To put things into perspective, microfinance has simply revolutionized the development world. The reason is that it has proved that with really small amounts of money, truly big results could be achieved. Yet, even this is not the major benefit of microfinance. As Muhammad Yunus, the inventor of microfinance, says:
"[Microcredit] lets individuals explore their own creative potential […] Microcredit turns on the economic engines among the rejected population of society. Once a large number of these tiny engines start working, the stage is set for big things.”
Indeed, Muhammad Yunus set the stage for big things: in 1983 he founded The Grameen (“grameen” means “rural” or “village” in Bangla language) Bank in Bangladesh that gave microloans for small business development to the country’s poorest and neediest, the ones who were rejected by the formal economy. In 20 years the bank became a self-sustaining social business. Even more so, The Grameen Bank has grown and spread out to become The Grameen Family of Businesses that include 25 for-profit, non-profit and social business enterprises, all of which aimed to alleviate poverty in bangladesh and worldwide. In 2007 80% of poor Bangladeshis were reached out with microcredit (with the help of other microcredit NGOs.) By 2012, Yunus projects, 100% of poor Bangladeshi families will be able to obtain microloans.
Of course, such success has been picked up by other bright minds, especially after the enterprise got a worldwide recognition in 2006, when Muhammad Yunus and The Grameen Bank were awarded the Nobel Peace Prize. Nowadays there are thousands of local and international nonprofits specializing in microcredit and its various forms. The true beauty and potential of microfinance is that it can be tailored to specific needs of any given community or a country.
In my next post I will list grassroots and international microcredit NGOs that proved to be the most effective and create real change on the ground, so that
“Our Grandchildren will have to go to museums to see poverty," Muhammad Yunus.
P.S. To learn more about The Grameen Bank and Muhammad Yunus' philosophy and approach to combating global poverty check out his books:
Banker to the Poor: Micro-Lending and the Battle Against World Poverty; Public Affairs; 2003; ISBN 9781586481988
A World Without Poverty: Social Business and the Future of Capitalism; Public Affairs; 2008; ISBN 9781586484934
I am reading the latter one and it's full of 30 years of experience, great ideas, and inspiration!