Global Education

Teacher resources to encourage a global
perspective across the curriculum

Microfinance

Year level: 5-6

Students use mathematical skills to develop understanding of the poverty cycle and critically evaluate how borrowing to run a small business, microfinance, works.

Women leaders record deposits of the WARA savings club members in rural Solomon Islands and keep them safe for deposit in Honiara.

Women leaders record deposits of the WARA savings club members in rural Solomon Islands and keep them safe for deposit in Honiara. Joanna Brislane, IWDA


Identity and cultural diversity, Interdependence and globalisation, Social justice and human rights

Australian Curriculum links

Learning areas

Mathematics

Year 5

Use estimation and rounding to check the reasonableness of answers to calculations (ACMNA099)

Solve problems involving multiplication of large numbers by one- or two-digit numbers using efficient mental, written strategies and appropriate digital technologies (ACMNA100)

Create simple financial plans (ACMNA106)

Year 6

Select and apply efficient mental and written strategies and appropriate digital technologies to solve problems involving all four operations with whole numbers (ACMNA123)

Find a simple fraction of a quantity where the result is a whole number, with and without digital technologies (ACMNA127)

Multiply and divide decimals by powers of 10 (ACMNA130)

Investigate and calculate percentage discounts of 10%, 25% and 50% on sale items, with and without digital technologies (ACMNA132)

Geography

Year 5

Collect and record relevant geographical data and information, using ethical protocols, from primary and secondary sources, for example, people, maps, plans, photographs, satellite images, statistical sources and reports (ACHGS034)

Reflect on their learning to propose individual and collective action in response to a contemporary geographical challenge and describe the expected effects of their proposal on different groups of people (ACHGS039)

Year 6

Differences in the economic, demographic and social characteristics between countries across the world (ACHGK032)

The various connections Australia has with other countries and how these connections change people and places (ACHGK035)

General capabilities

  • Literacy
  • Numeracy
  • Information and Communication Technology Capability
  • Critical and Creative Thinking
  • Personal and Social Capability
  • Ethical Understanding

Cross-curriculum priorities

  • Asia and Australia's engagement with Asia

Activity 1: Trapped in the poverty cycle

Students will use mathematics to develop an understanding of the poverty cycle.

Preparation

  • paper and pen
  • computer with spreadsheet function


Imagine
you have $5 a day to buy your school lunches for a week.
Use your school canteen price list to show your purchases and any money unspent. You may do this by hand and using a spreadsheet.

Discuss:
How did you address any overspends to manage your finances for the week? (eg make different selections, go into debt)

Imagine you have to use the same income to pay for your clothes as well.
Use the spreadsheet to work out how many weeks of savings you would need to buy new clothes for a special occasion. 
Work out your budget to manage your expenses for 10 weeks.

Imagine your income is decreased to $3 per day.
Create a new budget for your lunch and clothes.

Discuss
:

  • How difficult was it to balance your budget?
  • Were you able to purchase what you wanted?
  • What happened when your income decreased?
  • What could you do to increase the money available?
  • How would this impact upon your health or education?
  • What insights does this give about being trapped in a cycle of poverty? 

Activity 2: Operating a small business

Students learn about micro businesses and their finances.

Preparation

  • paper and pen
  • computer with spreadsheet function
  • internet access or copies of resources

 
View the slideshow from Microfinance: A Global Education Resource (2005).
Describe what each business is doing.

Examine
 one photo with its notes in a small group, and answer these questions:

  • What do you think would be the most enjoyable and difficult parts of the job? 
  • Do you think that person would make enough money for their food each day?
  • Could they also buy new clothes and pay for medicine if they got sick?
  • What would happen when they were sick?
  • Do you think you would be successful if you were running this business?

Present your answers to the rest of the class.

Discuss:
What do all these people have in common?

Compare
your answers to the statements at the end of the slideshow.

Read
the case studies – Mrs Dian, the Overlocking Lady and Ibu Sai, cool drink seller and do the related activities. 

Activity 3: Microfinance

Students learn about microfinance and small loans to start a small business.

Preparation


View
a video explaining microfinance at the Kiva website (2:08).
List the key features of microfinance and any questions you have. 

Write
answers to these questions in small groups, placing the questions around the room or on a wiki: 

  • What are the benefits of microfinance?
  • Why do poor people need help to obtain loans?
  • How do poor people obtain and repay the loans?
  • What problems might poor people have in repaying the loans?
  • What other resources do poor people need when they are setting up a small business?
  • Why might loans only be available for people setting up a business and not for general living expenses?

View or read one of the following stories as a small group.

Note:

  • the type of business (or enterprise)
  • skills, materials and costs involved
  • loan and repayments.

Create a dramatised version of the story featuring ideas of the micro-business developer and the lender.
Suggest reasons why credit availability and savings facilities are important when setting up and running a small business.

Use the Plus, minus and interesting chart to list your thoughts about microcredit.
Make a statement about the effectiveness of microcredit to assist people living in poverty.

Activity 4: Making microfinance multiply

Students develop an understanding of making a profit when running a small business. They make mathematical calculations using mental, written and digital technologies.

Preparation

  • paper and pen
  • computer with spreadsheet function


Brainstorm
small businesses and services you could start up.

Develop, in small groups, a business plan for a small business using this outline.

  1. Write a description of the business.
  2. List the materials required and their cost.
  3. List items required to support the business (eg stove, power, rent, advertising, display place etc) and their cost.
  4. Calculate the total cost of setting up the business: b + c
  5. Calculate how many items can be made with these materials (you may need to make a prototype and work out the fraction of materials used).
  6. Calculate the cost per item by dividing the total cost by the number of items: (b + c) /d
  7. Determine the selling price of an item. (Consider the cost, what people would be prepared to pay, and the amount of profit needed to cover risks such as sickness or disaster.)
  8. Multiply the selling price by the number of items produced to calculate the money raised if all items are sold: g x e
  9. Calculate a loan repayment by assuming that you need to borrow the whole cost of setting up the business, plus interest on the loan of 5%: d + (d x 120)
  10. Calculate the profit or loss, assuming all items are sold: h - i

Discuss:

  • Do you think you will be able to sell all your stock?
  • Would you have enough profit to cover loss of business through sickness or disaster?
  • What might happen if you were not able to repay the loan?

Extension

Investigate microcredit activities in Australia.

Activity 5: Funding microfinance

Students develop an understanding of the need to make a profit in order to repay a loan when expanding a small business. They make mathematical calculations using mental, written and digital technologies.

Imagine you are a lending institution.
Evaluate the business plan of another small group and respond to their application for funding using the following questions:

  • How clearly developed is the plan?
  • Does the plan indicate what will be done if there is illness or a disaster that prevents the business functioning?
  • Does the applicant have resources that could be sold to pay off the loan if there is difficulty making repayments?

Determine whether this is a good investment (ie how likely is repayment of the loan?)

Extension

Develop the business, keeping track of actual figures, and discuss the following questions to determine the success of the business:

  • Was your small business successful or not successful?
  • How do you know?
  • How could you improve your business if you did this activity again?

List at least three things that you have learned about operating a small business

Read the Microfinance Fun Day school case study.
 

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Women leaders record deposits of the WARA savings club members in rural Solomon Islands and keep them safe for deposit in Honiara.
Joanna Brislane, IWDA
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Women leaders record deposits of the WARA savings club members in rural Solomon Islands and keep them safe for deposit in Honiara. Joanna Brislane, IWDA