Poverty has innumerable consequences with a single certainty, that children will suffer most. For parents of 18 million children in central and Eastern Europe and the former Soviet states, poverty feels like this...

• Wondering how you will feed your daughter tomorrow when she barely had one meal today
  
  
• Keeping your son warm in sub-zero winter temperatures with a cup of water from the radiator
  
  
• Selling your last cow, the source of milk and cheese for the entire family, to by medicines for your feverish daughter
  
  
• Giving up your child with special needs to an institution because you can barely provide for your other children
  
  
• Living in a displaced persons camp for 12 years wondering every day if your children will ever know anything different than this place where they were born
  
  
• Ensuring the family survives a few more months by selling your daughter to a businessman who says she will work in "the west" as a domestic and be well cared for
  
  

How can the lives of desperate and poor families be transformed? How can parents move beyond survival mode, to ensure the one thing all parents the world over hold sacred, a better life for their children than they have now?

World Vision micro loans have created more than 1.7 million jobs and improved the lives of nearly 3.5 million children worldwide.

Imagine your life without a chequing account, without savings or access to loans and a mortgage? You are living on the money in your pocket and what your spouse will or won't bring home at the end of each day. Your budget for the family is US$2 per person per day.

For many families in Eastern Europe, the Balkans and Caucasus, this is reality. It is what it means to be poor, really poor. You can't get ahead, you can't plan; you have no contingencies, nothing to fall back on! You are too poor to qualify for a bank loan and moneylenders who are more than willing to help will charge exorbitant, loan shark interest rates.

No single programme can defeat poverty, but one does underpin all others. It is microfinance or micro-enterprise development. For the self-employed who eke out a living through hard work and hustle, a strong work ethic and entrepreneurial spirit are not enough.

To break the downward cycle of poverty the hard-working poor need access to the things people take for granted in developed countries. They need credit, advice and access to markets.

If people can depend on a steady income they can eat better and then perform better at school and work. They can seek medical help any time they require it. And they can begin to plan ahead, to dream and map out how they will achieve those dreams.

Microfinance also has an economic multiplier effect that benefits the whole community. Successful businesses buy raw materials, hire employees and contract with other service providers. Success begets success.

• How it works...

The Millennium Development Goals are: 1. eradicate extreme poverty and hunger; 2. achieve universal primary educations; 3. promote gender equality and empower women; 4. reduce child mortality; 5. improve maternal health; 6. combat HIV/AIDS, malaria, and other disease; 7. ensure environmental sustainability; and 8. develop a global partnership for development.

Financial services for poor households are a major part of the United Nation's Millennium Development Goals (MDGs), which strive to halve the number of the world's poor living in extreme poverty by 2015. It is regarded as so important that the United Nations has named 2005 as the International Year of Microcredit.

Microfinance significantly impacts a country's ability to achieve the MDGs, which focus on nutrition, education, health, gender equity and environment. World Vision is mobilising its resources and orienting its programmes to achieve the MDGs.

World Vision's largest microfinance operations worldwide sprang out of relief and rehabilitation programmes. World Vision came to the Caucasus in 1989 and the Balkans in 1994 to assist the victims of natural and man-made disasters.*

They remained after emergency relief programs were completed out of recognition of the need for long-term development and nurturing of civil society. Their programming response was financial services for the poor.

World Vision had disbursed more than 3.3 million loans as of September 2008 across the 47 developing countries where it provides microfinance services.

Since 2008, World Vision's loans have served more than 140,000 clients in: Balkans - Albania, Bosnia-Herzegovina, Kosovo, Serbia and Montenegro Caucasus - Armenia, Azerbaijan and Georgia

Since 2008 World Vision's loans worldwide have: Served more than 608,000 clients Created and sustained over 230,000 jobs Impacted more than 418,000 children Focused 70% of activity in rural areas Served on average 70% female clients

• World Vision’s Eastern Europe Microfinance institution loan portfolio grew from US$227 million in December 2007 to US$296 million in December 2008.
• By December 2008, 98% of World Vision microfinance clients made their monthly loan repayment on time.

Conflict, natural disaster, economic collapse and social upheaval have ravaged the Eastern European and former Soviet states, plunging its people into poverty and some 18 million children into crisis.

In a decade, the 'have's have become the worst of the 'have nots'. Unable to access traditional finance services, they have little chance of getting back on their feet.

World Vision clients tell how small loans and business coaching helped them to stand and better provide for their children. Loans that break poverty...

Mimoza is a 33-year-old Roma or gypsy woman who is the sole steady wage earner for her unemployed husband and four children. Struggling to survive in Albania's disastrous post-communist economy, Mimoza sells second-hand shoes at a busy intersection in a coastal town.

Without it (the loan), I'd be living day to day, asking around for work as a maid or doing manual labor.

Business is hardly bustling. She sells five pairs of shoes a day, maybe eight pairs on a really good day. Her daily profits are meager, about US$2. But the issue is economy of scale. Her daughter recently suffered a bout of pneumonia that wiped out the family savings. A loan from World Vision for the equivalent of US$65 recently gave her the critical capital to buy a large allotment of second-hand shoes and feed her family of six. "Without it (the loan), I'd be living day to day, asking around for work as a maid or doing manual labor. I will always feed my family," she says with determination, "but it's much better with a business."

Microfinance, including credit and savings services helps safeguard poor households against the extreme vulnerability that characterises their everyday existence.
For a poor family, access to savings can mean the difference between a quick slide into destitution and the ability to ride out hard times. A child's illness, the death of a relative or a seasonal business slump can ruin a poor family with no financial reserves. Savings not only see families through these bad times but let them plan and anticipate joyous occasions like weddings and school graduations.
World Vision recognises that access to saving services for families is critical and is currently exploring the possibility of integrating a savings account mechanism into its current microfinance service.

