What is microlending? In simplest terms microlending is the lending of very small amounts of money at low interest, to low income people in urban and rural areas. It started forty years ago, when a person named Muhammad Yunus was visiting his family and his country Bangladesh which had recently become an independent country. Muhammad Yunus had left his home country then –East Bengal- when he was a child with his parents in search of a better future. He graduated from Vanderbilt University in Nashville, Tennessee, with a PhD in economics. Muhammad Yunus is the founder of Grameen Bank, the first non-profit organization to offer microfinance services in Bangladesh and in the world (New York Times). This bank showed the world on how little money can make a tremendous difference in people’s lives. Presently, there are thousands of institutions around the world that offer microfinance services, which sometimes suffer setbacks and uncertainties as any other for-profit or non-profit organization.
When Muhammad Yunus was in Bangladesh, he realized that Bangladeshis were living in a more precarious condition than he had imagined and read on the newspapers. Many people owed money to these ruthless and heartless village money lenders. These people were never going to repay the loans because the interest rates were so high therefore, they were trapped for life. However, he found something very thought-provoking, which was the fact that when he accumulated the debt of approximately forty people, the grand total was seventy dollars. He gave people money out of his pocket so that they can repay their debt and they can be liberated. This was the moment when the idea of creating a microfinance institution originated- Muhammad Yunus realized that ...
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All operating costs for the foundations are covered out of corporate profits, so 100% of public contributions to the causes can be dedicated directly to the support of programs and initiatives. The Whole Planet Foundation partners with microfinance institutions to award over $60 million in grants to support development of 116 products in 61 countries from which the company sources products. Microfinance institutions issue microcredit, which was developed by Professor Muhammad Yunus, co-recipient of the 2006 Nobel Peace Prize. It provides low-income individuals access to credit without requiring a contract or collateral. Grant recipients use microcredit to create or expand their home-based business, “enabling them to lift themselves out of poverty.” Whole Planet grants are funded by the sale of Whole Trade Guarantee Program products, as well as contributions from customers, suppliers, and team members. Since the foundation’s inception, over 800,000 borrower families have received loans, with 89% of those families headed by women. Whole Foods estimates that each female head of household loan recipient supports a family of more than five, which means more than 4.2 million individuals have been made more prosperous by the support and contributions of the
Roodman, David. "Microcredit Doesn't End Poverty, despite All the Hype." The Washington Post. Washington Post, 8 Mar. 2012. Web. 3 Dec. 2013. .
Greed can lead to many different situations, experiencing times of hardship, consequences, but a major consequence is poverty which is not realized through
Microfinance organizations are helping women in developing countries. Women in developing countries are receiving income based on their husbands job without
Fatton Jr. , Robbert. Haiti's Predatory republic :The unending transition to demcracy . Colorado: Lynne Rienner Publishers, 2002.
Women all over the world suffer from poverty and unfair treatment. Almost half of these women in poverty come from Africa, being paid barely a dollar a day. These women can barely feed themselves let alone their family. In order to feed and take care of their family they need micro-loans to either start a business and continue their business. Women are not empowered by micro-loans because of gender-based division of labor, their husbands and men in their family, and the women being shamed for not being able to repay the loan and be in debt.
Although Yunus is an economist by profession and his microfinance project does sound as an economic move, nevertheless the scope of it is much wider than targeting finances alone. He has a long term vision to eliminate poverty around the world and provide a better quality of life for those who are less fortunate and deprived of some secure financial background. Since he feels like every person on this planet has an equal right to get a chance to improve her/his life, nevertheless her/his background, we could say that his vision goes far beyond providing the loans – he strives to
Gregor Meerganz von Medeazza, Economic and Political Weekly, Vol. 41, No. 11, Money, Banking and Finance (Mar. 18-24, 2006), pp. 949-952
1.Christen, Robert Peck; Rosenberg, Richard & Jayadeva, Veena “Financial institutions with a double-bottom line: implications for the future of microfinance” (July 2004)
The first and arguably most common effect of poverty on society is its financial impact (Veritta, 2008). In many of the societies that experienced significantly high levels of poverty, debt was increasingly common, and especially debt accrued from moneylenders (Hatcher, 2016). For many individuals living in poverty, access to financial services such as banking is often stifled and rudimentary, making it difficult for such individuals to access self-improvement loans at standard and fair rates (Yoshikawa, Aber, & Beardslee, 2012). For these individuals, moneylenders are the best option available, which results in them paying exorbitant interest rates. The interconnection between poverty and finance, however, is cyclic in nature. The lack of finances or access to financial services causes poverty, which in turn causes an isolation of individuals from finances and financial services (Hickey & du Toit, 2013). This makes poverty a fairly complex problem to
Social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems. Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to move in different directions. ust as entrepreneurs change the face of business, social entrepreneurs act as the change agents for society, seizing opportunities others miss to improve systems, invent new approaches, and create solutions to change society for the better. While a business entrepreneur might create entirely new industries, a social entrepreneur develops innovative solutions to social problems and then implements them on a large scale.
Doyle, M. (2010, October 5). US urged to stop Haiti rice subsidies. Retrieved April 24, 2014, from BBC: http://www.bbc.co.uk/news/world-latin-america-11472874