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Microlending Earns The 2006 Nobel Peace Prize


  02:07:55 am, by Nimble   , 337 words  
Categories: Announcements [A], Thoughts, Common Sense, People

Microlending Earns The 2006 Nobel Peace Prize

I caught an interview with Muhammad Yunus on the Daily Show, founder and director of the Grameen Foundation. He and the foundation split the 2006 Nobel Peace Prize for work on microfinance and microlending as a tool against poverty.

Microfinance is a great way of turning the banking paradigm on its head. As Robert Frost put traditional banking:

"A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain."

Microfinance lends to poorer people with commensurately less collateral, none in some cases. From Grameen Foundation's FAQs:

Why is this different from other loan programs?

Unlike other loan programs, microfinance does not require clients to have collateral to receive loans. This feature allows people to receive credit who would not qualify with traditional financial institutions. MFIs are also very client-friendly; they usually go to their clients to provide loans and receive payments, rather than requiring their clients to come to them. The peer support system practiced by many microfinance programs is another unique feature. When clients gather weekly at “center meetings” to make loan payments, or informally in smaller support groups, they share successes and discuss ideas for solving business and personal problems. Maybe most importantly, they empower each other to stay on the path out of poverty. This mutual support strengthens their resolve.

Allowing the poor to get that initial hand up from poverty, that just-enough loan to buy an animal or start a home-grown business, is ideal in places where there is will but little money.

I was a little surprised to find out that they do microfinance in New York and Dallas as well, but then again, poverty may not be universal in the developed world, but it certainly is prevalent enough.

Grameen operates in sub-Saharan Africa, but not in East Africa, where we went on honeymoon. Microfinance is present there, one of the leaders being Pride Africa.

A hand up instead of a hand out. I hope this makes a real difference :)

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