One of the first things poor families do with new income from micro enterprise is invest in their children's educations. Studies show children of microfinance clients are more likely to go to school and stay in school longer. Student dropout rates are much lower in microfinance client households.

Mushvig Aliyev, 34, once sat at a tiny table at the outer-most edge of the Imishli market selling potatoes, never more than a kilo at a time. He so despaired at the pain of seeing his children hungry he considered suicide. Now he is a wholesaler supplying about 20 tons, a significant portion of the potatoes moving through that market. Mushvig was a displaced person in 1993 with a wife, a newborn and only the clothes on his back. Five World Vision loans later he is a thriving entrepreneur, employing others, helping a disabled brother and planning for his children's university educations. "When we were in a bad situation, World Vision helped us. Without World Vision it probably would never have changed.

Five World Vision loans later he is a thriving entrepreneur, employing others, helping a disabled brother and planning for his children's university educations

We had no money to start trading but with the World Vision loan I could make money, repay the loan and buy a truck and later this apartment," says Mushvig. Mushvig's wife, Sevda, used to feel ashamed to look into the faces of her hungry children. Now she is proud of her 10-year-old daughter, Shabnam, who wants to become a teacher: "As a teacher she'll be involved in the community."

World Vision's microfinance clients increase their household incomes, build assets and reduce their vulnerability to the crises that are so much a part of their daily lives. Microfinance clients are able to plan for their future and that of their families. They can manage their cash flows and apply them to whatever household priorities they judge most important for their own welfare. Microfinance empowers and equips the poor to make their own choices and build their way out of poverty in a sustained and self-determined way.

In Bosnia and Herzegovina, 44-year-old Mujaga, is a proud citizen of a remote mountain village called Zepa and father of eight children. He says, "The loan to set up a cafe gave my wife back her will to live!

This loan helped put us all to work making money to buy food. Now I'm planning to extend the business

With God's help I will pay this loan and then come to ask for another. With that I can start a business that employs probably two people. I had no source of income after the war. This loan helped put us all to work making money to buy food. Now I'm planning to extend the business".

The impact of microfinance goes beyond mere loans. Financial services mean the poor can invest in health and education, manage household emergencies and meet the wide variety of other cash needs that they encounter.

In the future, we plan on hiring two more employees - single mothers!

Khatuna and Irma were desperate when they found themselves pregnant and abandoned in conservative, traditional Georgia. They felt their only options were to give up their newborn children, Anri and David, to the infant home in Georgia's capital, Tbilisi.

Social workers from the Prevention of Infant Abandonment & Deinstitutionalisation project, of which World Vision is the main implementing partner, offered another choice - to live temporarily in the project's Mother & Infant shelter, have time to bond with their babies and create a plan to become self sustainable.

Khatuna and Irma plan to open a small bakery that will generate enough income to pay for shared accommodation and provide for their babies. "We'll start by selling khachapuri (Georgian bread), hopefully 300 per day at 33 cents each, cheese bread and lobiani (a bean-filled bread). Once we're established, we'll add sweet baked goods. In the future, we plan on hiring two more employees - single mothers!"

World Vision's microfinance institutions primarily target women as clients. Women often prove to be more financially responsible with better repayment performance.
Also it has been shown that women are more likely to invest increased income in the household and family well-being. Access to financial services empowers women to become more confident and more likely to participate in family and community decisions.

After the war I was at zero. World Vision helped me to stand. Without World Vision I'd not be where I am now. I couldn't be lifting myself up

Skender, 37, is a farmer, husband and father of four children under the age of six. He described the state of the family after the NATO bombing in 1999 as 'zero', without a home, a single possession or a scrap of food. World Vision gave him a grant of one cow shortly after the war, then roof tiles to help rebuild his razed home, tractor parts to replace what had been looted, wheat seed and fertilizer. When Skender was back on his feet, World Vision loaned him 500 Euros to buy another cow. He has expanded that into three healthy milk cows and three calves. The six animals are three times as many cattle as anyone in his family before him ever owned in four generations of agriculture. It's twice as many as Skender had before they were looted during the NATO bombing. After the war I was at zero. World Vision helped me to stand. Without World Vision I'd not be where I am now. I couldn't be lifting myself up", Skender says. His wife Remzie adds, "Before we had no income and I was always worrying." Her voice lowers. "The situation with the children's health was more difficult. They got sick more often. Now the children get four litres of milk a day. It's much better. Thanks for your help."

Microfinance allows poor people to protect, diversify and increase their sources of income. It is path out of poverty and hunger. The ability to borrow a small amount of money to take advantage of a business opportunity, pay for school fees or bridge a cash-flow gap, can be a first step in breaking the cycle of poverty.

The situation with the children's health was more difficult. They got sick more often. Now the children get four litres of milk a day.

Similarly poor households will use a safe, convenient savings account to accumulate enough cash to buy assets such as inventory for a small business enterprise, to fix a leaky roof, to pay for health care or to send more children to school.

Testimonies and studies show households of microfinance clients have better nutrition, health practices, health outcomes and living conditions. Children are more likely to go to school and finish their studies and more children go on to further studies.

Access to financial services forms a fundamental basis on which many of the other essential development interventions depend. Improvements in health care, nutritional advice, and education can be sustained only when households have increased earnings and greater control over financial resources.

Improved earnings means that families can save money, which reduces their vulnerability when a business slows, a child gets sick or a family crisis hits.

Microfinance gives families options for the future and enables them to give their children the best start in life.

Throughout the World Vision partnership, VisionFund-affiliated microfinance institutions have an overall portfolio of US$402 million with more than 607,000 clients in 47 countries with a loan repayment rate of 98%.