Anchorage businessman helps alleviate Third World poverty: microloans give hope and change lives.

• Author: Gilbert, Lois
• Position: FINANCE - Eric McCallum - Arctic Wire Rope and Supply Inc.

When Eric McCallum, president of Arctic Wire Rope d Supply, planned his retirement, he wanted to give something back. "I was suffering from 'tormented arrogance,'" McCallum said. "I was tormented a lot about some of the major problems on the planet, and I was arrogant enough to think I could do something about them."

McCallum decided to become one of the founding guarantors of MicroCredit Enterprises (MCE). Without philanthropy or government grants, and with a tiny staff, MCE has guaranteed more than $20 million in international microloans.

Microloans are tiny loans made to Third World villagers who lack the collateral for traditional loans. A group of village women, sometimes as few as four or five, more often eight to 10, guarantees a loan, which one woman receives. When the first loan is repaid, typically within three months, the second woman receives her loan, also guaranteed by the group. Peer pressure in the village helps assure repayment.

A loan may be used for supplies to grow vegetables or tomatoes, or to buy chickens or a goat to supplement a family's diet. They also sell the surplus eggs and milk. Some businesses serve markets that haven't existed in America for a hundred years. Often loans provide the capital to buy items to repackage for the village market.

"They are buying a dozen things and selling them one at a time," McCallum said. "They don't have Costcos, and it wouldn't do them any good if they did, because if you're living on a dollar a day, you can't buy a dozen eggs. You can afford maybe one egg."

Other businesses financed by microloans include silk-making, weaving or soap-making.

"Poverty is huge, it's complex, it becomes so overwhelming you just want to turn your back on it," McCallum said. "If you are living on a dollar a day, you are inherently entrepreneurial. You have to be."

Microloans provide a culturally sensitive way to address poverty. They generally raise family income to about 1.30 a day. Village women meet once a week to make loan payments, giving microfinance institution (MFIs) representatives an opportunity to provide education about business principles and health issues.

"Whether your issue is poverty, infant mortality, childhood malnutrition, environment, empowerment of women--microloans can play a role," McCallum said, noting that microcredit has helped reduce the birth rate. Since loans go directly to the poor, it is more efficient than foreign aid.

"It kind of flies under the radar (of corruption)...