Water from the AguaClara plant in Amarateca, Guatemala, scrubbed clear by a gravity filter. Photo: AguaClara.

A sustainable water treatment system developed by AguaClara is delivering cheap drinking water to communities in Honduras using a power source far cheaper and more abundant than electricity: gravity.

In this podcast, AguaClara’s project coordinator Daniel Smith discusses his group’s project that provides potable water at less than .01 cent per liter, and uses simple and affordable materials available at the community level. Villages across Honduras are now drinking up and circumventing dependency on expensive and unreliable electricity sources to purify their water, thanks to AguaClara’s gravity-powered system.

Their innovation was recognized as a Tech Awards Intel Environmental Laureate for 2011, and AguaClara hopes to soon spread its impact beyond Honduras to neighboring countries like Nicaragua, Guatemala, and El Salvador.

Listen to the entire (28 minute) podcast interview here.

A foreign domestic worker looks after her elderly client. Photo: Jerry Wong (flickr)

From low-tech light bulbs in the Philippines to microfinance in Nicaragua, our team of young writers covered lots of ground this year.

Here's a rewind on the themes that struck the strongest chords with readers, and the money quote from each piece. As we head into 2012, odds are that these big ideas will keep resonating.

Lack of electricity is a huge barrier to overcoming poverty by
Megan Kelly, Feb. 10:

As long as those hundreds of millions remain in the dark, they will remain poor," and yet bringing electricity to areas that have none lacks global funding and attention. It's not even part of the Millennium Development Goals.

Megan made a sweeping case for attention to energy poverty, a theme we've continued to cover.

Microfinance isn't a magic bullet by Laura Mortara, Jan. 24:

And any situation involving loan and credit is dangerous, especially when people are allowed to borrow irresponsibly. The failure of microfinance in India is largely due in part to MFI's shifting their focus from non-profit to profit-making industries and the corruption that follows thereafter. In addition to this, microfinance in India expanded way too quickly without the experience or infrastructure to support it.

Laura rounded up the previous year's run of bad news about the microfinance sector with a wealth of links to the best coverage.

Used soda bottles light up the world, for free by Brynn Opsahl, Aug. 18:

A used plastic bottle filled with water and a touch of bleach is placed in a hole of a tin roof. For up to five years, 50 watts of light fill up the once-gloomy windowless shack any time the sun is out

Brynn's look at this shockingly simple, effective idea was one of several articles to land in the Christian Science Monitor as part of a partnership we forged with them this year.

Does China's rise mean U.S. decline? by Chris Sharp, Feb. 4:

According to a recent poll by the Pew Research Center, 44 percent of Americans believe China is already the world’s top economic power, compared to 27 percent who think it’s the U.S.

Chris's piece rebutted the popular cliche about China's looming global power, drawing on a post by Foreign Policy's Daniel Drezner to argue that the U.S.-China relationship is about interdependence, not domination.

The female remittance economy: A hidden global network of mothers and money by Eliza Slater, May 11:

Remittances are a significant part of an unofficial global aid network, worth $325 billion last year. That’s three times the size of official foreign development aid spending.

Eliza zoomed into the human scale of some staggering numbers, showing how shipping cash to one's relatives abroad has become, among other things, an important part of modern femininity around the world.

As we mentioned last week, Global Envision is planning some big new initiatives in 2012. Stay tuned—we're looking forward to talking with you about whatever comes next.

Women at a microfinance meeting in India. Photo: Mckay Savage (flickr)

Microfinance was once the poster child for poverty alleviation. Hailed as an alternative to dangerous loan sharks, it quickly gained momentum and support from governments and NGO's alike. But lately the microfinance glitter has been wearing off, and this once-globally praised idea has come under intense criticism. Some governments have even encouraged their citizens not to pay back their loans, causing lenders to experience a drop in payback. This is most notable in the Southern Indian state of Andhra Pradesh, where repayment fell from almost 100 percent to a mere 20 percent.

While much of the backlash has focused on India, the same problems could strike any community utilizing microfinance, making India an important lesson to learn from.

Andhra Pradesh, which has a population of almost 80 million people, accounts for one third of India's microfinance loans, reports The Economist. And it is in Andhra Pradesh where microfinance is taking the most heat.

Local governments have pointed the finger at microfinance institutions (MFIs), blaming them for farmer's suicides that occur as a result of severe debt, and castigating them as profiteering loan sharks. The motivations of these politicians, however may be more political than moral. Many of them have utilized the situation to gain votes from the poor, suggests The Economist article. These politicians may also see MFIs as competition to government-installed programs and their own popularity.

Microfinance has also come under fire in Bangladesh where Muhammad Yunus -- the father of microfinance -- was facing allegations of illegal financial transactions. The accusation made by a Norwegian film maker has since been retracted, but the prime minister of Bangladesh still seized the opportunity to damage Yunus' reputation. This is important considering much of her motivation in doing so could have to do with Yunus's proposal to start a political party, despite the fact that this party never materialized according to The New York Times. However, NPR has speculated that despite the attention this case is getting, it will not hinder Bangladesh's use of microfinance loans.

