Micro-credit is an organisation that loans money.
It is a system of loaning small amounts of money to people who are members of a group
and live in a developing country.
The reason it is a small amount of money is
because it is often only a small amount of money
that stands between absolute poverty and the ability to make a decent living.
The term “small amount of money” is, of course, relative to the country of origin.
What is considered a small amount of money in one country is, in reality,
quite a large amount to those living in developing countries
who are either existing in poverty or
are on the threshold of poverty.
Uses and Rules
These loans can be used to purchase raw materials
or livestock needed to provide work for the individual or for work for their family.
They pay the loan off when they can.
However, they are part of a loan group.
They know that as soon as they pay off their loan back to the bank,
then and only then, can another person in their group take out a loan
to help them and their family.
So the group is bound together. They form a unit.
They as individuals, know that when they pay their loan back
then another person in their group has the opportunity to make a better life.
This gives them a sense of responsibility to pay back the loan
so that other members of their group, clan, relatives or community
can have the same chance that they have.
Everyone in that group wants the first person to succeed
and therefore there is a lot of good energy
to help the individuals in the group succeed.
Nobel Peace Prize
This year the concept of Micro-Credit got a boost of positive feedback.
The originator of this idea was awarded the Nobel Prize for Peace.
His name is Mr. Muhammad Yunus and his idea or bank is called Grameen Bank.
Mr. Yunus is 65 and lives in Bangladesh
which is a very poor country of about 141 million people.
Bangladesh is located northeast of India.
The name Grameen means rural in the local Bengali language.
So the English translation is Rural Bank.
The bank idea got its start in 1974 when Mr. Yunus encountered a shy woman
who was making bamboo stools on the street.
She was a 21-year-old mother of three and
she only earned two cents on every stool that she made
because she had to borrow about nine cents from a middleman for each stool.
Mr. Yunus , an economic professor,
set out with his students to survey all of the poor villagers
and found out that they owed a total of about $27.
He put up the $27 and told them that they could pay him back when they could.
And pay him back they did, one day at a time.
In about a year his money was paid back and
his idea flourished into a solid business in 1983.
Repayment is High
The loans are available to everyone and the average loan is about $200 US or €180.
They are often used by women to buy livestock
such as cows or chickens or even a badly needed mobile phone.
People who want to borrow money are put in small groups.
Two members of this group can borrow money first and
after they have paid back their loans the other members can borrow as well.
The repayment rate is a high 99%.
That is very good considering their plight if they had not been financially helped.
The loans have helped six million of his compatriots.
To find out more about Prof. Yunus and the Grameen Bank
see this website: http://www.grameen-info.org/
Other initiatives include the Community Micro Credit Cooperative (KSU) of Bali
This concept has spread all over the world and
has since help about 1.7 million people to have better lives.
Please check out the following website for further information.
The Micro-credit Summit http://www.microcreditsummit.org/
On November 12, 2006, 2,000 delegates from 100 countries or more
will come together in Halifax, Nova Scotia in Canada
for the Global Micro-credit Summit.
Their goal is to reach 100 million of the poorest families in the world.
They also have two more goals.
1. Working to ensure that 175 million of the world’s poorest families,
especially the women of those families, are receiving credit for self-employment and other financial
and business services by the end of 2015.
(With an average of
five in a family this would affect 875 million family members. )
2 Working to ensure that 100 million of the world’s poorest families move from below US$1
a day adjusted for purchasing power parity (PPP) to above US $1 a day adjusted for PPP,
by the end of 2015. (With an average of five per family this would mean that 500 million
people would have risen above $1 a day nearly completing the Millennium Development
Goal on halving absolute poverty.)
You are welcome to join them at the Summit in their strife to reduce world poverty.
The Global Development Research Center
ACCION International was founded in 1961 to address the desperate poverty in Latin
America's cities. http://www.accion.org/
And there are many many more to be found on the internet, some of them on this site:
We wish them all well, continued success and prosperity for their borrowers!
You may e-mail:
Updated July 20, 2011
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Copyright©2002-2011 by Susan and Robert