What
is microcredit/village banking?
Microcredit
programs are committed to providing credit to the poorest of
the poor throughout the world, the poorest 20% of the
population that shares 1.4% of the world’s income.
The
concept of microcredit was founded by Professor Muhammad
Yunus in Bangladesh in 1976 when he started Grameen Bank.
Grameen comes from the Bangla word gram meaning village;
hence village banking. To meet the initial capital
requirements for the first village in order to purchase
materials and work freely, 42 people needed about $27.
Professor Yunus lent them the money – since no commercial
bank would lend money to people who don’t have it – and
they paid it back. Now there are millions of microcredit
borrowers throughout the world.
Why
are microcredit loans primarily to women?
Microcredit
is targeting women because 92% of a woman’s income will be
reinvested in food, shelter and education for her family;
only about 40-50% of a man’s earnings will reach his
family and often as little as 10%
A
loan of $4 to a landless and homeless woman in Nepal
resulted in a home and education for her children within a
short time. She bought a comb, a mirror and a pair of
scissors and put her husband in business as a barber.
What
is the repayment rate?
Across
geographic and cultural boundaries, the world’s poorest
borrowers have maintained a repayment rate of 95% or better.
Microcredit
views people as clients, not beneficiaries and it seeks to
provide them with the means to support themselves through
dignified self-employment. Regular meetings and group
support contribute to the outstanding repayment rate.
How
is Rotary connected to microcredit and how can you get
involved?
Rotary
has been funding microcredit programs throughout the world
for years. In our District 5340, there is an effort entitled
Mobilizing Rotary for Microcredit (MRM). Clubs have come
together to form MRM which funded a project in India during
2003-2004; four international projects in Afghanistan,
Ecuador, Zambia and South Africa and one local San Diego
project during 2004-2005; three international projects in
Ecuador, India and Niger and the San Diego project in
2005-2006, and five international project in Zambia, Sri
Lanka, Liberia, Uganda and South Africa and the San Diego
Project in 2006-2007.
