Microsoft Word - Credit in Australia Microcredit in Asia .doc

Credit in Australia, Microcredit in Asia

Primary Years

Years 3-5

Therese Molloy

School of the Nativity

Have you ever wondered what life would be li ke without credit? Loans from banks, car loans,

credit cards an d phone credit on mobile phones all contribute to our lifestyle in Australi a. Is all

credit the sa me? Can all people access credit at the same rate of interest?

Access to credit is not equitable across al l families in Australia, and it is not equitable across all

families in Asia. Low income familie s often have greater difficulty in accessing a loan at a

manageable rate of interest. The inability to access loans at manageable rates of interest can

mean that low income families take out lo ans at rates of interest that are unreasonable and

keep them poor.

In this the United Nations International Ye ar of Micro–Credit, we have the opportunity to

consider credit options for families in Aust rali a and in Asia, and this is an opportunity to

consider how microcredit can improve the li ves of low income families.

SECTION 1

Credit in Australia

What sort of credit is available to families in Australia?

Ask students to consider the follo wing questions. This discussion can begin in the classroom,

and then students can research with their own families on this topic.

What is loan? What is credit?

? Where have you got information ab out loan s from? e.g. TV ads, radio, newspaper,

magazines, internet, billboards, fam ily and friends

Activity

Numeracy

Collect and sort data from maga zines, newspapers, brochures and websites about

loans and make poster s for the classroom

Literacy

Label the different categories e. g. types of loans, techniques for advertising or

whatever the class has determined as the method of sorting the information about

loans.

? Why are loans important? e.g. to purc hase large and expensive items that may take a

lifetime to repay, or to improve family income by borrowing to set up a small business or

lifestyle such as a car to get to work, or a ho liday, or renovations or to help a family out

in an emergency, to buy things that th e family does not have the cash for.

Activity

Literacy and numeracy

Research with your family and de scribe ho w a person gets a loan i. e. home loan/car

loan/business loan/holiday lo an/furniture loan etc

? When is a loan really important to help a family? e.g. burglary, fire, unemployment,

illness, stolen car, natural disasters

? Where does a family in Australia ge t a loan? e.g. bank, broker, credit unions,

pawnbroker, family and friends

? How do lenders like banks make a profit through lending money? e.g. interest rates

Activity

Literacy and numeracy

Collect brochures about loans wi th conditions for borrowing and interest

repayments. Sort and explain your da ta. You can choose to use graph paper,

posters, excel, Word or publisher to help you represent this data. (Students will

notice that typically, credit cards ha ve much higher interest rates than home loans.)

? Can anyone get a loan at a reasonable rate of interest? What criteria do banks use

before deciding whether they will lend mone y at reasonable rates of interest? e.g.

employment, savings, income, credit history

Activity

a. Research the criteria used by bank s to de cide if they will lend mone y to a person.

Share with your group and create a list.

Invite a guest speaker, perhaps a parent in the school community, to speak ab out the

criteria banks and credit unions use to determine who they will lend money too. The

speaker might be able to give some exampl es of families/people that are advantaged

by the criteria used in Australia to dete rmine who gets a loan, and families/people

that are disadvantaged.

c. Consider if the crit eria used by banks and lending societies could be made fairer?

? Discuss the advantages for a family of being able to have a loan from a bank/building

society at a reasonable ra te of interest? e.g. can buy a new house, set up a new business,

buy furniture and pay it off gradually, buy something on sale and then save up and pay

off the item, help them in a crisis.

? Discuss the disadvantages for a fam ily of not being able to have a loan from a

bank/building society at a reasonable rate of interest? e.g. cannot buy something that is

reduced, cannot buy something that is an unexpected opportunity, cannot buy large

expensive items because it is too di fficult to save, (saving to buy a house for cash is

difficult because house prices increase).

Activity

a. Research with your family and make a lis t of organisations in South Australi a that

help low income families to improve their lives? e.g. St Vincent de Paul, Caritas

Australia, Fred’s Van, Angl icare SA etc.

b. Invite a guest speaker from one of these organisations to provide more information

about how they help low incomes families.

Do any of these organisations or others offe r credit to low income fa milies? If so,

what is the intere st rate? Is the interest rate reasonable?

