Currently I’m living and working in the beautiful country Bangladesh. Amongst the lush green environment of this country there is however a giant man-made problem that is my friends, the problem of extreme poverty. The GDP per capita in Bangladesh is very low and even outside where I live, unfortunately I do see, small children picking up garbage as a means of their living and selling that garbage rather than going to school. This is where good business ideas can have a huge impact.
Its heart wrenching but I’m inspired however by a great thing about Bangladesh.
Microcredit as a Social Innovation
One important innovation that has come out of this country, actually came from the Nobel Laureate, Muhammad Yunus who had created the Grameen foundation and Grameen bank.
In Chittagong, Muhammad Yunus had actually gone out and provided small loans to vulnerable women. Providing these micro-loans he then followed up with them as they used that loan to purchase income generating assets. With those assets, such as a chicken or a cow or small goods to then sell, these women were able to make a living for themselves.
What’s great about micro-credit is that it is founded on the idea that the people in developing countries have the initiative and drive to lift themselves out of poverty. It’s a great belief and a great philosophy that I myself am quite enthusiastic about. Being here on the ground in Bangladesh, I actually live not too far from Chittagong and the programs that I’m involved in do involve livelihood programs as well as programs to provide micro-loans and even savings programs for vulnerable groups especially for women.
2 Challenges with Microcredit
Micro-credit was an innovate idea from Bangladesh and it’s something which I think it is great to really debate it and improve upon.
- One of the major issues however on micro-finance and micro-credit has been that after Yunus’ idea, it has been growing as a movement worldwide. Some of the problems have been very high interest rates for vulnerable people and it’s very hard to get out of that cycle of debt because it exacerbates poverty. And Yunus has been very vehement to advocate that the interest rates must be quite low.
- Another major problem that I’ve seen is as a challenge as at times, micro-credit can only really target those who are facing moderate poverty and is sometimes difficult for those who are facing extreme poverty.
Micro-Development: From Hand-outs to Hand-ups
But it’s a great idea so far, the philosophy that we can provide a hand-up to people living in developing countries rather than handouts and I’ve also seen the determent of creating dependency for beneficiaries.
So Micro-credit is a start of good business ideas emerging and I would like to open up the forum to you out there. As social entrepreneurs how else can we provide hand-ups to people, to lift themselves up and encourage them to take initiative for their own lives? In what ways can we promote that?