Microcredit

"I believe terrorism cannot be won over by military action. ... We must address the root causes of terrorism to end it for all time. I believe putting resources into improving the lives of poor people is a better strategy than spending it on guns."

That is from a speech by Economist Muhammad Yunus, winner of this year's Nobel Peace Prize. He was given the award yesterday for his work in microcredit. Now, if you're like me, you heard about this back in October, when it was first announced, heard the words "economist" and "microcredit" and "bank" and thought oh, yeah, that sounds complicated, how nice but I'm not going to look into this any further. But, maybe you are even more like me (scary, hey) and watch Jon Stewart's The Daily Show where Yunus was a guest. I almost turned it off when he came on but stayed with it for a couple of minutes which was all it took to grab my attention.

This guy is cool and this idea is revolutionary and, contrary to what you might think, very simple. That is the beauty of it. It is insanely simple. Give very small loans to very poor people so they can start very small businesses so they can look after themselves and their families. It is targeted mostly to women (not saying that is why it works so well but, well, it probably is the reason it works so well). And it is based on trust. Yes, you read right. Trust. Not collateral or contracts. A microcredit bank gives $100.00 to a woman so she can buy materials to make baskets and then she sells the baskets, feeds her family and pays back the $100.00 in installments.

Here are some statements from the website of Yunus's Grameen Bank:

Grameen Bank:

• "has over 2 million borrowers and works in 35,000 villages throughout the country" [of Bangladesh]
• "actively seeks out the most deprived in Bangladeshi society: beggars, illiterates, widows"
• "claims a loan repayment rate of 99 per cent"(!!!)

"Grameen is being copied in 52 countries." "The United States alone has over 500 Grameen spin-offs."

Isn't it amazing? There are critics too and everything is not rosy for every user of microcredit but what a difference it can make in the lives of the people most in need in the world. If you would like to read more about this, visit the Grameen Bank website and read excerpts from Professor Yunus's Nobel acceptance speech.