Banking On Micro-Credit

Sometimes a new way of thinking is required to effectively address old problems which have seemed hopeless, unsolvable. In the Bible it says the poor will always be with us.

Maybe...but there's no excuse for the depths of poverty experienced in the world today. It is unconscionable that the poorest in developing countries were actually better off a thousand years ago than they are today -- or that in a city of such great affluence as Miami, with its ultra modern high-rises and its multi-million dollar mansions, 45% of its children live in poverty.

Another approach... is to stimulate the economy from the bottom up,
not just by providing jobs and job training, but by creating incentives
for self-employment, building on skills already possessed.

Economists tell us that we must stimulate the economy to create new jobs, and that tax breaks for the upper echelon will provide needed capital for investment. Perhaps this is the intention, but the benefits seem to always stay in the hands of the wealthy. Just look at the amazing increase in the number of millionaires and billionaires in the last twenty years, while at the same time the number of those living in poverty has skyrocketed.

Micro-Credit - A Better Solution

Another approach, one that is often pooh-poohed by mainstream economists, is to stimulate the economy from the bottom up, not just by providing jobs and job training, but by creating incentives for self-employment, building on skills already possessed. The most remarkable example of this bottom-up approach is the Grameen Bank in Bangladesh, which started by giving tiny loans to a handful of destitute women and has grown to an astounding 2 million borrowers per year, with loan size averaging just $100 and a 98% payback rate. Micro-enterprise lending banks based on the Grameen model are spreading to all parts of the world, and since 1987 a small portion of U.S. foreign aid has been designated to promote this type of bottom-up credit. There are several micro-lending institutions in the United States to combat domestic poverty, including Working Capital/Partners for Self-Employment in South Dade, which started up at the end of 1994 and is enjoying a 100% repayment rate on its loans.


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Providing access to credit to the poor is not just about creating small businesses. As a result of these loans -- primarily to women -- families are climbing out of poverty in just 5 to 10 years, children in third world countries are attending school for the first time, family health and nutrition are substantially improved, birth rates are declining, and borrowers are not emigrating to other countries. But best of all, there are no hand-outs, no charity. People are pulling themselves out of poverty by their own efforts, with great pride and dignity, and are entering the productive middle classes of their respective countries.

Jump on It

The United States needs to champion this effort, making credit for micro-enterprise a hallmark of our foreign aid program, encouraging international lending institutions such as the World Bank to do likewise, and removing the barriers and regulations in our own country which make it so perilous for welfare recipients to risk starting up their own businesses and beginning their climb out of poverty. Our elected officials in Washington need to know of our support. Write today!


 Recommended book:

 

Banker To The Poor: Micro-Lending and the Battle Against World Poverty
by Muhammad Yunus.

 

Banker to the Poor is Muhammad Yunus's memoir of how he decided to change his life in order to help the world's poor. The definitive history of micro-credit direct from the man that conceived of it, Banker to the Poor is necessary and inspirational reading for anyone interested in economics, public policy, philanthropy, social history, and business.

Click here for more info and/or to order this book on Amazon.


About The Author

Gail Neumann has been a grass roots activist since 1984 and works to generate political will to end hunger and poverty. Additionally, Gail has served as group leader of the Miami RESULTS Chapter since 1987 and has coordinated various events to publicize the work of UNICEF and the 1990 World Summit for Children. Gail can be reached at 11220 SW 175 St., Miami FL 33157.