“To look forward and not back, to look out and not in, and to lend a hand.” -Edward Everett Hale
Lending money to the poor is considered by well off banks to be a risky bet and sometimes quite fanatical if done too extravagantly. The whole mentality of these banks is that lending to the poor is very unreliable, and the assumption holds that the odds of repayment are quite slim. The poor don’t have any credit history, employment records, or a definite financial means to let the bank know that it can trust them with it’s money. How can people who are much less fortunate than us strive to run a business that they so ardently want to bring up, or finance an institution that has the potential to bring wonders to a community? Well, the solution is microcredit.
20 years ago, professor Muhammed Yunus who taught economics at a school, decided that what he was doing wasn’t working. With an altruistic heart that he so willfully possesses, he took $26 and made his first loan to a woman making bamboo furniture. The smile and joy with which the woman received the loan struck a cord in Yunus’s mind and with no urge to stop, he lent more.
He found that repayment rates are suprisingly high since first time entrepreneurs know that they will not receive further funds if they default, and that in small social communities there is a psychological pressure to repay.
With this in mind, Muhammed went all over lending to people in villages and small towns in Bangladesh who don’t have enough to make by and follow pursuits in their businesses. Soon, microlending was born and the practice took hold pretty quickly. Today, his not-for-profit Grameen Bank has started many ‘village banks’ that lend to millions of unfortunate souls in Bangladesh to help them lead the lives they want to live.
Grameen Bank’s motto: “The less you have, the more eligible you are.”
Today, other countries have taken up this scheme and have implemented it in their constitution. Parts of South America, such as Brazil, have lent to 46,000 small business to help them set the right foot forward and form a strong base to grow forward on. It is also burgeoning in Africa and Asia.
There is a bit of globalization at play here, as countries and even foundations as big as the World Bank put there hands together to support one cause.
How you can make a difference!
Today, even you can help out. Go to http://www.kiva.org/home (Kiva non-proft organization) and donate out a minimum $25 loan to help make a dream come true. Your proceeds, put together with many others, can help people run successful small businesses, set up health and educational institutions, and fulfil other delayed ventures. Plus there is a 97% chance that you will get your loan fully repayed in installments. Once repaid, lend the same $25 out again and help out even more! Always remember:
“Give a man a fish, he’ll eat for a day. Give a woman microcredit, she, her husband, her children and her extended family will eat for a lifetime.” – Bono