The Micro-lending Revolution has done more to improve the lot of ordinary human beings than any other social movement. It has many anticidents, since rotating credit associations and fraternities have a long, though mostly undocumented history. The island of Okinawa, for example, has had multi-purpose, democratically managed co-operative associations called moai for centuries, which operate as effective micro-lenders. [1] The moai are such convivial and effective institutions that many Okinawans attribute their unusual good health and long lifespans to participating in them [2]. Nineteenth century pioneers of savings-and-loan co-operatives in Scotland, Bohemia (Raiffeisen), and Canada (Desjardins) were at first involved in the kind of small scale producer-credit that is today called micro-lending, and it was this element in them that helped create astonishing leaps in social equality and prosperity in those places, though the institutions they founded gradually came to be conventional consumer-oriented banks. In 1976, Muhammad Yunus founded the Grameen Bank, which began as a research project by Yunus and the Rural Economics Project at Bangladesh’s University of Chittagong to test his method for providing credit and banking services to the rural poor. The first loan was for only $27. Money was loaned through self-governing circles of five, and involved only small sums strictly for the improvement of a viable enterprise (for example, paying for a cart to bring produce to market, or tools for a bicycle shop). The majority of lenders were women, whom Yunus found statistically more responsible with the money than men. More than half of Grameen borrowers in Bangladesh (close to 50 million) have risen out of acute poverty thanks to their loan, as measured by such standards as having all children of school age in school, all household members eating three meals a day, a sanitary toilet, a rainproof house, clean drinking water. Repayment rates, while slow, have proven to average 98 % (far exceeding repayment rates in conventional banking). The Grameen bank was spectacularly successful, and spread like lightning through Bangladesh, and subsequently to 43 other countries. Yunus was awarded the Nobel Prize for his work, one of the best-deserved of such awards. However, the concept was “in the air” among those who had long suffered under the idiocies of Marxism and the economic nostrums of Big Power institutional orthodoxy. Esther Afua Ocloo, in Ghana, and Ela Ramesh Bhatt, in India, initiated the same concept with their Women’s World Banking association in the same year as Yunus began Grameen. Originally viewed with hostility by most governments and financial institutions, micro-lending is now a bandwagon to jump on, so you can expect various bureaucratized, corporate and state-directed perversions of the concept to be foisted on people. Be that as it may, the amount of good that the movement has done for the world is undeniable.
Now we have another, grass-roots twist on micro-lending. KIVA is an internet-based micro-lending system. Potential borrowers register on the Kiva site, describing their micro-business. Field officers, working with existing micro-lending groups, verify their bona fides. The average loan is for about $600, but it is made up of smaller amounts, often $25, contributed by the public. Prospective lenders choose their borrowers from the internet profile. They almost always get their money back, and usually re-lend it. To maintain the non-profit status of the organization, the lenders cannot collect interest, but the satisfaction of knowing that a tiny donation can do substantial good over and over again is enough to satisfy most participants. Kiva’s website provides a “risk and due diligence” page that demonstrates the combination of idealism, honesty, and level-headedness that human beings can bring to bear on the problem of poverty if they step out of the old ways of thinking into the modern age.
[1] Lebra, William P. & Thomas W. Maretzki — “The Community Cooperative in Northern Okinawa” — Economic Development and Cultural Change, vol.1 #3, part I (April 1963). p.225–238.
[2] Buetnner, Dan — “New Wrinkles On Aging”, National Geographic, November 2005.
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