" Poverty does not belong in civilized human society. Its proper place is in a museum. ThatÕs where it will be. When schoolchildren go with their teachers and tour the poverty museums, they will be horrified to see the misery and indignity of human beings. They will blame their forefathers for tolerating this inhumane condition and for allowing it to continue in such a large segment of the population until the early part of the twenty-first century. "
-"Banker to the Poor" by Muhammad Yunus
Dr. Muhammad Yunus and the Grameen Bank won the Nobel Peace Prize
in 2006 for their pioneering work using microcredit to battle poverty. (read more)
What is Microcredit
Sometimes called "banking for the poor," microcredit is an amazingly simple approach that has been proven to empower very poor people around the world to pull themselves out of poverty. Relying on their traditional skills and entrepreneurial instincts, very poor people, mostly women, use small loans (usually less than US$200), and support from local organizations called microfinance institutions (MFIs) to start, establish, sustain, or expand very small, self-supporting businesses. A key to microcredit is the recycling of loan dollars. As each loan is repaidÑusually within six months to a yearÑthe money is recycled as another loan, thus multiplying the value of each dollar in defeating global poverty, and changing lives and communities.
Why is this different from other loan programs?
Unlike other loan programs, clients are not required to provide collateral to receive loans. This allows people who would not qualify for loans at traditional financial institutions to receive credit. The peer support system practiced by many microcredit programs is another unique feature. When clients gather weekly at Òcenter meetingsÓ to make loan payments, or informally in smaller support groups, they share successes and discuss ideas for solving business and personal problems. Maybe most importantly, they empower each other to stay on the path out of poverty. This mutual support strengthens their resolve.
Why do you focus on women?
Women have proven to be the best poverty fighters. Experience and studies have shown that they use the profits from their businesses to send their children to school, improve their familiesÕ living conditions and nutrition, and expand their businesses.
Can very poor people actually start and run a successful business?
Absolutely. Many poor people have skills that can quickly become an income producing activity. With small sums of money, they are able to purchase the inventory, supplies and tools needed to start or expand microbusinesses that range from weaving, sewing, grinding grain, reselling produce, and growing and selling vegetables, to catching and selling fishing, wholesaling dried fish, raising chickens to sell eggs, and breeding livestock.
Do very poor people repay their loans?
Yes, microcredit clients are excellent credit risks. The repayment rate is between 95 and 98 percent. In fact, it is higher than the repayment rate of student loans and credit card debts in the United States. They value the opportunity to improve their lives.
Learn more about microcredit:
www.grameenfoundation.org
