|There is nothing wrong to give a critical look about Grameen Bank and contribution of Dr Yunus. Though he is the only Bangladeshi to secure a Nobel Peace Prize, he has acclaimed star-power for himself and Bangladesh.|
Dr Yunus's Grameen bank is in action for almost 30 years now. We need to give it a closer look those who took micro-credit from Grameen bank in 1974, 30 years later where they stand today? No where!
Have there really any substantial change for those who took loan from Grameen Bank?
Grameen micro-credit ain't that cheap, it changes 24% interest rate, hgher than any credit card interest charged.
The person who really made millions from Grameen hoop-hoola, is defintely Dr Yunus. That first woman, Sufia from Jobra, who borrowed 5 taka from Dr Yunus lived in poverty and died in poverty. That's the true case study.
--- On Fri, 10/9/09, Siraj Zaman <firstname.lastname@example.org> wrote:
From: Siraj Zaman <email@example.com>
Subject: RE: [chottala.com] Proud of Dr. Yunus - can we STOP biting please?
Date: Friday, October 9, 2009, 6:09 PM
It may not have improved the life of middle-class or high-income level people but it tremendously improved the life of the poor and poorest people of the country throughout all areas and all localities. Yes, as I always say, nothing is perfect in the world. But we have to live with the statistics and to support whatever improvements are achieved in the maximum levels, ignoring the minor drawbacks. Is there anything without any drawbacks in the world? None. Humans being so improved as a specie amongst all living beings, still carry filthy urines in their bladders and stinky droppings in their stomachs. Did that make humans so bad? Why not? Because humans have so much more good stuffs compared to having just urine and droppings. Likewise, please look at the more good stuff and not just little bad stuff of something. Many selfish rich people and a lot of selfish middle class people bitterly oppose micro-credits for one main reason, which is, the micro-credit provided the jobs of own to the poor and poorest people and created the scarcity of house-hold servants and day laborers all over Bangladesh. People have to pay more now to find the servants and the day laborers. Those rich and middle-class people consider it as going against the improvement of the society, because of the price hiking in the market of day-laborers and house-servants; and those rich and middle-class people are concerned about their losses in the absolute hoarding and profiteering in the labor market. This is the worst mentality and a lot of people are siding with them, perhaps you did too, and perhaps for that reason you only see the bad affect of the microcerdits, but not the immense improvements of the condition of lives of the poor and poorest people of the country. This must be a corrupt thought. Uplifting the conditions of the poor and poorest people should be valued as more desirable and more precious above the losses of profits of the well-to-do people's spending in the labor market.
By the away, why I have accept your ridiculous information that people of areas where there is no micro-credits are better off? Are you talking about the poorest people there or about the well-to-do peoplethere? Before and even now, no one used to land money to the poorest people, except robbing their physical labors with very little or no money. Of course, some local local business people (mohajons) or village politicians (matobbars) would lend them money with 200% to 500% interest yearly, and at the end, when the loan could not be paid-off by those poor people, the influential lenders would grab all belongings of those poorest people. Micro-lending interest is about 30% maximum yearly, which is way cheaper than the local lenders. Are you in favor of those local cheaters? I believe you are not. So far all microcrediut small loans have been found to be within the means of the poorest people of all societies throughout the country.
--- On Sun, 10/4/09, Dr. Jamir Chowdhury <americamyland@ gmail.com> wrote:
From: Dr. Jamir Chowdhury <americamyland@ gmail.com>
Subject: Re: [chottala.com] â€˜microlendingâ€™ doesnâ€™t actually do much to fight poverty - Boston Globe Article
To: chottala@yahoogroup s.com
Date: Sunday, October 4, 2009, 11:03 AM
Please compare the povert rates of the areas where Micro-credit was provided VS the areas that recieived support from NRBs.You will find that people from the areas supported by NRBs are in much better conditions. Yes, Micro-credit helps but not to transform the lowest income poor to the mid-income level. thanks.
