Is the End of Poverty Actually in Sight?: Microfinance op-ed

An op-ed by Eliot Daley about recent successes in microfinance...
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Is the End of Poverty Actually in Sight?

“Whatever banks did, I did the opposite.” With that contrarian resolve, a young professor of economics named Muhammad Yunus launched the world’s first microcredit program in Bangladesh some thirty years ago, triggering a global cascade of micro-prosperity that earned him the Nobel Prize for Peace two years ago. Unlike the big banks, he gave unsecured loans to the poorest women in the most remote villages, eschewing collateral in favor of trust in their resourcefulness and determination and honor. With their tiny fistfuls of capital, these enterprising women purchased what they needed to become self-employed: enough rattan to weave a chair to sell, or a sewing machine to set up shop as a seamstress, or, more recently, a cell phone that created a one-person telephone company selling individual calls to others.

Also the opposite of today’s miserably failed big banks, microcredit worked—spectacularly well. Recently Dr. Yunus and Sam Daley-Harris, founder of the Microcredit Summit Campaign which supports the global spread of microcredit programs, announced that in 2007 an astounding 100,000,000 borrowers held microloans. These loans enabled them to start on a path toward becoming financially self-sufficient and in the process start lifting themselves and their families (and neighbors they employ) above the poverty level. Taken together, this means that half a billion people are on track to escaping the relentless, heartless undertow that forever has sucked them and their ancestors down into daily misery and pinned them there.

The wisdom of Dr. Yunus’ mantra seems all the more prescient and wise given the troubling behavior of big banks today. All they seem to be doing in the midst of a nearly unprecedented crisis is sucking up billions in public funds and hoarding them for a rainy day, as if the monsoon drowning companies and jobs all around them doesn’t suggest that bad weather is already upon us. While they perpetuate the infamous “credit crunch”, the purveyors of microcredit are busily handing out loans every day to nurture millions and millions and millions of small-business startups all around the globe. More than one hundred million in 2007. Imagine that. And the new goal of the Microcredit Summit Campaign is 175,000,000 borrowers by 2015. Incredible though it seems, we may actually be witnessing the beginning of the end of global poverty.

With such a conspicuous and undeniable success sparking new prosperity and happiness in locales all across the globe, maybe it’s time for the rest of us to start doing the opposite of what we ourselves have been doing. For example:

We have believed that poverty is inevitable. (There’s even offhanded Biblical support for such a notion.) But we can change our minds about that. That’s the first opposite-course to adopt: stop accepting poverty, and start believing that we ourselves can be part of ending it forever.

We have believed (implicitly, at least) that poverty is the fault of the poor. The opposite: Recognize that the most resourceful, entrepreneurial people in the world are those who must scratch out their survival every day in the bleakest of circumstances. But their poverty, we now know, is caused not by them but by the inequitable distribution of capital. Microloans fuel their fierce will to thrive, and the results are stunning.

We have paid scant attention to how U.S foreign aid is spent or misspent. That’s the opposite of what is needed: Tell your representative in Congress that their colleagues who have pledged to reform U.S. foreign assistance should learn from the lessons of the Microcredit Summit Campaign: 1) focus on the poorest, 2) set targets to achieve bold and measurable outcomes such as the Millennium Development Goals and those of the Microcredit Summit, and 3) monitor progress to ensure we achieve results.

Taking that action will honor our own best impulses in working to drive poverty from the face of the earth in our lifetimes. It would also get us to another of Muhammad Yunus’ visions: putting poverty in the museums, where it belongs.

Eliot Daley is a writer based in Princeton, New Jersey, with a longtime interest in the microfinance movement. His writings are posted on www.eliotdaley.com. He welcomes reader responses at eliot@eliotdaley.com.