Micro loans = macro impact
THE NOBEL PEACE PRIZE comes with a $1.4 million award and a giant international soapbox. Muhammad Yunus of Bangladesh, the current Nobel laureate, is using his platform to press the World Bank to double its investment in the successful antipoverty program that won him the prize: microcredit.
In New York last week, Yunus said the tiny loans distributed in the developing world, most of them to women, have already lifted 100 million people out of direst poverty and brought them the dignity of running small businesses, many of which eventually create jobs for others. These simple, sustainable businesses - weaving, raising chickens, selling groceries in small shops - are proven development vessels that can be launched with loans as small as $100. But Yunus said the World Bank, the influential institution working to combat global poverty and a supporter of microcredit, has balked at employing it for the world's poorest - those who earn less than $1 a day.
"They think the bottom layer of poverty belongs to handouts and safety net programs, and that they can't handle credit," Yunus said during a conference call with reporters. "We have always argued that all human beings have built-in creativity, built-in entrepreneurial abilities, only we never gave them a chance to bring it out."
To prove the point, four years ago Yunus started a microcredit program with Bangladeshi beggars. With loans typically as low as $15, the beggars equipped themselves with small stocks of merchandise, such as candy and toys, which they sold door to door instead of begging. Yunus says that the program transformed the lives of 100,000 of the most destitute people on earth - and that many repaid their loans and had profits to plow back into their enterprises. "You can't get any poorer than a beggar," Yunus said.
Today a delegation of congressional supporters of microfinance is meeting with Robert Zoellick, who became head of the World Bank in June. Working with the advocacy group Results, they want the bank to double what they say is just $168 million in direct funding, and ensure that half of that goes to recipients earning less than $1 a day. For its part, the bank says that it spends hundreds of millions each year in additional technical support for microcredit, and that the loans are only part of a comprehensive approach, including savings accounts and grants, for the poorest of the poor.
If Yunus is to reach his goal of lending to 275 million new micro-entrepreneurs by 2015, commercial banks, nongovernmental organizations, philanthropists, and governments all will have to ramp up their commitments. The return on such investments can be counted not just in families fed and children educated, but in more stable, peaceful societies all across the developing world.
