Devious criminals who prey on the poor have stolen the concept of microcredit and twisted it into a way to wring money out of the poor, while leaving them destitute. Dr. Yunus has defined the current problem, now it's time for us to urge our leaders to help end this misuse of micro-lending through careful regulation.
Sacrificing Microcredit for Megaprofits
By MUHAMMAD YUNUS
Published: January 14, 2011
IN the 1970s, when I began working here on what would eventually be called “microcredit,” one of my goals was to eliminate the presence of loan sharks who grow rich by preying on the poor. In 1983, I founded Grameen Bank to provide small loans that people, especially poor women, could use to bring themselves out of poverty. At that time, I never imagined that one day microcredit would give rise to its own breed of loan sharks.
But it has. And as a result, many borrowers in India have been defaulting on their
microloans, which could then result in lenders being driven out of business. India’s crisis points to a clear need to get microcredit back on track.
There are always people eager to take advantage of the vulnerable. But credit programs that seek to profit from the suffering of the poor should not be described as “microcredit,” and investors who own such programs should not be allowed to benefit from the trust and respect that microcredit banks have rightly earned.
Governments are responsible for preventing such abuse. In 1997, then First Lady Hillary Clinton and Prime Minister Sheikh Hasina of Bangladesh met with other world leaders to commit to providing 100 million poor people with microloans and other financial services by 2005. At the time, it looked like an utterly impossible task, but by 2006 we had achieved it. World leaders should come together again to provide the powerful and visionary leadership to help steer microcredit back on course.
Muhammad Yunus, the founder of Grameen Bank, received the Nobel Peace Prize in 2006.Read more at www.nytimes.com