Wednesday, November 29, 2006

A new path to peace is being paved with tiny loans

With so many distressing events being reported in today’s news, it is refreshing to hear the uplifting stories, the ones that invite us to hope that things just might be getting better in the world. One such bit of news is the story about the 2006 recipient of the Nobel Prize for Peace. This year’s Nobel was awarded to Muhammad Yunus and the Grameen Bank of Bangladesh for their work with micro-credit. So you might be asking yourself, “What’s the big deal? I don’t even know what micro-credit is, and if it has anything at all to do with Microsoft, I don’t want to know.” Well, let me share with you the hopeful story of Susan.

Susan is a 30-year-old single mother living and supporting her two children in Nairobi, Kenya.

With only a 4th grade education, Susan found herself working in prostitution and living in the slums of Nairobi.

One day, thanks to a neighbor, she found out about Jamii Bora, a microfinance bank supported by Unitas (www.Unitas.com), in Nairobi.

At Jamii Bora, she received business training and a small loan, and was able to start a small business mending clothes. A few years later, with continued support from Jamii Bora, Susan has been able to move her family into a safe house out of the slums and has been able to begin saving money for her children’s education — a major step toward eventually breaking the cycle of poverty for the next generation. Thanks to Jamii Bora’s micro-credit program, Susan is able to care for her children, live a life of dignity and hope for a better future for herself and her family.

What is so amazingly hopeful about Susan’s story is that through the efforts of micro-credit programs like Jamii Bora and Yunus’ Grameen Bank, 112 million clients — 112 million Susans — have been granted an opportunity to leave poverty behind!

Mr. Yunus and his bank have been in the business of providing micro-loans for more than 20 years. Even so, providing micro-credit to the poor on such a scale certainly was not a sure-fire plan from the beginning. In fact, they took a huge risk each time they lent money to an individual who frankly failed to meet the criteria for being a “good borrower,” as defined by conventional wisdom. With the Grameen bank, Mr. Yunus was following his own, very radical form of economics. When asked what his strategy was in forming the bank, he replied, “I didn’t have a strategy…I just did whatever was next.

“But when I look back, my strategy was, whatever banks did, I did the opposite. If banks lent to the rich, I lent to the poor.

“If banks lent to men, I lent to women. If banks made large loans, I made small ones. If banks required collateral, my loans were collateral free. If banks required a lot of paperwork, mine was illiterate friendly. If the client had to go to the bank, my bank went to the village. Yes, that was my strategy. Whatever banks did, I did the opposite.”

Since its shaky beginning in 1974, Yunus’ idea has taken root around the world and with incredible success! With millions of clients, and loan repayment rates of 95 percent or better, the Grameen Bank model has proven that microcredit banking is not risky business. According to a report that came out on at the beginning of November, as of the end of 2005, micro-credit had reached 82 million people living on less than a dollar a day.

Since the benefits of micro-credit extend to the families of the borrowers, it is estimated that, in 2005, micro-credit touched the lives of 410 million of the world’s poorest people, a number greater than the combined populations of the United States, Canada, the United Kingdom and Belgium. Wow. That’s hopeful.

I am so thankful that for the first time ever, the Nobel Peace Prize Committee used their highest honor to recognize Mr. Yunus’ courageous work in fighting poverty. It signifies an invitation to all of us to dare to hope for peace in the world, and to start considering “micro-credit” as much more than an obscure bankers’ term. Micro-credit provides the means out of poverty and the possibility for millions of individuals to live out their dreams of self-sufficiency and freedom.

In this way, micro-credit loans pave the path toward world peace, and promise to eventually make poverty a topic for our history books. In Professor Yunus’ own words, “one day our grandchildren will go to museums to see what poverty was like.”

by Caroline Fleming

2 comments:

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Victoria Baxter said...

Hi: I had the honor of interviewing Professor Yunus a few weeks ago. Check out my two video installments with the Nobel Peace Prize winner. (He was so eloquent, we had to make two videos!!)

http://youtube.com/watch?v=6lya8f8RAag and http://youtube.com/watch?v=2H0PEle9G0U