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Dancing with Debts – NewsWeek

DEVELOPMENT
Where Credit Is Due
Young activists and middle-aged bureaucrats take up an unlikely new fad: tiny business loans for the poor
MARTHA BRANT

TEARS STREAMED DOWN JENNIFAR Robey’s cheeks as she listened. When the speech ended, the 28-yearold poverty activist jumped to her feet and joined hundreds in a standing ovation. “It was like listening to John Kennedy talk about going to the moon,” she gushed. But this was not, obviously, the late U.S. president speaking; it was a little-known fellow named john Hatch, the founder of FINCA-a group that has started 2,700 “village banks” worldwide. And he was talking not about moon shots or civil rights but about the importance of “microcredit” – small loans for poor people. To Robey, the budding movement to make credit available to 100 million families by 2005 is no less inspirational than a march on Selma, Alabama, might have been in the 60s. “Microcredit is so exciting,” she said as she stood packed into a Washington, D.C., hotel last week. “It’s really very cool.”

With a zeal once reserved for the environmental or civil-rights movement, young activists and middle-aged bureaucrats alike are throwing themselves into an unlikely new fashion in foreign aid. Aimed primarily at women, uninsured microcredit loans of often no more than $100 are meant to help the world’s poor jump-start small businesses. It’s an idea the Clintons discovered back in Arkansas-one of the poorest of the U.S. states-and have helped take mainstream. Hilary Clinton cochaired the first-ever “microcredit summit” last week-a kind of Davos for the downtrodden. Women’s rights leader Bella Abzug (what summit would be complete without her?) called on some 2,500 “believers” in attendance to “never give up.” At the closing ceremony, World Bank president James Wolfensohn-fresh off a jet from meeting the government and business elite in Davos itself-draped his arms around his fellow luminaries and joined in a weepy chorus of “We Shall Overcome.” “If sometimes we sound like evangelicals,” says Nancy Barry, head of Women’s World Banking, “it’s because we are trying to change the world.” But some who’ve heard those words before worry that microcredit is a great idea in danger of becoming a misused fad. Continue reading

The Los Angeles Times

Helping the Poor to Help Themselves

The Los Angeles Times Poverty: Repay Third World debt into a fund from which small loans would be made.

By Muhammad Yunus

There are a growing number of micro-enterprise lending programs around the world that proved to be a powerful tool for helping people raise themselves out of poverty.

The Grameen Bank in Bangladesh, for example, has provided thousands of village entrepreneurs with the small amounts of capital they need to start self-employment ventures. The Grameen model is being replicated in dozens of other countries and is so successful it is praised by people from across the political spectrum.

Yet there is a huge obstacle confronting the hundreds of grass-roots “microcredit” organizations trying to help the poor become entrepreneurs: Where can they get sufficient startup capital? Traditional sources such as commercial banks want to lend to the wealthy, not to the poor, Governments of rich countries are undergoing fiscal retrenchment and are cutting their foreign aid budgets. microcredit organizations could rely on begging from sympathetic foundations and aid agencies, but the amounts would not approach what is needed to meet the widely accepted goal of reaching 100 million of the worlds poorest families with microcredit by the year 2005. Continue reading

Fighting Poverty From the Bottom Up — TIMELINE

Fighting Poverty From the Bottom Up

An address by Muhammad Yunus

TIMELINE November/December 1996

I am very honored to be here today to share with you the experience that we have gone through. Instead of making a speech, I thought I’d just tell you my personal story.

It all started with the independence movement, the independence of Bangladesh 25 years back. All of a sudden we were confronted with war, a lot of bloodshed, a lot of misery; and then it was over, luckily, after nine months. During that period I was teaching here in one of the American universities, and immediately when Bangladesh became independent, I went back to Bangladesh. I thought I would join everybody else to rebuild the nation and create the nation of our dreams, just like anybody who has gone through an independence movement who has committed everything they’ve got into that movement.

As days went by, the situation of Bangladesh did not improve. It started flagging very fast, and we ended up with a famine at the end of 1974. I was teaching economics at that time, at the university, and I felt terrible. Here I was, teaching the elegant theories of economics in the classroom with all the enthusiasm of a brand new Ph.D. from the United States. You feel as if you know everything. You have the solutions. But you walk out of the classroom and you see skeletons all around you, people waiting to die. Continue reading

The New York Times

Micro Loans for the Very Poor

The New York Times

Sunday, February 16, 1997

Anyone who scoffs at the value of 62 cents should talk to Muhammad Yunus. In 1976, the Bangladeshi economics professor tried an experiment. From his pocket, he lent the equivalent of $26 to a group of 42 workers. With that 62 cents per person, they bought the materials for a dayís work weaving chairs or making pots. At the end of their first day as independent business owners, they sold their work and soon paid back loan.

Thus began the microcredit movement, which has become the worldís hot idea for reducing poverty. This month, microcreditís backers met in Washington to began to broaden the programís reach and raise money from developed nations and institutions such as the World Bank. Eight million people are now getting microcredit, half of them in Bangladesh. Microcredit proponents want to expand that to 100 million people by 2005.It is a worthy goal that the united states should supports.

The first microcredit program was the Grameen Bank, founded by Mr. yunus. Now almost all its borrowers are women, who tend to be poorer than men, have fewer opportunities and are much more likely to spend new earnings on their children, Grameen requires its borrowers to organize themselves into groups of five. All are cut off if one borrower defaults. They meet every week to make loan payments at commercial interest rates and critique one anotherís business plans. They also pledge to boil their water, keep their families small and carry out other good health practices. People who repay small and loans on time can take ones. Grameen, which now makes a profit, claims a higher repayment rate than traditional banks. One-third of its two million borrowers have crossed the poverty line and another third are close. Continue reading

Herald International Tribune

Yes to Micro Credit

Herald International Tribune
Published with the New York Times and the Washington Post
Monday, February 17, 1997

Anyone who scoffs at the value of 62 cents should talk to Muhammad Yunus. In 1976, the Bangladeshi economics professor tried an experiment. From his pocket, he lent the equivalent of $26 to a group of 42 workers. With that 62 cents per person, they bought the materials for a day’s work weaving chairs or making pots. At the end of their first day as independent business owners, they sold their work and soon paid back loan.

Thus began the microcredit movement, which has become the world’s hot idea for reducing poverty. This month, microcredit’s backers met in Washington to begin to broaden the program’s reach and raise money from developed nations and institutions such as the World Bank. Eight million people are now getting microcredit, half of them in Bangladesh. Microcredit proponents want to expand that to 100 million people by 2005. It is a worthy goal that the united states should support.

The first microcredit program was the Grameen Bank, founded by Mr. yunus. Now almost all its borrowers are women, who tend to be poorer than men, have fewer opportunities and are much more likely to spend new earnings on their children, Grameen requires its borrowers to organize themselves into groups of five. All are cut off if one borrower defaults. Continue reading