Microfinance - a path to independence

In our world, there are still people working in slavery-like conditions, with too low wages and very little free time. Microfinance means that a person can borrow a small amount, a micro-credit, to finance the start-up of a small business or an education. These micro-loans are interest free, repayable according to individual payment plans at a slow pace, as entries allow.
Muhammad Yunus
Muhammad Yunus was born on June 28, 1940 in Chittagong. He is a banker and economist from Bangladesh, Grameen Bank founder and inventor of the microcredit concept. Along with the bank, Yunus was awarded the Nobel Peace Prize 2006. Muhammad Yunus lends money to the poor to finance small businesses, so they are able to support themselves and their families economically. He is well known for organizing groups of borrowers in Bangladesh, which has joint liability. These systems are successful projects that create security and stability in the groups.

Microcredit compared with traditional aid
Our experience is that the concept of micro-credit is a very effective means to help eradicate poverty in developing countries. Traditional aid is certainly useful as a first aid, but in the long run, often results in passivity and indifference. We think that  nobody wants to be dependent on anybody else. Therefore, our strive is to make people independent. Healthy people, with the ability to work, prefer to provide for themselves and their families. Independence leads to confidence and self esteem, which is the basis for a well-being. Our opinion is that the main goal in the ”do-good-business” should be to phase out assistance as soon as possible. When the need for help does not exist, the objective has been met.

Transparency
The oldest form of aid, financial support from one government to another, increases the risk of corruption. Many times the money ends up in the wrong pockets, often because of lack of transparency. When there is visible information and open books, the money is more likely to find the right way. 

Pay-back
In microfinance, the borrowed money shall be returned, which means that the borrower has to be active and take responsibility for their situation. 

Halving world poverty by 2015 is one of the United Nations’ Millennium Goals. Micro-credits for self-help is an efficient instrument to advance this goal.

If you would like to find out more about microfinance, please follow the link below http://www.kiva.org/about/microfinance