On Sat, Oct 3, 2009 at 7:31 PM, Siraj Zaman <sirajuz@hotmail. com>
"Billions of dollars and a Nobel Prize later, it looks like â€˜microlendingâ€™ doesnâ€™t actually do much to fight poverty" is the most uninformed, ignorant, and untrue statement that someone out of touch of the real ground where it is happening, can only make. I do cordially invite the commentator and the writer of the below too long too absurd essay full of lies and distortion to go in the interior villages of bangladesh like chitpur of Sherpur district or raokhali of rangamati district or mashkanda of Netrokona district or in any of the 64000 interior villages of Bangladesh and collect data about the social life style upliftment of the people of the lowest rung of the society. Compare it with what was 2o years ago and what was 100 years ago to their fore-fathers. It will be quite obvious and quite clear how much improvement the micro-credits did for their lives. Microcredit provided each family a living home, cell phone, cows, goats, plots of very high yielding crops, vegetables or fruits, clothes on them, created millions of independent small jobs where the poors can work and earn and live decent lives what they could not ever afford before other than working as day-laborers with very low or no wage for their entire life. Only because of the small credit, even the poorest of the poors, can send their children to the schools, especially their daughters, and can buy a bike for each one of them to go to the distant schools form home. Could anybody imagine before that 100% of the children will go to school in Bangladesh, even it is a poverty stricken country? It happened because of the micro-credit only. Before when population was half of what is now, used to die significantly by the famines and mongas. Now-e-days no one dies for any famines. Mongas happen but very very less and micro-credit is working fantastically to tackle those crises. The poorest class people before could never thought of making their children educated, but now with the help of microcredits the poorest people are finding very high yielding self employments such as growing, selling, trading, transporting, communicating, educating, food and other stuff processing, catering, sewing, crafting, painting, and many many activities like these, that provide ample earning as for their needs, and so no need the children to help them to run the family; and so the children can go to schools and be educated; and change the status of their families when they become educated with higher degrees.
Please go to the interior villages of Bangladesh, and verify the truths; before publishing ridiculous essays for seriously affecting and dis-servicing the low-income people that would be quite agaist humanity.
To: khabor@yahoogroups. com
; notun_bangladesh@ yahoogroups. com
; amra-bangladesi@ yahoogroups. com
; reform-bd@yahoogrou ps.com
; chottala@yahoogroup s.com
; SonarBangladesh@ yahoogroups. com
From: Syed.Aslam3@ gmail.com
Date: Thu, 1 Oct 2009 18:16:18 -0400
] â€˜microlendingâ€™ doesnâ€™t actually do much to fight poverty - Boston Globe Article
Billions of dollars and a Nobel Prize later, it looks like â€˜microlendingâ€™ doesnâ€™t actually do much to fight poverty
By Drake Bennett Globe Staff / September 20, 2009
In the world of international aid, microcredit is a rock star. The practice of giving very poor people very small loans to start very small businesses has been hailed as one of the very few unambiguous success stories in the long, frustrating fight against Third World poverty. The pioneer of the practice, Bangladeshâ€™s Grameen Bank, has disbursed more than $8 billion in unsecured loans, usually in amounts under $100, to people traditional banks ignore. Along with a 98 percent repayment rate, Grameen has accrued an inspiring collection of stories about its overwhelmingly female borrowers, whose microloans allowed them to start up an embroidery or pottery business, or a snack cart or a stand selling cell phone cards, and through such petty entrepreneurship lift themselves out of poverty. â€œSmall Loans, Big Gains,â€� a 2002 Globe editorial on microcredit was titled.
Microlending institutions have sprung up all over the developing world, from India to Bolivia to Serbia; by one estimate, over 150 million people worldwide have taken out a microloan. Government aid groups and NGOs have rushed to fund them, and so have Wall Street banks and hedge funds, enticed by the promise of an anti-poverty program that can do so much while paying for itself - and even turning a nice profit. Grameen Bank and its founder, Mohammad Yunus, were awarded the Nobel Peace Prize in 2006, and Yunus is fond of saying that, thanks to microcredit, his grandchildren will have to go to museums to know what poverty looks like.
But two new research papers suggest that microcredit is not nearly the powerful tool it has been made out to be. The papers, by leading development economists affiliated with MITâ€™s Jameel Poverty Action Lab, have not yet been published, but they are already being called the most thorough, careful studies yet done on the topic. What they find is that, by most measures, microcredit does not offer a way out of poverty. It helps a few of the more entrepreneurial poor to start up businesses, and at the margins it may boost the profits of existing microenterprises, but that doesnâ€™t translate into gains for the borrowers, as measured by indicators like income, spending, health, or education. In fact, most microcredit clients actually spend their borrowed money not on a business, but on household expenses, on paying off other debts or on a relatively big-ticket item like a TV or a daughterâ€™s wedding. And while microcredit champions point to microloans as a tool for empowering women, the studies see no impact on gender roles, and find evidence that if any one group benefits more, itâ€™s male entrepreneurs with existing businesses.
