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   Get Smart - Jim Pinto's Connections for Growth & Success
  Micro-Loans help to Abolish Poverty & Build Self-Respect
Issue # 320 (November 20, 2013)
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  • Perry Marshall & Jim Pinto Webinar - December 18, 2013

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    Micro-Loans help to Abolish Poverty & Build Self-Respect
    by Jim Pinto

    The Nobel Peace Prize for 2006 has been awarded to Muhammad Yunus and Grameen Bank for their efforts to create economic and social development for poor people. I saw Yunus on CPAN the other day, and was impressed by his clear visions and simple answers to many complex questions.

    With pioneering "micro-credit" loans (as little as $10) Yunus has transformed society in Bangladesh, one of the poorest countries in the world. While poverty is increasing elsewhere in the world, in Bangladesh it is steadily decreasing, and decreasing faster.

    The movement started in 1974, when Muhammad Yunus, a University economics professor in Bangladesh, took his students on a field trip to a poor village. They saw a woman making bamboo stools, who had to borrow a few pennies to buy raw bamboo. After repaying the money-lender, at rates as high as 10% a week, she was left with a penny profit margin. Had she been able to borrow at better rates, she would have been able to get beyond the subsistence level.

    Realizing that there was something terribly wrong with the economics he was teaching, Yunus (from his own pocket) lent the equivalent of about $25 to 42 basket-weavers. He found that this tiny amount not only helped them to survive, but also created the spark of personal initiative for them to pull themselves out of poverty.

    Against the advice of banks and the government, Yunus continued giving "micro-loans" and in 1983 formed the Grameen Bank ("village bank") founded on the principles of trust and solidarity. In Bangladesh today, Grameen has 1,084 branches, with 12,500 staff, and 2.1 million borrowers in 37,000 villages. 94% of the borrowers are women and over 98% of the loans are paid back, a recovery rate higher than any other banking system.

    Grameen methods are now applied in 58 countries, including the US, Canada, France, The Netherlands and Norway.

    Muhammad Yunus is that rare thing - a bona fide visionary. His dream is the total eradication of poverty from the world. He has started a fundamental rethink on the economic relationship between the rich and the poor, their rights and their obligations.

    Yunus was asked for his views on the American welfare system. Here's his direct, simple and startling response, which rings true:

      "In the wealthy, western countries you have designed a great big box called 'social welfare'. If people are poor, it is society's responsibility to keep them alive. I think that's completely wrong. That way of thinking creates a divide between those who work and can take care of themselves and those who cannot. "

      "What happens? If you're one of the unlucky few, you get a benefit payment every month. The message is clear: 'No need to do anything, the government will take care of you'. So people become dependent. The get used to having society hand out money. They don't have to do anything for it, don't have to justify it. That is deadly to initiative, and they start waiting for more aid. That's when the fundamental human element of creativity is broken. "

      "The social welfare system creates a human zoo. The animals in the zoo are given their meals on time and a doctor comes by when they're sick, but they are living in captivity. They still have a vague instinct that tells them they should hunt, but they aren't challenged to go hungry for days and hunt prey. The animals aren't as sharp and inventive as they would be in nature. They have become a poor imitation of themselves. People who are swallowed up in the western social welfare system are also no longer themselves. They aren't stimulated to discover their possibilities, talents and creativity. They are robbed of every challenge. They are curbed in their development."

      "Every single individual on earth has both the potential and the right to live a decent life. Across cultures and civilizations, even the poorest of the poor can work to bring about their own development.

      "Micro-credit has proved to be an important liberating force in societies where women, in particular, have to struggle against repressive social and economic conditions. Economic growth and political democracy can not achieve their full potential unless the female half of humanity participates on an equal footing with the male."

    Wow, I was transfixed with the simplicity and directness of this man as I watched him on TV. When he was done, I switched it off and sat contemplating in the dark for several minutes.

    Follow the weblinks below, to read about Yunus and Grameen Bank.


    Jim Pinto
    San Diego, CA. USA

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