In small groups se lect one organisatio n that supports low income families and

research the type of help it gives. Does that help include access to loans? If so , at

what rate of interest? Consi der how you will research this, e.g. guest speaker,

phone, letter, Google search. Sort an d present

your data. You can choose to use

graph paper, posters, excel, Wo rd or publis her to help you represent this data. Your

group can then share your data about the or ganisation you researched with the class.

? What would you like to see happ en about access to credit that could improve the lives of

low income families in Australia? What coul d your class do?

SECTION 2

Microcredit in Asia improves the lives of low income families

This section will lead the studen ts into an un derstanding of how microcredit improves the lives

of low income families in Asia, in particul ar Sri Lank a. Students will need to be explicitly taught

about low income families in Asia and the ways that they make an income. Many families in Asia

make a living by producing and selling food.

Activity

a. This hyperlink provides pictures which give students informa tion about how low income

fam ilies in Sri Lanka produce rice:

http:// www.galenfrysinger.com /r ice_farming,_sri_lanka.htm

Compare rice farming in Sri Lanka to farming in Australia. Can you find some image of

farmers in Australia? e.g., Google search, TV shows, newspapers, journal articles. What

are the similarities, what are the di fferences?

On a map of Australasia, identi fy Australia and Sri Lanka. Mark in Canberra, the capital

city of Australia and Colombo, th e capita l city of Sri Lanka.

This hyperlink shows images from Colombo, th e capital city of Sri Lanka. Scroll through

the pi ctures of Colombo until you come to the market in Colombo, where low income

villagers sell food that is produced on their farm. When they sell their farm produce at

the market, they make an income for their fa mily. How would you describe the market

in Colombo? What foods can you recogn ise? Are any foods strange to you?

http://www.ga lenfrysi nger.com/colombo.htm

Compare selling of food in the market in Colo mbo, Sri Lanka to where your family buys

food.

d. Visit the Adelaide Ce ntral Market and/or Chin a Town and look for foods that come from

Asia. Fill in a table or map identifying th e Asian food in the Adelaide Central

Market/China Town and the Asian countr y it wa s grown (originated from). The hyperlink

below provides some images of the Adel aide Central Market and China Town.

http://www.to uradelaide.com/adel_central_market.html

e. Visit the Adelaide Botanic Ga rdens and speak with the Education Officer (telephone

(61 8) 8222 9311 ) about the “ Plants and people of Asia’ trail and accompanying booklet.

? Read and discuss the inform ation about microcredit found in the brochure ‘ Help Sri

Lankans rebuild after the tsunami’.

http://online.cesanet.adl.catholic.e du.au/docushare/dsweb/Get/Document-

5995/Microcredit+brochure.pdf

? Microcredit is a sustainable meth od of improving the lives of low income families by

providing small loans at manageable rates of interest to local co-operatives. These

local co-operatives decide which members re ceive loans and at what rate of interest.

The loan is used to increase and improve production and therefore the income of the

family.

Leelawathie’s Story

A common method of establishing microcre dit is for an

organisa tion like Caritas Australia to provide initial funding to a

small group of low income families in a village. This funding

migh t be $100.00 and the group would decide which members

receive loans from this funding. The group might decide that five

members will receive a loan of $20.00 ea ch.

One of the members of this gr oup is Leelawathie Tissera, and she

proposed to the group that she would like a $20.00 loan to buy a

st ove and new pans so she can produce fresh leaf congee, a rice

gruel. With the money she makes from selling the congee,

Leelawathi e repays her loan with interest and increases her family

income. The money that Leelawathie repays with interest increases

the amount of money the co-operative ha s to loan to other low

income families in the village group.

If Leelawathie could not borrow money fr om the co-operative in

he r village at a reasonable rate of interest, she would have two

choices. Firstly, she could leave th ings the way they are, and not

buy the items needed to build a small business to improve her

family income. The second option would be to borrow money from

a mone y lender at a very high rate of interest, perhaps 200% or

more. That would mean in one year sh e would have to pay back

$60.0 0 on a loan of $20.00. If Leelawathie borrows money from

the money lender at a very high rate of interest, all the money she

makes from selling more congee will go t o the money lender to

repay he r loan with interest. She will not be able to improve the

lives of her family.

Sometimes people like Leelawat hie wh o borrow money from a

money le nder at very high rates of interest have to borrow from

another money lender because they have not been able to save all

th e money they need to pay the debt back to the first money lender

in time. In this way, low income famili es can get themselves into

very serious debt because they can not access loans at manageable

rates of interest.

