A Proposal for Sustainable Development through Microfinance

In both developing and emerging economies, microfinance has vastly and increasingly been seen as one of the most important means for enhancing the lives of the poor and therefore a major tool for economic and social development mostly in rural areas. Lately, contrary to this widespread belief, critics have raised eyebrows against this growing popularity of microfinance as a major tool for enhancing economic development. Contrary to belief, they are of the opinion that microfinance is a ‘make-belief’ that is hindering economic and social development rather than enhancing it.

The book, Microfinance and its Discontent: Women in Debt in Bangladesh written by Lamia Karim, gives us account on what causes a culture to be known as “economy of shame” status, such as in the case of Bangladesh. She writes on a subject that is a top list priority in the economical world these days, the corrupt ways NGO’s lenders do business not only in Bangladesh but across the world, however, she centralizes her views on Bangladesh and only a handful of NGO’s. Even though this was primarily a look at Bangladesh, it has resulted in capturing the attention of people across the globe not only with the NGO’s mention in the book but resulting in a closer look at all NGO’s and how they serve the people. Karim shares with the readers how the 1980’s nongovernmental organizations (NGOs) led in the way of microfinance institutions and claimed that they were providing women with an empowerment tool by issuing them loans. We find that over 80% of borrows are women and most are economically challenged already. With that being stated Karim also takes a look at how and why that is, she discusses the long term effects it is having on women and how it is furthering the exploitation of women in Bangladesh. She looked at how this type of exploitation has not only weakened further women’s economy in Bangladesh but has also strengthen the power NGO’s have over the people (mainly women) at the same time. It takes a look at this type of expansion and brands NGO’s use as a “shadow state

Many families in developing nations do not have sustainability in their lives. In her article, “Microfinance Empowering Female Entrepreneurs”, Elizabeth Matsangou writes, “starting and growing a business is virtually impossible without access to financial services.” Basically, Matsangou is saying that in order to start a business, you need help with the use of micro-loans. Further proving the point that micro-loans that empower women and women need these loans. Many women in developing countries start micro-enterprises to help raise money for their family. With this in mind, it is obvious to see what kind of positive impact micro-loans can have on women. Starting businesses are nearly impossible without the use of micro-loans, proving that they can help empower

Micro credit is the process of helping the “poorest of the poor” obtain loans. Since big time banks rarely help people who need help acquiring loans, micro credit is another source that makes it possible for the lower class to achieve that. They focus on they call the “real economy,” where they are on personal relationships with their clients. They want them to succeed and help their clients change their own life. Compared to the big banks, they are not looking to make huge amount of interest back off their loan (paper chasers).

Microfinancing produces many benefits for poverty stricken, or low- income households. One of the benefits is that it is very accessible. Banks today simply won’t extend loans to those with little to no assets, and generally don’t engage in small size loans typically associated with microfinancing. Through microfinancing small loans are produced and accessible. Microfinancing is based on the philosophy that even small amounts of credit can help end the cycle of poverty. Another benefit produced from the microfinancing initiative is that it presents opportunities, such as extending education and jobs. Families receiving microfinancing are less likely to pull their children out of school for economic reasons. As well, in relation to employment,

Grameen Bank provides various services that benefit not just a group of people but the impoverished people in the whole world, starting from Bangladesh and spreading across to every part of the world where underprivileged people live. Speaking exclusively about the services of Grameen Bank, the organization specializes in providing small loans to impoverished farmers and other small startup entrepreneurs in Bangladesh and beyond without requesting collateral from loan recipients. That is apparently why the bank is popularly called ‘the bank of small business’ and their motto is ‘banking for the Poor’ (Grameen Bank, n.d.). Through its services, many communities have flourished and various startup ventures are

Women in developing countries are heavily empowered by micro-loans. These women normally aren’t able to provide income for their family because of a lack of education due to low funds. On top of that, husbands are considered the money makers of the family, while women are expected to stay home and tend to their house and children. But micro-loans change all of this, as it gives women the power to start their own businesses. In full, micro-loans are very influential, and can help with women that struggle, and assist them in making more money.

In this documentary, Tom Heinemann (the director) provides a sharp critique of microfinance in the world. The documentary pertains critically to the work of Muhammad Yunus and the Grameen Bank in Bangladesh. Tom Heinemann tells an unpopular and confronting story about how microfinance, although innovative, leaves few to prosper and the many poor being financially “strapped”. This documentary has caused a flood of criticism about microfinance, while diminishing the reputation of Grameen Bank’s founder, Muhammad Yunus. I feel that The Micro Debt does not shed the full light onto microfinance, yet it is becoming increasingly hard to ignore its effects.

