The New Star on the Development Horizon

The idea of "microcredits", developed by this year's Nobel Peace prize winner, Prof. Muhammad Yunus, is gaining in popularity. Especially for women from the third world, these credits have often paved the way to a better future. By Elefteriya Yuanidis

The statement issued by the Nobel committee says that "there can be no lasting peace until large groups of the population can find their way out of poverty." Microcredits, allocated as they are by Yunus and his Grameen Bank without securities and mostly to women, are such a way. For the same reason the United Nations declared the 2005 to be the year of the microcredit.

"SHARE is a microcredit organization for women in Andhra Pradesh, India. It allocates credits up to 50 or 100 dollars to its members based on a simple system.

Five women always receive a credit together. When the first one pays the money back, the second one receives the credit, then the third, and so on. In this way the women support and motivate each other so that the microcredit system can continue," says Ulrich Lampe from Oikocredit.

The ecumenical development society Oikocredit is a worldwide cooperative society that was founded in order to allocate money to development projects – not, however, as donations, but as loans.

It cooperates closely with Prof. Yunus's Grameen Bank, and since 2001 it has supported the world of SHARE, which in English stands for "Society for Helping Awakening Poor through Education," with two large loans to the amount of two million euros.

SHARE follows the principle of the Grameen Bank. Several women offer securities for each other. In one three-year rotation process each one of them receives a loan. If one group member cannot pay back the money, the others jump in. The individual loans run for one year and can be paid back in 50 small payments.

Microcredits on a large scale

The organization was founded in 1989 and has since set up 19 branches and is active in over 700 villages in India. Around 80,000 female farmers, food merchants, potters and bakers have since started up a small business thanks to microfinancing. Ulrich Lampe enjoys talking about their success stories:

"One of these women is Daanama. She started weaving baskets to support her family. But to buy material she had to borrow money at usurious interest rates, 50 to 100 percent. So she was actually working only for the interest."

Daanama received a microcredit from SHARE. With the money she bought rattan and produced beautiful baskets that sold well. She earned enough money fast enough to pay back the loan. The next step was to buy a buffalo. For a poor Indian family this is affluence, for the milk brings a great return every day.

A second buffalo followed, and Daanama was in the position to sell her small hut for a stone house with some land so that she could also plant vegetables. Today she can support her family with her income and even save money for rainy days. This is how more than two-thirds of the cooperative society members of SHARE have managed to climb out of poverty.

Women today make up the majority of microfinancing customers worldwide. They usually have no other choice. In many countries they are economically, legally and culturally disadvantaged.

They have little education, and because they have no property most banks do not consider them to be creditworthy. The microfinancing program offers them a chance to prove the opposite. Petra Euhus, member of the board of a Oikocredit sponsor's association in Berlin.

"What is amazing is that women are much more reliable in paying back the money and in beginning projects that are sustainable, that can continue after the money has been spent, and that even go beyond that to secure their education and their own subsistence."

Meanwhile more than one million self-help groups with more than 16 million members, mostly women, exist in India. Alone for the Indian program of the National Bank for Agriculture, called NABARD, nine of ten credit borrowers are women. Despite these impressive results it is still debated whether the microcredits really reach the poorest of the poor.

Around 200 million people worldwide have since been given microcredits, not only in development countries and not only motivated by development policies. The microcredits have since developed into a billion dollar market with a high potential for profit, which is increasingly interesting banks.

Elefteriya Yuanidis

Translated from the German by Nancy Joyce

Qantara.de

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