Microcredit programs have provided a hugely positive impact on third world and developing nations where employment opportunities are limited due to the collapsed and limited economies of these countries. What microcredit programs entail is the issuance of small loans to individuals who would not normally qualify for a loan because their lack of employment and collateral assets make them poor candidates in the eyes of financial institutions. Microcredit loans look past the risk involved regarding the issuance of the loan and provide initial venture capital to impoverished people start a small business. Of all the countries where microloans have proven successful, it would be the country of Bangladesh.
Throughout its history, Bangladesh has suffered tremendously from a variety of maladies that have lead to its current economic depression. Under British colonial rule, the population suffered massive famines; and in the 1970’s a series of natural disasters lead to even further economic despair. Today, Bangladesh currently suffers from a severe overpopulation situation that has further pushed economic disaster. Because of its severe depression, Bangladesh was essentially the trial location to test of the feasibility of microcredit loans.
Organizations such as Grameen Bank have special programs to provide charitable loans to Bangladesh and the bank has documented the proof that these loans are successful. According to Grameen Bank:
Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means. Development from below also serves to advance democracy and human
rights….. Every single individual on earth has both the potential and the
right to live a decent life. Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development.
Microcredit programs have proven successful as a means of providing underprivileged people with an opportunity to rise out of a disadvantaged position. In fact, these programs have been so successful that many banks have started to reconsider the people of Bangladesh as “high risk” candidates for loans. That is, because the microloans have proved successful, there is a belief on many bank’s part that money lent to the people will return (with interest) when the borrower launches a successful business. The Microcredit Summit Campaign details a popular success story:
With a gift of 10,000 CFA ($US 16) in 1994 from her father, [Yama Laye] set up a small table to sell essentials such as tea, sugar, salt, matches and sweets by the roadside. The profit she made never exceeded 500 CFA ( $.80) per day. Almost all her profits were spent on the purchase of essential food for her husband and her six-year-old child.
Yes, all it took was a mere $16 to set in motion the ability for a family to be able to purchase the essential items needed for survival, a purchases that would not have been possible in the absence of the $16 grant.
If anything, the microcredit loans have shown that there is always hope and there is always an answer, provided people work in concert together to find sane, sensible, effective means of solving a problem. In a way, Microcredit programs are a unique mix of financial philanthropy and human rights and it is a unique mix that has repeatedly been proven as successful.
Microcredit Summit Campaign. (2005) Results Educational Fund. 22 October 2006.
What is Microcredit? (January 2003) Muhammad Yunus. 22 October 2003.
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