Other Latin American countries such as Nicaragua and Bolivia have also become entangled with the negative side of microfinance. And politicians in these countries have made similar statements to those made by their counterparts in India, encouraging the poor not to pay back their loans in order to gain support from the lower classes.

In truth, microfinance is not a magic wand. Like all financial institutions it is wrought with the ups and downs of the market. And any situation involving loan and credit is dangerous, especially when people are allowed to borrow irresponsibly. The failure of microfinance in India is largely due in part to MFI's shifting their focus from non-profit to profit-making industries and the corruption that follows thereafter. In addition to this, microfinance in India expanded way too quickly without the experience or infrastructure to support it. The boom led to landslide profits for microlenders but disaster for their borrowers.

It's important to remember that microfinance is just a tool that can be used in both positive and negative ways. And as The Economist notes, it is neither miraculous nor detrimental:

In fact, research suggests that it [microfinance] does work — for some people some of the time, as you would expect. It is not a magic bullet, but nor is it intrinsically harmful.

Still there is much hope for microfinance, but it needs strict monitoring and legislation to ensure that corruption and profiteering to not deter it from the original goal of poverty alleviation.

Check out this video to hear directly from Howard and learn more about Vittana. Photo: Vittana

Microfinance, as a poverty alleviation strategy, was popularized in the development sector thanks to the work of Muhammad Yunus. Traditional microfinance loans are distributed to small business owners and entrepreneurs with the goal of increasing the scale and profits of their businesses. What is surprising is that after more than thirty years of growth and popularity, the microfinance sector has largely neglected student loan programs.

One reason for this gap is that there has yet to be a proven track record of success for such loans. It was not until Yunus was awarded a Noble Peace Prize, and the astonishingly high repayment rates from borrowers were documented, that large scale funding institutions invested their resources toward microfinance. Vittana, a startup nonprofit were I currently intern, is working to create a track record of microfinance for student loans in developing countries by using a peer-to-peer lending platform.

Student loan programs are effectively nonexistent in countries outside of the US and Europe. Vittana helps students like Howard Rene Alvarez Morales receive the funding they need to get a higher education. Howard is a 21 year-old law and business management student at the Universidad de Ciencias Comericales in Nicaragua. He is an ambitious student who goes to school on the weekends, works as a legal assistant during the week, and takes English classes at night. In order to complete his thesis and get his degree processed, his university charged him a fee of over $1,000, a large sum of money he did not have. In an interview Howard said, “The main problem I have encountered is finding the financial means to finish my degree.” Vittana was a part of Howard’s solution.

Vittana formed a partnership with the microfinance institution (MFI) AFODENIC in Managua, Nicaragua. Our staff provided the expertise, and individual small-scale lenders provided the capital needed for AFODENIC to establish a sustainable student loan program. Howard received an student loan of $1,044 and was able to pay his school fees. The law and business management degree he is working toward is projected to increase his annual income from $2,000 to $12,000. Beyond Nicaragua, Vittana has MFI partnerships in Peru, Paraguay, Mongolia, and Vietnam and will soon be expanding to additional countries. Our long-term vision is a world where students, no matter where they live, have access to higher education.

Howard is pursing his degree because what he wants most “are the means to work and succeed, and everything begins with the first step.” When that first step is a degree, it is a giant stride toward ensuring that students and their families stay out of poverty and have more sound economic futures. Thanks to Vittana, when I imagine microfinance borrowers, I no longer only see animal farmers, salon owners, and the like. I also see students like Howard.

What can you do to help?

It is because of lenders like you and me that Vittana students have access to higher education. Visit www.vittana.org to find the student you connect with and make a loan today. Alternatively, purchase a Vittana Gift Certificate to empower someone in your life to become a lender.

We’d love to hear what you think! questions@vittana.org

What impact is the U.S. economic slowdown having on developing countries? Matt Homer of the World Politics Review writes that the weakening U.S. dollar is having an adverse effect on individuals in developing countries relying on remittances for large parts of their income. A bigger problem, however, is that the negative impact of the declining dollar is likely to go beyond the individual level. For a number of developing countries, remittances make up a significant percentage of total GDP, and several countries are already expressing concern that a decrease in remittances could hurt their entire economies.

In Tonga, for example, remittances account for just over 32 percent of the country’s total GDP. Yet because up to 80 percent of all remittances come from sources in the U.S., there is concern that continued declines in the U.S. economy “will hit Tonga extremely hard.” Economists in Nicaragua are also predicting that “any decline in the amount of remittances will undoubtedly affect consumerism within the Nicaraguan economy.” While around 40 percent of Nicaraguans receive remittances, most of which come from the U.S., economists estimate that almost 90 percent of remittance money sent to the country is spent in the local consumer economy.