Examining the Success of Microcredit in Bangladesh
Microcredit, which provides small loans to those in poverty, has rapidly increased in third world countries, such as Bangladesh, over recent decades. Muhammad Yunus, who started a lending organization called the Grameen Bank, developed this program in the 1970s. There has been a great amount of success in reaching millions of borrowers, most of whom are women. The loans are often provided to pay for start-up costs of small businesses, and using the money to make money is strongly encouraged. Along with the tremendous success that has been experienced, there have been numerous improvements among the countries that have adopted such microcredit programs, especially Bangladesh. For example, while poverty is being alleviated, women are also experiencing empowerment. Not only have the lives of women, their families, and communities as a whole improved, but also, such lending programs significantly contribute to society, politics, and the economy. However, it is questioned whether or not microcredit programs have effectively reached the poorest of the poor. This argument is supported by the fact that the extremely poor population is vulnerable, and is being excluded from the vast majority that is able to take advantage of such programs. Nevertheless, the well-being of the poor in general has been greatly influenced by the many positive contributions of these small loans.
In the article, “Micro-credit and Poverty Reduction,” by H. I. Latifee, the many advantageous effects of microcredit programs, namely the Grameen Foundation, are examined. Microcredit has been associated with much progress including: the alleviation of poverty, the empowerment of women, the improvements among communities and families, as well as contributions to society, politics and the economy. Latifee’s article begins with a brief introduction, which discusses microcredit’s role in reducing poverty. Poverty is a global issue, in which more than one billion people in the world are struggling to survive on barely a dollar a day. This explains the reason why microcredit programs have now become a worldwide movement, and a powerful means of fighting poverty. As defined in this article, the poor are those whom live below the poverty line, and interestingly, women make up the majority of these individuals suffering from poverty. The reasons given for this are the fact that women are still facing discrimination and many barriers to opportunities. Latifee explains that, “Muhammad Yunus advocates that credit is a human right. Once the right is established, the entitlement to other rights for leading a dignified life becomes easier. It empowers to break the vicious cycle of poverty” (Latifee 4). He goes on to discuss that microcredit is even more empowering if combined with other programs or instruments. The process to reduce poverty takes into consideration the fulfillment of basic needs, and the development of assets that will reduce the poor’s vulnerability. This article then considers each of the improvements mentioned, while stating that appropriate planning is necessary for the benefits of microcredit programs to be enjoyed. If such planning is present, “evidences also show that serving the poorest and at the same time attaining sustainability are not contradictory goals” (Latifee 6). In the following section of the article, Grameen Bank, the pioneer of microcredit programs is discussed. It is made clear that this tension free program (which in fact requires no collateral or guarantee) provides the poor with options and flexibility when given access to credit. The program also appears to allow its members to cope with devastating situations much better, perhaps due to the concept of saving being a vital component of the Grameen program. Before concluding the article, Latifee provides examples from Grameen’s partners worldwide. An evaluation of these partners, in addition to the...
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