Micro credit is a system of small loans given to help poor people, especially women, so that they can turn their entrepreneurial ideas into money-making businesses that will lift them out of poverty. For people with no bank accounts, credit or collateral, conventional bank loans are out of the question. This concept was started in 1976 in Bangladesh by Muhammad Yunus a professor of economics. His financing method led to the establishment of the Grameen Bank in 1983. Subsequently a good number of development agencies, non-governmental organizations, non-profits and others jumped on the bandwagon to include microcredit components. Lifting families out of poverty and empowering women are very important issues in which everyone wants to have a role. There are many success stories. There are also as many critics as there are enthusiasts. Critics state that the results of micro credit are inconclusive because it’s hard to establish criteria and gather data, especially regarding the impact these loans have on the clients. Other reasons critics mention are the high interest rates with a relatively short pay back time, the fact that loans are often used for day to day consumption and that the men in women’s lives take over their loan. Also it has been observed that the loans don’t often reach the poorest, and finally that they don’t lift people out of poverty.
Women for Girls believes that micro credit can be a beneficial component in a comprehensive village development project designed to create employment for many. This is especially true as we wait for governments to get their act together and meet their responsibilities in developing necessary infrastructures, providing education and public health services and investing in its people to create the economic growth that reduces poverty.
Read more about Women for Girls’ microcredit initiative with the Mbousnakh Community Development Project.