Microcredit undoubtedly is easily sustainable to the public. For example suppose you had poor credit or no credit at all, you can still receive a lone (The Pros and Cons of Microloans). Because of this anyone can get a small lone. This show that no matter their position, microfinance can help. In addition the program targets under privileged citizens (What are the pros and cons of microfinance?). This shows that microcredit can help people in the toughest situations. As a result people can provide better for themselves and their family. However some claim borrowers can’t make a living because people can’t afford to pay back lones. Lastly microcredit is used all over the

Muhammad Yunus, Founder of the Grameen Bank is often hailed as the architect of microfinance lending and has been praised around the world for his work and even awarded the Nobel Peace prize in 2006. The concept of microfinance is to lend small portions of money to poor people who could not have otherwise acquired a loan from a regular bank. Microfinance banks give the poor a small loan with incredibly high interest rates in the hope that the borrower will create a business or some form of income creating venture to sustain themselves and pay back their loans. Not only is that person left with a way to support themselves, but it also creates jobs in the community. These banks have noticed that when the money was lent to a family through the woman of the household, it went a longer way than if the man of the household received the loan. Yunus has noticed even within the Grameen Bank that “Poor women [have] an amazing skill, the skill of managing a scarce resource.” (12) Studies have shown that if a mother is receiving income the first beneficiaries are her children. The effects of this are amazing, many communities have seen a rise in school enrollment and improved child survival rates because women are more likely to spend money on food for their children and health care than are fathers. There is a saying, “If you give a man a fish, he will eat

Jeff was hyped about socks and microfinance loans for startups in developing countries. He traveled to Columbia and heard pitches from trust groups and saw the pride in entrepreneurs who sustained themselves from receiving microloans. Microfinance loans are very small, short-term loans at low interest, especially to a start-up company or self-employed person.

In recent months a new concept of micro financing has created intrigue. Micro financing has many definitions but the most popular reference these days is the practice of informal loans between individuals rather than institutions (peer to peer Micro loans). Micro financing first became popular in third world countries where entrepreneurs were able to start businesses for as little as twenty-five dollars. Many were able to quickly repay their loans and often times become grantors of other peoples loans. This created a formula for prosperity though admittedly on a small scale. As micro financing web sites began to pop up for use in more industrialized nations one question became obvious. The maximum request is capped at ten thousand dollars with most micro financing organizations. So what enterprises would actually benefit from the loan? There are not a large number of start up businesses that can be built in the modern world for a mere ten thousand dollars. Most franchise opportunities require well over a twenty-five thousand dollar initial investment. Even legitimate home based businesses are not cheap. Surprisingly entrepreneurs seem to be able to do a lot with limited funds. A little research on one of the more popular micro loan web sites www.kiva.org turned up a large number of people with success stories based on loan amounts far less than the maximum. No one had plans to start up a franchise but there were many people with clear and realistic goals. A large number of

Microfinance is grown to one of the biggest areas in fighting again poverty, it can be discussed, if microcredits are the best option to help people out of poverty. In the past it was almost impossible for the poor population of the world to get a loan with acceptable conditions. Banks would not lend to the poor, because the risk of losing the money was too high for them, which meant poor people in Africa had no chance of getting a loan from big banks. The so called “money lenders” would take advantage of this situation, and give the poor an opportunity to receive a loan. The “money lenders” were not trying to help the poor, they just wanted to earn money, thinking on their own personal benefit. That’s why their loans have insane conditions with interest payments of a couple hundred percent. If someone could not pay back the loan in time, they would take everything from the customers, and maybe even kill them. This was the only opportunity for poor people to get a loan until microfinance was born. Another problem is, that women have been excluded from the banking system in general in some regions of the world, because that was nothing women would do in their culture. In most cultures it was implemented, that women are staying at home, taking care of the house, children, and food. Men would go to work and earn the money for the family needed for the cost of living. It would also be more complicated for women to get a loan, because they traditionally work less than men, and

What is microlending? In simplest terms microlending is the lending of very small amounts of money at low interest, to low income people in urban and rural areas. It started forty years ago, when a person named Muhammad Yunus was visiting his family and his country Bangladesh which had recently become an independent country. Muhammad Yunus had left his home country then –East Bengal- when he was a child with his parents in search of a better future. He graduated from Vanderbilt University in Nashville, Tennessee, with a PhD in economics. Muhammad Yunus is the founder of Grameen Bank, the first non-profit organization to offer microfinance services in Bangladesh and in the world (New York Times). This bank showed the world on how little

To cite the saying that social entrepreneurship is the best way to help people in need, we would like to provide an outstanding example of social enterprise which is Grameen Bank. Grameen Bank was officially founded in 1983 by Muhammad Yunus and it provides small loans, rather than charity, to the poorest of the poor especially women in Bangladesh. This indeed provides an opportunity for the people to transform their lives. In 2006, Nobel Peace Prize was awarded to Muhammad Yunus and the Grameen Bank for their efforts to create economic and social