Activity

Literacy

Break the word microcredit into two parts, ‘micro’ and ‘credit’. What do they mean as

individual words?

What new meaning do they have wh en they are joined?

Make a list of other words that begin with the prefix ‘micro ’. What do these ‘micro’

words mea n?

Numeracy

From what you have learnt about banks, woul d they want to lend $20. 00 to Leelawathie

to bu ild up her congee business? Discuss how a bank would respond to a request fro m

Leelawathie to borrow $20.00. Perhaps you co uld present your group response as a role

play showing what the bank would think abou t this. How would Leelawathie feel if she

approached a bank for a loan? Would there be people in Australia who would be nervous

to go to a bank for a loan?

What are the advantages for L eelawathie’s vi llage of ha ving their own locally managed

co -operative to borrow from instead of a large bank in a city like Colombo?

If Leelawathie borrowed $20 through microcredit for one year at 10% interest, how

much would she pay back at the end of the year?

If Leelawathie borrowed $20 through a mo ney lender for one year at 100% interest,

how much would she pay back at the end of th e year?

What advantages are there for Leelawathie’s family of borrowing $20 using microcredit

in stead of the money lender?

What is a reasonable rate of interest fo r a small loan for a low income family?

What do you think is an unreason able rate of interest for a small loan for a low income

family?

Are there families in Aust ralia who could benefit from microcredit?

? Read the brochure again and look closely at the description of microcredit.

http://online.cesanet.adl.catholic.e du.au/docushare/dsweb/Get/Document-

5995/Microcredit+brochure.pdf

? Sustainable means something that ca n be on going, something that does not run out.

When you worked out that Leelawat hie paid back $22.00 to the microcredit group,

you would have realised that the microcred it group had made $2.00 profit. So next

time the microcredit group had more mone y to lend ($20.00 + $2.00 = $22.00) to

low income families.

? Donations made to

Caritas Australia were given as initial fundin g to a local group in a

Sri Lank an village. This local group decide d to lend a small amount at a reasonable

interest rate to Leelawathie and o ther members of the group with business

proposals that seemed well thought out.

? Often donations made to improve the lives of low income families are given as a gift.

Can you think of times when donations are ma de that are not sustainable? (e.g. just

after the bushfires near Pt Lincoln and imme diately after the tsunami). When is it a

good idea for donations to be sustainable, when is that inappropriate?

Activity

a. Watch the video and take notes about the help that Sri Lanka needed after

the tsunami. e.g. roads, schools, food, medi cine, houses etc

http://w ww.caritas.org.au/emerg encies/eart hquake_video.htm

b. What help is best given as a gi ft? e.g. food and medicines straight after the

tsunami; food, clothes, medicine and ho using straight after the Port Lincoln

bushfire

What help is best given as a loan? e.g. money to build fishing boats that can

be used to make an income through fish ing. When the fish are sold, profits

made can be used to pay off the loan and a small amount of interest. Then,

once the loan has been repaid with interest, the money can be lent to other

low income families to improve their income .

Activity

The idea of microcredit has bee n represented in the logo of the United

Nations International Year of Micr ocredit. Follow the following link to look

at the logo. Do you think it is a good logo for the United Nations International

Year of Microcredit>? What does it make you think?

http://www.ye arofmicrocredit.org/

Microcredit improves the live s of low income families

Microcredit is a sustainable meth od of alleviating poverty by

providing loans at reasonable interest rates to low income

families unable to access fund s from tr aditional means.

b. How could you demonstrate the i dea of microcredit being sustainable in a

drawing? (Microcredit is sustainabl e the same way that a traditional bank is

sustainable in Australia, because the amou n t that is repaid is more than the

amount that is lent. So microcredit is really the same as bank credit except

that it is loans for very small am ounts and that it is managed at the local level

by the borrowers rather than by a national or international bank)

c. How coul d you demonstrate the idea of mi croc redit to another group? It could

be older students in your school, students the same age or younger students.

Alternatively, your class might de cide to present the concept of microcredit to

the school or year level in an assemb ly. The following example is based on

demonstrating the ideas behind microcredit t o a class of students in that

coul d be in either Reception, Year 1 or Year 2. On the next page is a simple

story about quite a complex idea, mi crocredit to support a cashew nut

business, and shows that complicated idea s can be presented in a way that is

easy for younger people to understand. Perh aps this example of the cashew nut

business might help you with your own ideas about how to explain microcredit

simply.

