Microcredit: the solution to poverty?
By 
Shan-ul-Hai •
July 10, 2008
For those of you who have never heard about microcredit, it’s a great idea. It’s surprisingly simple: you essentially just loan a couple of hundred dollars to somebody in a poverty-stricken country. That amount of money may seem inconsequential to an American businessman… but in some countries, it’s enough to rebuild a person’s life. The recipient of the loan now suddenly has much more buying power than ever before, and will use that money to go buy some more farmland or a better fishing boat or a wider array of mining tools. People suddenly have a means for climbing out of poverty, and we don’t even have to give them a free ride.
Sounds like a great idea, right? Well, it’s been around since the 1970’s and still hasn’t become widespread. Economists and development experts generally agree that microcredit will help us make great strides in the fight against poverty, but most of us still haven’t even heard of it. People criticize the elements of the concept in practice (some say that interest rates are too high, some say that the solution won’t work for everybody), but it’s rare for anybody to question whether it’s making a positive contribution to the world. So why don’t we hear about it more often?
Muhammad Yunus, the man who conceptualized microcredit, won the Nobel Peace Prize in 2006. He was featured as part of Newsweek’s “superclass” of modern influential thinkers who might help us get out of the “credit crisis.” He has met with the heads of state of many of the world’s most developed countries to discuss strategies to fight hunger and poverty. So why have so many people never heard of him?
I honestly don’t know the answer. I think it’s just a testament to how little we care about the world’s poverty problem. When we’re looking at Newsweek’s list, we skim through the humanitarians and jump straight ahead to the ideas that might make our house values increase. When we talk about the Nobel Peace Prize, we showcase how much we care by mentioning Jimmy Carter or Nelson Mandela or Al Gore. Poverty isn’t as glorious and controversial as the Israel-Palestine issues or the fight against Apartheid or the Global Warming problem. And people don’t like to see pictures of starving kids.
Is that the reason? Or can you think of anything better?
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and i think u are strange. But nice website.
As a professional in the international development industry, I’m glad you draw attention to this. But it’s pretty silly to think of any single intervention as “the solution to poverty”. Microcredit is an important tool, and it’s still vastly underutilized. But many, many other simultaneous approaches are also called for, including investments in health and education infrastructure, and especially farm-to-market roads. Also, some people argue that provision of credit to small and medium (as opposed to micro) enterprises can have a greater effect on poverty, as those businesses are in a position to employ others.
I was fascinated to find out about Microcredit sometimes back, it’s a fantastic system that allows many people to start a business who would never normally get the chance.
But no only this, some of the businesses that they have generated are truly inspirational, and creative.Who would of thought that you could start a business out of disregarded orange juice cartons, and turn them into sturdy bags that can be used everyday-and in a variety of ways.
Truly Fascinating!
Al Gore, Nelson Mandela, and Jimmy Carter are very prominent former civil servants who, along with the Nobel, also have best-selling books and award-winning movies and make a lot of public appearances, unlike Yunus. They are much bigger celebrities.
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