The
Metamorphosis
By
Ernie
D. Delfin
MUHAMMAD
YUNUS’ FORMULA ON MICRO-LOANS
MUST BE SPREAD TO ALL COUNTRIES
Last week, while watching TV on CSPAN I happened to watch an hour address of Dr. Muhammad Yunus before the media in
Washington D.C. before he was given a
“Medal of Freedom Award” by President
Obama as one of 16 people as “agents of agents” in our world today. I have read his book on Micro-Finance years
ago, and I believe that the proven success of his Grameen Bank must be spread
to all countries, especially the third world countries, in order to empower the poor faster, thereby
contributing to the progress of their respective nations.
As a brief background, Dr. Muhammad
Yunus is a global leader in anti-poverty efforts, and has pioneered the use of
"micro-loans" to provide credit to poor individuals without
collateral. Dr. Yunus, an economist by training, founded the Grameen Bank
in 1983 in his native Bangladesh to provide small, low-interest loans to the
poor to help better their livelihood and communities. Despite its low
interest rates and lending to poor individuals, Grameen Bank is sustainable and
98% percent of its loans are repaid – higher than other banking systems. It has
spread its successful model throughout the world. Dr. Yunus received the
Nobel Peace Prize in 2006 for his work.
Having been born and raised in the
Philippines, still a developing nation, I have witnessed that t the World Bank model
of primarily lending and dealing with the established institutions has kept the progress mainly on
the top of the economic pyramid. The
trickle down theory has not worked well but kept the status quo where the poor
gets poorer, and the rich richer. Lack of capital aggravated by lack of
education and business know how made
those in the bottom of the pyramid preys of predatory lending, where the
Shylocks of the world make a ton of
money at their expense, without even realizing it. In many developing countries in Asia, Africa
or Latin America, the Shylocks of the
world are still making a lot of money because there is only a few Grameen Banks. This where businesspeople as well as NGOs from first world countries
like the Rotary International with its 1.25 million
Rotarians in 200 countries, or Lions International, must get involved NOW to accelerate the
expansion of micro lending, the Grameen Bank way.
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Briefly, allow me to illustrate the modus operandi of this
“underground lending” (that is the only one available) in many rural villages in the world:: The venture capitalist (Shylock of the
village) lends FIVE PESOS to a market
vendor on Monday morning, then collecting ONE PESO as interest ONLY the next
Friday! So the ORIGINAL FIVE PESOS
earned 52 PESOS for one year! But after 5 weeks, Mr. Shylock has earned another
FIVE PESOS to lend. Beginning on the 6th week, he will be collecting TWO PESOS AS INTEREST ONLY from two
market vendors! Just extrapolate what happens every five weeks, or after several years from the day when the original FIVE PESOS that was lent to the first
vendor!
That is the factual scenario of many third or fourth world country’s poor villages, where credit facilities of
the World Bank or any traditional banks
cannot or do not want to reach. I am not surprised at all why Grameen Bank is succeeding, after great
patience in dealing with the slow pace of changing the mindsets of those in the bottom
of the economic pyramid.
Another excellent book that deals with
developing nations is “The Fortune at the Bottom of the
Pyramid” by Dr. Prahalad. The
book succinctly describes the successes
of several business enterprises in India, Mexico and Latin American countries
that thrives in the lower economic
strata the country by the
application of revolutionary marketing and consumer principles, and diligently
working with a different mindset of their client base. The companies that were showcased in the book
illustrate how a social enterprise can
make a fortune by incorporating the prevalent values of the market place and never imposing the
traditional business practices of Wall Street.
The
building of a nation is never easy but I
believe it can be accelerated through the innovative
fusion of labor, committed entrepreneurs and social capital that is not only centered on
making profits that only go to the
owners of the enterprise. Socially
oriented businesses as advocated by Drs. Yunus, founder of the Grameen Bank,
and Dr. Prahalad, author of “The Fortune
at the Bottom of the Pyramid” should be
supported and encouraged to expand
faster in as many countries as possible.
It is one proven way to make the gap between the very rich and very poor
narrower in many countries of the world.
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Email: ernie.delfin@gmail.com or drbannatiran@yahoo.com
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