Real business, real small.(Enterprising: business as an act of creation)(microfinance institution )

The concept of giving very small loans to the poorest of the poor to help them establish businesses first emerged some 30 years ago. Since then, "microfinance" programs around the world have exploded. And they have proven very successful and cost-effective.

Ruth is living proof. She is a mother who lives in the Filipino slum of Tondo, outside Manila. Nearly half of Tondo's citizens live in a state of abject poverty, according to the World Bank. The neighborhood has little infrastructure other than sporadic electricity, and the tin shacks in this vast squatter area are inhabited by as many as 250,000 people.

However, Ruth has been able to parlay a series of microfinance loans (some as small as $60 U.S.) into a growing enterprise that brightens the slums of Tondo like a desert flower. She owns what the Filipinos call a Sari-Sari store--a counter at the front of her home where she sells everything from canned goods to candy to baked items.

She also owns the shack across the muddy path from her store, and uses it for an array of purposes: storing inventory, including some she wholesales to other Sari-Saris; hatching eggs in an incubator (as many a 50 at a time, which she then sells locally); and operating a"movie theater" where local children sit on wooden benches and watch pirated Hollywood films for 5 pesos (about 10 cents U.S.).

While Ruth's income from these ventures is statistically insignificant according to most economic measures, her entrepreneurial efforts have tangible benefits for her family. In addition to regular meals--a luxury that many of her neighbors cannot afford--Ruth's business income allows her occasionally to purchase new clothing and shoes for her children. She and her children may one day get out of Tondo for good.

The Center for Community Transformation, the microfinance institution (MFI) that has given Ruth her loans, currently enjoys a 95 percent repayment rate. This is an astonishing rate in what should be a high-risk enterprise. Five years ago, the Center had a loan repayment rate that hovered around 50 percent. At that time it practiced group lending. Originally, group lending was the preferred method for ...