2004-06-27

Microloans

Yesterday I finished reading an amazing book—Banker to the Poor—Micro Lending and the Battle Against World Poverty by Dr. Muhammad Yunus, who recently gave a talk at work. Thirty years ago he started Grameen Bank, which has enabled over three million Bangladeshis to rise above the poverty line via microloans. The rate of loan recovery is almost 99%, and 95% of Grameen's borrowers are women, incredibly significant given Bangladesh's patriarchal Muslim society:
"UN studies conducted in more than forty developing countries show that the birth rate falls as women gain equality. The reasons for this are numerous. Education delays marriage and procreation; better-educated women are more likely to use contraceptives and more likely to earn a livelihood. I believe that income-earning opportunities that empower poor women and bring them into organizational folds will have more impact on curbing population growth than the current system of 'encouraging' family planning practices through intimidation tactics.' 'Family' planning should be left to the family."
Here's a snippet that describes how borrowers use their loans:
"I firmly believe that all human beings have an innate skill. I call it the survival skill. The fact that the poor are alive is clear proof of their ability. They do not need us to teach them how to survive; they already know how to do this. So rather than waste our time teaching them new skills, we try to make maximum use of their existing skills. Giving the poor access to credit allows them to immediately put into practice the skills they already know—to weave, husk rice paddy, raise cows, peddle a rickshaw. And the cash they earn is then a tool, a key that unlocks a host of other abilities and allows them to explore their own potential. Often borrowers teach each other new techniques that allow them to better use their survival skills. They teach far better than we ever could."
Here's the story of a specific borrower named Murshida Begum, who was featured in a PBS documentary called To Our Credit:
"At first Murshida borrowed 1000 Taka (~$17) to purchase a goat and she paid off the loan in six months with the profits from selling the milk. She was left with a goat, a kid, and no debt. Encouraged, she borrowed 2000 Taka, bought raw cotton and a spinning wheel, and began manufacturing lady's scarves. She now sells her scarves wholesale for 100 Taka with tassels and 50 Taka without. Murshida's business has grown so much that during peak periods she employs as many as twenty-five women in her village to manufacture scarves. In addition, she has bought an acre of farmland with her profits, built a house with a Grameen Bank housing loan, and set up her brothers in businesses that include sari trading and raw cotton trading."
One final snippet:
"Critics often argue that micro-credit does not contribute to the economic development of a country. And even if it does contribute something, that something is insignificant."

"But it all depends on what one considers economic development. Is it per capita income? Per capita consumption? Per capita anything?"

"I have always disagreed with this kind of definition of development. I think it misses the essence of development. To me, changing the quality of life of the bottom 50 perfect of the population is the essence of development . To be even more rigorous, I would define development by focusing on the quality of life of the lower 25 percent of the population."
Further reading:I'm adding this book to the Library of Awareness, in case any of you co-workers want to check it out.

2 comments:

  1. On a related subject, I also recommend "How to Change the World" by David Bornstein. He'd also written about the Grameen Bank in a previous book.

    :)

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  2. Thanks Charles, I just added it to my Amazon queue.

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