 29 to Jan. 12 for the class "Microfinance for Women-Run Enterprises." There, they studied hundreds of microloan recipients, most of them women, who started their own businesses and significantly improved their standard of living.

"In many cases, they doubled their daily income," said Ira Delilovic, an economics and international studies student from Des Moines who took the class. "At the same time, we saw it wasn't a miracle cure for all development problems, but in many ways it works very well."

Microcredit is a growing international financing trend in which small amounts of money -- typically around $100 -- are loaned mostly to impoverished women living in rural areas of developing countries to start or expand small businesses. The intent is to help the women lift themselves and their families out of poverty and give them a better life. Most loan programs operate in South Asia, Africa and South America. Although billions of dollars in microloans have been given to millions of participants around the world, the concept received wide international attention last year when Muhammad Yunus, who developed the concept and founded the micro-lender Grameen Bank, was named the winner of the Nobel Peace Prize.

The class was led by geography professor Raj Rajagopal and adjunct professor Edwin Brands, and Christine Brus, director of Women in Science and Engineering (WISE). The participants visited with micro-entrepreneurs in Chennai (formerly Madras) and Madurai who received their microloans from a lending agency called Mahasemam.

Brands said most recipients of microloans live in rural areas and run agricultural businesses, such as operating small, one- or two-cow dairies. On this trip the students met with hundreds of mainly urban women who worked primarily in retail, running stores that sell general provisions, purified water, or flower garlands that are worn into Hindu temples as part of worship. Some businesses make woven baskets and detergent, while others offered such services as clothes pressing or bicycle repair. One woman they met operated her own digital photo studio, a husband and wife team owned a label-making business, and several women formed a joint venture that operated a printing press.

"We saw a wide variety of businesses," said Brands. "Everything you can imagine we do here, the recipients of microloans do there, just on a much smaller scale."

Students said they were impressed by the energy and drive of the entrepreneurs and the pride they took in their business success.

"We met one woman who suggested the possibility she might export her products to the United States or Europe," said Dominic Boomgarden, a finance major from Algona, Iowa. "It's a substantial goal, but it shows that some of these women are really thinking big things for their businesses and aren't content to just stay small."

Ingrid Frisk, a communications studies student from Logan, Iowa, remembers watching two sisters who made saris sell their dresses door-to-door.

"It amazed me that they were only 19 and 20 years old with almost no education and already running a business," said Frisk. "Meanwhile, I'm still taking entrepreneurship classes and thinking about starting a business someday. I'm only thinking about it in theory, while they're doing it and feeding their families."

The students visit to India culminated in a two-day leadership summit on microfinance hosted by the Gandhigram Rural Institute in the city of Dindigul and co-sponsored by the UI, where they gave presentations on their observations and questions for further exploration. The students also visited an Indian music academy, an ancient temple site, and the Meenakshi Temple, one of the most famous Hindu temples.


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