My fascination with microcredit and its potential to eradicate world poverty
Why my interest in microcredit better known as microfinance?
First, I am fascinated by the proven idea that small loans—often as small as $40—given to the poor in primarily underdeveloped countries can help to alleviate extreme poverty. These microloans provide seed capital to mostly poverty-stricken women who use the money to pursue an entrepreneurial endeavor like selling crops or homemade baskets. Profits from their businesses often result in more money for healthcare, education for children, and other benefits. Thus, living standards are improved considerably.
Also, I believe in the power of entrepreneurship—more than anything else—as a means to attain self-sufficiency and prosperity. The success of microfinance is due, in large part, to the great possibilities that entrepreneurship affords.
Finally, just as fascinating are the impressive repayment rates of the millions of loans administered by microfinance intuitions (MFIs). Some funds have a delinquency rate as low as 1.5 percent. (Read a previous post: “The world’s poorest more creditworthy than Americans”.) The success of the industry has even sparked the interest of wealthy investors, looking for new asset classes with steady growth and low risk.
For those who are equally captivated by the promise of microfinance or at least interested in learning more about this innovation, I suggest you read “Small Loans, Big Dreams” by Alex Counts, President and CEO of the Grameen Foundation. Mr. Counts harmoniously narrates the parallel struggles and successes of borrowers in Bangladesh and Chicago, while interweaving the biography of microfinance pioneer and Nobel Prize winner, Muhammad Yunus. The book is a compelling and honest treatise on microfinance—its pitfalls and promise—but ultimately delivers newfound hope of eradicating world poverty through credit.