The Times
November 27, 1998

Credit, shared human right

In 1976 an economics professor at the University of Chitagong in Bangladesh, decided in take action and help 42 hardworking but severely impoverished individuals at the nearby village of Jobra, by lending them a total of $27. Twenty two years later micro-credit programís in 50 countries around the world have loaned some $ 22 million to the poorest of the poor. The authorís primary thesis is that credit is a basic human right and should therefore be available to all in particular to the very poor. Who in most cases have insufficient collateral to secure loans from banks and are thus unable to break the cycle of poverty. Encountering numerous obstacles in implementing his idea of directing loans to the poor via the traditional banks, Yunus created his own "Grameen Bank" (gram meaning village), with branches located in small rural sediments.

Lending crimeless" represent the heartbeat of micro credit enterprise. With groups of five individuals working together to oversee and guarantee their own loans. Tantamount to this is the notion of shared or reciprocal responsibility: if one defaults then all are held responsible. Profits too are shared providing a mutual impels to a system that has manifested multiple positive social repercussions since its inception in 1976.

Most micro Credit borrowers are women: women who continue to be a marginalized, latent force in so many communities today Micro-credits endowment of women with economic power has profoundly affected their status providing a focus for increased self confidence independence and the achievement of equality on every level. Micro-credit, than represents a fundamental challenge to existent gender relations in many societies.

Women in developing countries generally have less access to capital than men are of inhering social status and have less involvement in major family decision. It is however women who deal with day Ėto-day domes he altar-making ends meet in providing for the family.

Clearly the idea of micro credit has captured attention on the world stage and Yunus has been instrumental in achieving this. On a note of caution (one shared by Yunus) grant funds such as those normally available from donor agencies can be damaging to the health of the development of micro credit if applied too liberally and with out concern for the effects on the micro financial institutions themselves.

Their long -term sustainability depends on gaining access to commercial funds not on becoming dependent on grants. Their capital requirements are best met through the market from commercial sources. The problem therefore is how to use public funds effectively to encourage partnerships between large commercial sources of funds and effective micro financial institutions. Although some institutions perform better than the commercial banks. there is still scope for grant funds to help those weaker ones build their capacity for management and to reach the poor more effectively.

The book is directed on the one hand at a professional readership at those working closely with issues of development assistance and on the other at a far wider audience one interested in the eradication of poverty on a global scale. With numerous references to case studies Banker to the poor offers a range of vivid insights into inspiration behind the development of his micro credit system.

His profound sense of social responsibility which leads his to shun a detached academic life is repeatedly illustrated in both his autobiography and his system of credit we are granted access to an individual genuinely concerned with the fate of the poor one whose pragmatic insights into the processes of the world economic system contribute hugely to a grass roots model for development.

Yunus micro credit system expends to a whole range of social concerns such as gender and social equality birth control education hygiene sanitation housing communications and environmental concerns. In so many ways the authors brainchild has revolutionized community relations through making credit available to those previously considered beyond (or below) the reach of conventional systems.

But all is not rosy in the world of micro finance. An inexpensive programme that directly touches poor people and develops self reliance and entrepreneurial skills is of enormous appeal, but is no substitute for health and education schemes that tackle poverty at its most basic level. Yunus under stands this and has tried to remedy the situation by branding out in complementary directions, with Grameen phone or the establishment of a Grameen Health care system. But as much as it can expand micro credit cannot replace all see for development assistance implemented by government donors and international institution.

Poverty alleviation is now a political priority of the European Union and of other donors and international organizations. The Masticate Treaty clearly sets out the goal of fostering the campaign against poverty in the developing world. A concerted effort is necessary by all partners involved donor countries recipient (governments and civil society) and international agencies to attain this far reaching goal.

The timing of this publication coincides with the award of the Nobel prize in economics to another gifted Asian economist Amartya Sen. Social scientists in Asia have taken the lead in changing the way we think about development and especially the way we can approach the goal of eradicating poverty. Often leaving academic in order to pursue the application of their theories as in the case of Yunus they have been able to find practical ways of empowering the poor to escape their conditions. Development his to rains in the future will reflect on the reasons why this particular movement arose in Asia.