Advent Spiel for 3 December: The Grameen Bank.
Dec. 6th, 2004 11:40 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
camwynOrdinarily this would be the day for which the appropriate charity would be the International Campaign for Justice in Bhopal, or the Sambhavna Trust Clinic- a clinic in Bhopal that treats the survivors and their children. (Who, I should point out, are still victims- the filth that Union Carbide spewed into the air and water that night is teratogenic and the incidence of 'monstrous births' in the area is far too high to ignore). However, ![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
kali921 already called that to memory and mind; I will refer you instead to her and to the sites she recommended, and then go on to another organization which serves the people of Bangladesh in an effort to help those mired in poverty. Remember, it's a lot harder to build shitty facilities in areas that aren't desperately poverty stricken, and a lot easier to get justice for people who have the money to pursue it.
The Grameen Bank is an organization in Bangladesh that owes its existence to one man: Professor Muhammad Yunus, the head of the Rural Economics Program at the University of Chittagong, Bangladesh. In 1976 Professor Yunus set out to determine whether a credit system could be created that would allow the rural poor to borrow very small sums to finance the creation of small businesses, farms, etc.- businesses and farms that could then become profitable and allow their owners to pay off their loans and work their way out of poverty. There were no banks at the time willing to participate in such an enterprise, though. No money in lending to the poor, after all. Even if they did turn a profit, the loans involved were so small that any interest collected on 'em wouldn't be worth the effort of making the loan in the first place. This wasn't a case of 'I need the Bangladeshi equivalent of $500 to rent a shop front'. This was 'I need $5 to buy the material for a whole lot of baskets'. The loans were tiny, the people were horrible credit risks, the reward patently negligible in a country where poverty had been ingrained since time immemorial; what would be the point?
Dr. Yunus believed that, given the seed money necessary, quite a lot of the people he interacted with in the course of his research could become self-sufficient. He started his credit program with the money in his own pocket.. From there, the Grameen Bank Project began; Grameen means 'rural' or 'village' in the local language. According to their web site, the Project had the following objectives:
- extend banking facilities to poor men and women;
- eliminate the exploitation of the poor by money lenders;
- create opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh;
- bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves; and
- reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous circle of "low income, injection of credit, investment, more income, more savings, more investment, more income".
They started in a village near the university in 1976. The project spread to nearby villages over the course of the next three years. It proved so successful at helping the local poor to get themselves on their feet that they won support from the central bank in the country and were able to expand further north- then to other distrcts in Bangladesh. In 1983, the national government granted the Project status as an independent bank.
This is what the Bank has to say on breaking the poverty cycle:
The Grameen Bank is based on the voluntary formation of small groups of five people to provide mutual, morally binding group guarantees in lieu of the collateral required by conventional banks. At first only two members of a group are allowed to apply for a loan. Depending on their performance in repayment the next two borrowers can then apply and, subsequently, the fifth member as well.
The assumption is that if individual borrowers are given access to credit, they will be able to identify and engage in viable income-generating activities - simple processing such as paddy husking, lime-making, manufacturing such as pottery, weaving, and garment sewing, storage and marketing and transport services. Women were initially given equal access to the schemes, and proved not only reliable borrowers but astute enterpreneurs. As a result, they have raised their status, lessened their dependency on their husbands and improved their homes and the nutritional standards of their children. Today over 90 percent of borrowers are women. . .
The success of this approach shows that a number of objections to lending to the poor can be overcome if careful supervision and management are provided. For example, it had earlier been thought that the poor would not be able to find renumerative occupations. In fact, Grameen borrowers have successfully done so. It was thought that the poor would not be able to repay; in fact, repayment rates reached 97 percent. It was thought that poor rural women in particular were not bankable; in fact, they accounted for 94 percent of borrowers in early 1992. . .
(Emphasis mine.)
This is capitalism at its finest, folks. It might not be investment as you and I know it, but this is why I deeply admire economics and the study thereof. The reward may be small now, but as the system spreads, it has a knock-on effect throughout the country. A tiny amount of money by Western standards goes a damned long way in Bangladesh, and in the other countries where the Grameen Bank and its associated foundations are at work. These people are working their way out of poverty one painstaking step at a time- emphasis on working. The Grameen Bank has a better repayment rate than just about any other bank in the world, to my knowledge. This is the kind of poverty relief even Ayn Rand could get behind.
Have a look at the stories of some of the people whose lives were touched by these minuscule loans, and how much of a difference they've made. And don't be too surprised by the fact that some of those stories might be from awfully close to home. . .
Grameen Bank rocks. The Grameen Foundation, which is an outgrowth of the Bank that works with them and Dr. Yunus and uses their methods (Dr. Yunus is on their Board of Directors), also rocks.
