“Have you looked into micro-credit?” is the question I get asked most frequently. I actually got to meet Professor Yunus – a Bangladeshi and Nobel Peace Prize winner for his work in micro-credit. Micro-credits are basically small loans to those poor who wish to use that small loan for entrepreneurial purposes with the goal of pulling themselves out of poverty. Grameen Bank (founded by Professor Yunus) has had incredible results and amazing success stories. The reason I have somewhat shyed away from focusing on micro-credit in my work here in Bangladesh is because I believe there is an overemphasis on micro-credit back in the developed world. Micro-credit is part of the solution to ending poverty. It is not the solution to ending poverty in and of itself.
In terms of borrowing money, the poor in the developing world are very much like people in the developed world: what makes sense for us also make sense for them. It makes perfect sense, for example, to take a loan so you can attend a college. But does it make sense for you (or your parents) to take a loan so you can go to grade school? It also makes perfect sense to take a loan to buy a car. If you took a loan to buy a car, for example, you could start a delivery/transport business. But, would it make sense to constantly have to take subsequent loans because your car keeps breaking down because of the lack of proper roads? It’s also understandable that people sometimes need to to take loans to pay for medical expenses. But imagine if you could avoid getting sick in the first place simply by having a community with basic sanitation and the simplest of protection against diseases.
There is nothing wrong with micro-credit. It’s the developed world’s attitude toward micro-credit which is the problem. Aid and micro-credit isn’t an either/or proposition. They can work together. Many of the Millennium Development Goals advocated by Dr. Sachs and the United Nations are really a good basic support. Completing the MDGs will put people in a position of 1) being able to take full advantage of any micro-credit loans they ask for as well 2) helping people avoid unnecessary loans. Why take a loan for malaria treatments in a hospital when you can avoid getting infected by sleeping in an insecticide treated mosquito net? Imagine how far someone can go with a micro-credit loan if they have had the opportunity to gain even the basic of literacy skills to tap their full potential and ingenuity.
If there was a one sure fire solution to ending extreme global poverty – we’d already have this problem solved. Reaching a real solution means having to break our romantic belief that there is a holy grail to ending poverty.