â€œMicrocredit is not a transformational panacea that is going to lift people out of poverty,â€� says Dean Karlan, an economics professor at Yale and a co-author of one of the studies. â€œThere might be little pockets here and there of people who are made better off, but the average effect is weak, if not nonexistent.â€�
In other words, Karlan and others argue, thereâ€™s a place for microcredit in the campaign to help the worldâ€™s poor, itâ€™s just not a very big one. And in the global anti-poverty fight - where aid budgets and public attention are both limited, and the potential stakes measured in the trajectories of millions of lives - itâ€™s vitally important to know what actually works, and what is simply hype. Thatâ€™s all the more true with microcredit, where the interest rates are usually far higher than what weâ€™re accustomed to in the developed world, and where thereâ€™s always the risk that poor borrowers, just like wealthier ones, may end up piling up debts they canâ€™t repay.
Microcreditâ€™s defenders say the new findings, while suggestive, arenâ€™t enough to prove anything. Some argue that they actually show that microcredit works, in a qualified way, providing a cheaper alternative to the village moneylender and his ruinous interest rates. Microcreditâ€™s more dramatic effects, they suggest, may take longer to appear than the 1Â½-to-2-year windows the researchers looked at.
Underlying all of this is a debate over the role and the importance of the micro-entrepreneur. Part of the appeal of microcredit lies in its suggestion that the worldâ€™s slums are populated not by helpless victims of global forces, but eager entrepreneurs lacking only a $30 loan to start a business and pull themselves out of poverty. The new research underlines the fact that, inspiring as that story may be, it misrepresents how both individuals and nations climb the economic ladder. Developing nations already have far more petty entrepreneurs than wealthy countries do, mostly because people there have little choice but to start their own business if they want to make any money. What these countries donâ€™t have enough of are the kinds of steady jobs that more reliably raise incomes, and the sort of enterprises, often quite large, that provide them. Truly addressing the poverty of the developing world may require that we think macro rather than micro.
In 1976, Muhammad Yunus was an American-trained economics professor at Bangladeshâ€™s University of Chittagong. A brutal famine two years earlier had made him vividly aware of the precarious lives of the very poor, and he had begun to spend much of his time in Jobra, a village that abutted the university. It was there, he recounts in his autobiography, that he met a woman named Sufiya Begum, a young mother of three who made bamboo stools by hand. Begum was too poor to afford the 5 takas (about 22 cents) per stool that her bamboo cost, so she had to borrow the money from merchants. As part of the deal, she then had to sell the merchants her stools, and they set their prices so that she only cleared two cents a stool.
All she needed to break out of that pernicious cycle, Yunus realized, was 22 cents. Then she could buy her own bamboo and sell her stools on the retail market, using what she earned to buy more bamboo and pocketing the profits. So Yunus decided to lend it to her himself. Working with a student, he drew up a list of 42 Jobra villagers in situations like Begumâ€™s and lent them, out of his own pocket, the money it took to pay off their debts. All in all it came to $27.
It was out of this first experiment that Grameen Bank was born; last month the bank disbursed just under $97 million worth of loans to borrowers all over Bangladesh. Yet, despite the explosive growth, thereâ€™s been little rigorous research on the efficacy of microcredit.
This is not necessarily unusual for development and antipoverty interventions. Such research can be very difficult to do. When the target is something as complex as poverty, even at the level of a small village cause and effect can be maddeningly elusive.
And once an aid organization or philanthropically minded corporation, won over by powerful success stories, commits to an antipoverty tool, whether itâ€™s microcredit or bed nets or building rural schools, they tend to lose interest in funding research that could suggest that it doesnâ€™t work.
Ironically, the very speed with which microcredit has spread has made it hard to do the sort of comparisons that would most clearly measure its impact: in Bangladesh today itâ€™s impossible to find a community where people donâ€™t already have access to microcredit.
The new microcredit studies set out to address these challenges. At least one author of each of the papers is affiliated with MITâ€™s Poverty Action Lab, a research center that brings together economists with a determinedly experimental bent. In particular, its researchers all share a belief in randomized controlled trials - the same sort of test that new drugs have to undergo - as a tool for evaluating poverty alleviation measures.
Karlan and his co-author, Jonathan Zinman, an associate economics professor at Dartmouth, looked at a bank in the Philippines that offered microloans. They created their controlled experiment by altering the algorithm the bank used to evaluate creditworthiness so that some borderline applicants were randomly denied loans while other otherwise identical applicants had loans approved. The researchers then followed up with the borrowers and nonborrowers to see what difference the loan had made.
