If you knew you could loan someone less than $100 and it would dramatically improve their life forever, would you do it?
[tweetmeme only_single=false http://www.URL.com%5DThis is what micro-credit is all about – extending small loans to the poor to allow them to engage in commercial activity in their local communities. While many poor people work hard and have great business ideas to provide for themselves and their families, they often lack collateral, and unlike you or I cannot access it from traditional lenders.
In the past this left them either with no capital or at the mercy of middlemen who charged extortionate interest rates on loans. This meant they were basically unable to lift themselves out of the poverty into which they were born. But with micro-credit, where interest is charged at a rate that allows them to turn a profit, they are empowered them to innovate and change their own lives.
Microcredit began in the 1970s when Muhammed Yunnis founded Grameen Bank in Bangladesh, providing small loans to the country’s poorest people. Grameen Bank has now loaned more than $8 billion to the poor people in Bangladesh and touched more than 40 million members and their families.
Since then thousands of micro-credit programs have sprung up around the world, inspired by the Grameen model. Many of these programs, including Grameen, favour lending to women as research has found they are more likely to use the money to benefit the whole family.
Today lending money to poor families is easier than ever before, with online micro-credit organisations such a Kiva linking lenders and borrowers from all over the world. For more information, to take a look at some of the families seeking loans, or to start lending, visit their website here.
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November 10, 2010 at 9:28 am
Michael Gilmore
Have heard a lot about microfinance but never seen kiva – what a great website. Good to see team Australia well up the rankings! Think I will introduce the kids to this and finance some project as a family.
November 10, 2010 at 9:48 am
Kate Carroll
It’s a great thing to do as a family – helping kids understand about loans, interest and the value of money, and also about the joy of giving. You could even give some money to your kids as part of their Christmas present to spend at Kiva. And it’s ongoing because when the loans are repaid (as 99% are) they can choose new projects to support.
November 23, 2010 at 7:15 am
Antonio Kaplan
This is a great resource. We have been thinking of how to actually help communities throughout the world that is not charity. The feeling of empowerment that micro-finance brings to people who need help to get started is what will help progress the global and local economies. Definitely on the to do list now!