Alum promotes economic justice through microfinancing

October 1, 2010

TProvanceAs executive director of Oikocredit USA, Terry Provance (MA 1998 in Christian Social Ethics) heads up one of the world’s largest sources of private funding encouraging socially responsible investing. With over $650 million in investments to the microfinance sector, Oikocredit provides development-focused loans and credit to 118 projects through 550 microcredit banks and 250 trade cooperatives in 71 countries in the developing world. In turn, these institutions dispense life-changing loans to the poor and disadvantaged, with a special emphasis on rural areas and women.

Believing that economic and social justice will promote peace, Terry says the organization promotes investments in microcredit opportunities for people around the globe. The 35-year-old organization founded by World Council of Churches “makes $28 billion in microcredit loans available to 110 million women in the world to help them improve the quality of their lives through barefoot capitalism,” he said. “It’s a first step out of poverty. We don’t romanticize their lives, but it’s a step to reduce the global poverty of 3.4 billion of the world’s 6.6 billion people who live on less than $2 a day."

Terry describes how, before receiving microfinancing five years ago, a Filipino woman sent her four children aged two to nine years old from their peasant shack out to the streets of Manila to beg. Her husband was too ill to work. They survived on $1.40 a day.

Even though she is not literate and could not qualify for a bank loan because she has no assets or collateral, she was able to receive a microcredit loan of $35. She bought a sewing machine and makes slippers. Her family eats twice a day and her husband has gone to a doctor. The children have books and clothes, so they can go to school. She paid back the first loan, and qualified for a second loan of $100. She used it to hire two sisters and a friend to help her sew.

The loans go to women, Terry said, because “money women earn goes for their family’s needs. Only 30 percent of money paid to men goes to their families," he said.

“The poor are reliable borrowers. They participate in their own livelihoods and keep money coming in to pay loans. With every $1 loan, we receive 98 percent back, because people do not want to risk losing their livelihoods and because of peer pressure. In the United States, the payback rate on loans is 89 cents on the dollar,” Provence said.

Oikocredit is a nonprofit, keeping costs low and offering below market rates of two percent to investors. The investor knows where the money goes and has a “high social reward,” he said.

"All that capital comes primarily from religious constituencies, we have 40,000 investors worldwide, most from religious communities," says Provance.

“It’s not a donation, because the investor receives the principal back," he said.

Oikocredit, based in the Netherlands, has 32,000 investors. It does not make loans in the United States or Europe, because of the acuity of poverty in Asia, Africa and Latin America. The name Oikocredit for the Economic Development Cooperative Society comes from the Greek word, “oikos,” for household—economy, ecology and ecumenism—and the Latin word, “credaire,” which means to believe. For more information, visit

Terry Provance returns to PSR on Monday, October 4 to discuss Oikocredit. The talk takes place 12:30-2:00 pm in the Bade Museum on the PSR campus.