September 14, 2009
Sofiya Begum, a Bangladeshi mother of three, worked hard every day, but could not lift her family out of poverty. And no wonder: She labored every day making bamboo stools.
But since Sofiya had no capital to buy the raw materials, she had to borrow from moneylenders—who charged exorbitant interest rates. This meant Sofiya made a profit of only two cents on every stool.
But her life changed when an economics professor named Muhammad Yunus happened to visit her village in 1976. As former Congressman Tony Hall writes in his book, Changing the Face of Hunger, Yunus identified 42 craftspeople who, like Sofiya, could not pull themselves out of poverty no matter how hard they worked.
Yunus loaned money to all 42 of them—"a grand total of $27." Every one of the grateful borrowers repaid their loans—and Yunus realized that he had discovered a solution to perpetual poverty: microloans. He then went to work convincing bankers to make tiny, unorthodox loans to the poor.
Hall writes that, in 1977, the Agriculture Bank in Bangladesh started an experimental branch in Sofiya's village. That bank—called the Grameen Bank—"breaks many established rules of banking."
"In addition to lending to the poorest of the poor, it demands no collateral." And yet, its default rate is just 1 percent! By mid-1979, Hall says, a "consortium of national banks enabled Yunus to open another two dozen branches." Today, there are more than 1,500 Grameen banks.
Among their biggest borrowers are beggars—45,000 of them. The loans are long-term and interest-free; beggars use them to buy everything from blankets to mosquito nets. So far, the beggars have repaid about half of the $1 million loaned to them.
Women especially benefit from microloans—including the "telephone ladies," as they're called. Some 140,000 women have taken out microloans to buy cell phones. They then rent the phones out to their neighbors. And hundreds of thousands of other small loans have paid for housing and education for the poor of Bangladesh.
Professor Yunus has helped to spread the microcredit concept around the world. It's the way, he says, to "reverse the age-old vicious circle of low income, low savings, and low investment."
Yunus is right. And microloans are a deeply biblical concept. Scripture tells us to help the poor, and protect them from those who would exploit them—such as unethical moneylenders.
You know, many people think relief programs are the answer. But poor countries cannot afford them, and here in the U.S., welfare tends to keep families in poverty for generations. How much better to loan money to the poor so they can help themselves through their own entrepreneurial efforts? It's a concept Prison Fellowship International has used for years in helping ex-prisoners start a viable business.
During these tough economic times, we ought to ask lawmakers to support micro-lending policies here at home. Loans could be given to people who want to start up a lawn mowing or car-wash business and just need a small loan to pay for equipment.
Whether the poor choose to make baskets, like Sofiya, or open a beauty salon, microloans are a biblical way to make a difference—a difference between permanent poverty and the hope of a better life.
Note: This commentary delivered by PFM President Mark Earley.
Chuck Colson's daily BreakPoint commentary airs each weekday on more than one thousand outlets with an estimated listening audience of one million people. BreakPoint provides a Christian perspective on today's news and trends via radio, interactive media, and print.