The answer was not much. Neither household income nor spending rose for those who got microloans. And borrowers who did put the money into their businesses - instead of using it, as many did, for household expenses - actually shrank rather than grew their businesses. Karlan and Zinman suggest that this might be because the business owners were taking advantage of the loan to fire unproductive workers to whom they owed financial favors, and those firings seemed to explain the very small gains in profit Karlan and Zinman found. In addition, the gains accrued only to male entrepreneurs, not the women usually targeted by microcredit programs.
The second study, co-authored by Abhijit Banerjee and Esther Duflo, economics professors at MIT, along with Rachel Glennerster, executive director of the Poverty Action Lab, and an MIT economics doctoral student named Cynthia Kinnan, found a slightly larger impact, though a selective one. Working with a microcredit bank in India that was looking to expand in the city of Hyderabad, the researchers did find some small positive effects. Borrowers who already had a business did see some increase in profit. Households without businesses that the researchers judged more predisposed to start one were found to cut back on spending, suggesting they were saving to augment their loan for a capital business expense like a pushcart or a sewing machine. The researchers also found small but encouraging shifts in household spending across the board, with less money spent on â€œtemptation goodsâ€� like alcohol, tobacco, and gambling.
Still, overall household spending - a key indicator of financial well-being - stayed about the same. And the researchers found no effect on childrenâ€™s health or education levels, and the women in the borrower homes were no more likely to play a role in household decisions than those in the control group.
To Duflo, this only seems disappointing because expectations for microcredit are so high.
â€œI donâ€™t see this as a negative finding,â€� she says. When asked why she thinks microcredit didnâ€™t boost health and education outcomes, she says, â€œI would really ask the question, â€˜Why did we expect all these things to happen?â€™ If you give people access to a financial instrument, itâ€™s like any other instrument. Itâ€™s useful, but itâ€™s not like the miracle drug to end poverty.â€�
For microcreditâ€™s defenders, evidence like this is, at best, an incomplete portrait. In part thatâ€™s because of the relatively short time horizon of the studies.
â€œCertainly if people expected to see increasing incomes right away, in 12 months, that might be too much to expect,â€� says Nachiket Mor, an economist and president of Indiaâ€™s ICICI Foundation for Inclusive Growth.
Other microcredit proponents argue that the fact that microcredit has proliferated as fast as it has, with new clients signing on in droves and old ones coming back repeatedly, means it must be providing a reliable benefit to borrowers, if only by allowing them to pay off higher-interest moneylender loans.
â€œThe fact that [microcredit] has survived commercially, I take that more seriously than any other piece of evidence,â€� says Tyler Cowen, an economics professor at George Mason University who has studied the topic.
Even among some of microcreditâ€™s more passionate proponents, however, there has been a ratcheting down of the rhetoric in recent years. What microcredit may do, they argue, is not transform lives, but simply ameliorate them, giving poor people a more affordable source for credit, and one that, unlike some moneylenders, will not resort to physical violence if someone canâ€™t repay.
â€œThe picture that emerges is not of people climbing out of poverty through microenterprise, but people doing what they need to to get by,â€� says David Roodman, a microcredit expert at the Center for Global Development.
Nonetheless, the microcredit narrative of entrepreneurship and self-advancement is a stirring one, and still tends to dominate the image microcredit institutions present to the world.
Karlan sees the romance of this ideology standing in the way of measures that might more directly aid poor households. In many situations, he argues, the most helpful thing for poor households may not be a loan - especially since microloan interest rates can run from 30 up to 100 percent - but making it easier for them to save, or allowing them to buy some form of formal insurance policy against financial shocks. Research has shown that even people making $2 a day can put some money aside, and in many poor neighborhoods people donâ€™t save as much as they might simply because thereâ€™s no trustworthy place to put their savings.
And if there are interventions that can lift whole neighborhoods - and, ultimately, whole nations - out of poverty, they will probably have to be much broader in scope. Part of the appeal of microcredit is that it avoids the frustrations of anti-poverty campaigns that seek to catalyze economic growth at a large scale. But itâ€™s a basic tenet of economics that scale has its advantages. Forty workers at a textile plant are going to be much more productive than 40 microentrepreneur weavers each working by themselves.
Partly in response to these concerns, Grameen itself has begun to offer a line of loans of up to $10,000 for what might be called mini- rather than microenterprises. And in a more marked shift, a few NGOs have begun to focus on the previously neglected sector of medium-sized businesses in the developing world, looking not just at loans, but buying equity stakes in the companies to provide them with interest-free money. Theyâ€™re bigger investments, and in the end they may have far bigger returns.
Â© Copyright 2009 Globe Newspaper Company.
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