microcredit
TRANSCRIPT
Very small loans (<$100) to poor people
Loans to those who lack:� Collateral� Steady employment� Credit history� Therefore, can’t get traditional credit.� Village money lenders have been only source of credit.� Objective to develop self-employment projects.
Grameen Bank� Founded by Muhammad Yunus in 1976 in Bangladesh.
Won Noble Prize in 2006.� In 1974 loaned his own money to 42 people including a
woman who made bamboo furniture.� 96% of loans to women.� Loans to “solidarity groups” helps ensure repayment.
Microfinance Now� Thousands of institutions.� Serving millions of poor people.� Loan is preferable to aid.� Banks now offering micro loans.� Poor entrepreneurs possess skills just don’t have the
capital.� Typical interest rate 11-12%.
Criticism�Microcredit provides govt’s rationale for reducing
their anti-poverty, education & health programs.� Success primarily judged from lender’s view (high
repayment rates & financial viability).� Borrowers’ become dependent on for normal hh
purchases rather than investment.�Men spend the money while women stuck with the
debt.