The world is a big place, full of so much sadness and horror and death that the opportunities for despair seem limitless. . . but if we allow ourselves to step back for a moment and let our heads clear, sometimes the small, simple, practical matter of figuring out how to best arrange very small things can make an astonishing amount of difference. Well done, Dr. Yunus.
kali921 already called that to memory and mind; I will refer you instead to her and to the sites she recommended, and then go on to another organization which serves the people of Bangladesh in an effort to help those mired in poverty. Remember, it's a lot harder to build shitty facilities in areas that aren't desperately poverty stricken, and a lot easier to get justice for people who have the money to pursue it.The Grameen Bank is an organization in Bangladesh that owes its existence to one man: Professor Muhammad Yunus, the head of the Rural Economics Program at the University of Chittagong, Bangladesh. In 1976 Professor Yunus set out to determine whether a credit system could be created that would allow the rural poor to borrow very small sums to finance the creation of small businesses, farms, etc.- businesses and farms that could then become profitable and allow their owners to pay off their loans and work their way out of poverty. There were no banks at the time willing to participate in such an enterprise, though. No money in lending to the poor, after all. Even if they did turn a profit, the loans involved were so small that any interest collected on 'em wouldn't be worth the effort of making the loan in the first place. This wasn't a case of 'I need the Bangladeshi equivalent of $500 to rent a shop front'. This was 'I need $5 to buy the material for a whole lot of baskets'. The loans were tiny, the people were horrible credit risks, the reward patently negligible in a country where poverty had been ingrained since time immemorial; what would be the point?
Dr. Yunus believed that, given the seed money necessary, quite a lot of the people he interacted with in the course of his research could become self-sufficient. He started his credit program with the money in his own pocket.. From there, the Grameen Bank Project began; Grameen means 'rural' or 'village' in the local language. According to their web site, the Project had the following objectives:
- extend banking facilities to poor men and women;
- eliminate the exploitation of the poor by money lenders;
- create opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh;
- bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves; and
- reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous circle of "low income, injection of credit, investment, more income, more savings, more investment, more income".
They started in a village near the university in 1976. The project spread to nearby villages over the course of the next three years. It proved so successful at helping the local poor to get themselves on their feet that they won support from the central bank in the country and were able to expand further north- then to other distrcts in Bangladesh. In 1983, the national government granted the Project status as an independent bank.
This is what the Bank has to say on breaking the poverty cycle:
The Grameen Bank is based on the voluntary formation of small groups of five people to provide mutual, morally binding group guarantees in lieu of the collateral required by conventional banks. At first only two members of a group are allowed to apply for a loan. Depending on their performance in repayment the next two borrowers can then apply and, subsequently, the fifth member as well.
The assumption is that if individual borrowers are given access to credit, they will be able to identify and engage in viable income-generating activities - simple processing such as paddy husking, lime-making, manufacturing such as pottery, weaving, and garment sewing, storage and marketing and transport services. Women were initially given equal access to the schemes, and proved not only reliable borrowers but astute enterpreneurs. As a result, they have raised their status, lessened their dependency on their husbands and improved their homes and the nutritional standards of their children. Today over 90 percent of borrowers are women. . .
The success of this approach shows that a number of objections to lending to the poor can be overcome if careful supervision and management are provided. For example, it had earlier been thought that the poor would not be able to find renumerative occupations. In fact, Grameen borrowers have successfully done so. It was thought that the poor would not be able to repay; in fact, repayment rates reached 97 percent. It was thought that poor rural women in particular were not bankable; in fact, they accounted for 94 percent of borrowers in early 1992. . .
(Emphasis mine.)
This is capitalism at its finest, folks. It might not be investment as you and I know it, but this is why I deeply admire economics and the study thereof. The reward may be small now, but as the system spreads, it has a knock-on effect throughout the country. A tiny amount of money by Western standards goes a damned long way in Bangladesh, and in the other countries where the Grameen Bank and its associated foundations are at work. These people are working their way out of poverty one painstaking step at a time- emphasis on working. The Grameen Bank has a better repayment rate than just about any other bank in the world, to my knowledge. This is the kind of poverty relief even Ayn Rand could get behind.
Have a look at the stories of some of the people whose lives were touched by these minuscule loans, and how much of a difference they've made. And don't be too surprised by the fact that some of those stories might be from awfully close to home. . .
Grameen Bank rocks. The Grameen Foundation, which is an outgrowth of the Bank that works with them and Dr. Yunus and uses their methods (Dr. Yunus is on their Board of Directors), also rocks.
The world is a big place, full of so much sadness and horror and death that the opportunities for despair seem limitless. . . but if we allow ourselves to step back for a moment and let our heads clear, sometimes the small, simple, practical matter of figuring out how to best arrange very small things can make an astonishing amount of difference. Well done, Dr. Yunus.
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