Before reading the story you migh t be interested in seeing the cashew apple,

the fruit attached to the cashew nut.

http://www.nda.agric.za/doc s/cashews/cashew.htm

Microcredit for Cashew Business in Ta nzania

In Tanzania, a poor cou ntry in Africa, there were a group of young men who didn’t

have enough money to live. Be fore, they used to borrow money from a person called

a moneylender. The moneylender made th em pay back extra, so it took ages to

give back the money.

But now these young men have a special ban k called a microcredit bank thanks

to your Project Compassion money. This bank lends them money but does not ask

them to pay back a lot extra .

Some of the young men borrowed money to buy cashew nuts and small trays. They

made lots of small packets of cashew nu ts and filled their trays with these packets.

Then they were able to sell their cashew nuts.

They walked up and down the busy street s asking people to buy the packets of

cashews. With the money they received they were able to buy things they needed

and to start paying back the money they had borrowed.

What example would you choose to explain the idea of micr ocredit to

Re ception -Year 2 students? The Cashew Nut story, the Leewathie story or

another example you have found? H ere is a link to another story about a

woman who borrowed money from a ‘loan shar k’ to buy a sewing machine to

make clothes to sell.

http://ozspirit.info/2005/105b.html

What method/s would work best to help Reception -Year 2 students

understand the idea of microc redit? e.g. a play, series of pictures, a story, a

game, a PowerPoint

What words would you use to expl ain microcredit instead of ‘sustainable’,

‘method’, ‘alleviating poverty’, ‘low intere st rates’, ‘low income families’, ‘access

funds’, and ‘traditional means’?

? Think also about how you will let t he Reception - Year 2 students know why

microcredit is important. We all learn new ideas better if the new learning

builds on what we already know and if we bel ieve the new learning will help us

understand things that are worth knowing. Do you need to find out from the

Reception -Year 2 teacher what they have learnt recently? If you think about

the way you learn best, it will really help you teach the Reception - Year 2

students about the complex ideas associ ated with microcredit. Think too,

about how you will know if the Receptio n - Year 2 students have understood

what you were teaching. What will be the criteria you will use? e.g. interested,

made comments, knew answers, could predict what would happen, made

comparisions, unders tood jokes, wanted to know more.

d. In groups, demonstrate to the Reception -Year 2 students the idea of

microcredit, notice what they foun d easy to understand and what, if

anything , they found more difficult.

In your group, reflect on your pres entation to the Reception - Year 2

students and consider if there is an ything that you would do differently

and if so, why? Consider also, if yo u were satisfied with the Reception -

Year 2 students unde rstanding of the idea of microcredit. Would there

be any benefits in spending a little more time with the students? If so,

what aspect of microcredit would you focus on and how would you present

it this time?

Did working in a group to teach others help your own understanding of

microcredit? What was the most helpful part for you?

g. What questions do you have about micr ocre dit, is there anything else you

wo uld like to know? How could you fi nd out some of the answers to your

questions?

SECTION 3

How can your class help low income fa milies like the Tisseras in Sri

Lanka?

? What can your class do to help

Caritas Australia provide more low income

families in Sri Lanka with access to loans at reasonable rates of interest?

? Visit the folder Fund Raising to provid e more ideas to help you with raising

money to support low income families access microcredit.

http://online.cesanet.adl.catholic.e du.a u/docushare/dsweb/View/Collection-1640

Therese Molloy

tmolloy@nativity.adl.catholic.edu.au

10 June 2005

SECTION 4

References

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Australia. 1995

Asia Counts Primary, Numeracy and Stu dies of Asia .

Jan Ki eran and Howard Reeves. Curriculum Corporation, Carlton, Vic, Australia. 2001

Plants and people of Asia . : A walking trail in the Botanic Gardens.

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Brando, Business Development Manager Inte rnational Educational Services.

2001

Plants and people of China .

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of Education and Children Services. 200 4

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Rebecca Reid-Nuyen.

Curriculum Corporation, Carlton, Vic, Au stralia. 1999

Our Home

Rob Watson, Yuki Asano and Darian Ward.

Curriculum Corporation, Ca rlton, Vic, Australia. 1995