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Article 22: Right to social security and realisation of economic, social and cultural rights

Case Study: BANGLADESH'S MICRO-LOANS

The Grameen Bank of Bangladesh is a micro-credit institution that lends small amounts of money to poor people who are ignored by the conventional banking system due to their lack of collateral.
The Bank has helped 7,000 micro-lenders with 25 million clients worldwide.
Its method of small loans has advanced the economic rights of women in particular and has contributed to national economic growth.
Industrialised and developing countries have also adopted the Grameen Bank model to tackle poverty.

Background

Across the globe, women lack control over material resources and are generally less able than men to realise their full economic rights. The Grameen Bank in Bangladesh was set up to empower impoverished women.

The Grameen (village) Bank was developed by Professor Mohammed Yunus in 1976, when the country was stricken with famine. Using $26 from his own pocket, he lent cash to poor village women so that they could invest in the livestock and materials they needed to make money of their own. He received sponsorship from the central bank of Bangladesh as well as commercial banks, and in 1983 the Grameen Bank became an independent entity.

Reversing conventional banking practice, the Grameen Bank lends to the poorest in society. The bank rests on the principle that those who are too poor to get bank loans are actually good credit bets.

Women, who make up 94% of its customers, use loans from the bank to invest in business ventures like matt-weaving and small-scale agriculture.

The Grameen Bank now lends $1.3 billion to 2.3 million borrowers, most of them women. With 1,128 branches, the $2 billion operation serves 38,951 villages, covering more than half of the total villages in Bangladesh. The average loan is $160.

In spite of a national illiteracy rate of 62% (78% for women), economic activity in rural Bangladesh has seen a marked increase since the launch of the bank.

In 1998, Dr Yunus was awarded India's Indira Gandhi peace prize for his efforts to tackle poverty.

A Worldwide Trend

The Banco do Nordeste in Brazil and the Dagang Bali Bank in Indonesia have copied the Grameen Bank model.

The United States and the United Kingdom have also welcomed micro-lending institutions for their own impoverished populations.

The People's Fund in the US has been granting micro-loans to poor women and ethnic minorities since 1995.

There is a significant micro-credit infrastructure in Britain.

The British Bankers' Association said there are 62 local schemes lending 拢5,000 or less to help the 'financially excluded' begin self-employment or start a business. The British government has also promoted the expansion of credit unions.

The UN has encouraged Western banks to lend more money to micro-lending institutions, and the World Bank is a major supporter of the Grameen Bank.

Problems

There are still many issues that constrain the aims of the Grameen Bank.

Critics have charged that micro-lending institutions rarely provide loans to those who most need them and that the interest charged in micro-lending institutions can be prohibitive, as it is 30% to 50% higher than commercial banks.

They argue that recipients often cannot make the most out of the loan they are given because they lack basic business skills. Moreover, the small sum they receive only enables people to trade goods, not become independent producers.

Although women are the primary loan recipients, often men are the key beneficiaries, as many husbands assert control over the money once their wives have obtained it.

In 2002, there were allegations in Western newspapers that the Grameen Bank had suffered an 85% fall in profits between 1993 and 2000.

Dr Yunus, however, claims that the Grameen Bank is in its 'strongest position ever.'

He noted that the bank is currently helping to finance renewable energy projects in 30 rural communities in Bangladesh. It is providing loans so that people can purchase solar panels and phone equipment to encourage Internet use.

The Grameen model does not offer a global solution to poverty but by helping to empower some of the world's poor in the short term, it paves the way for more long-term poverty eradication programmes.

	大象传媒 Sites: External Sites: The 大象传媒 is not responsible for the content of external internet sites		Article 22: Right to social security and realisation of economic, social and cultural rights Read this article in full Case Study: BANGLADESH'S MICRO-LOANS The Grameen Bank of Bangladesh is a micro-credit institution that lends small amounts of money to poor people who are ignored by the conventional banking system due to their lack of collateral. The Bank has helped 7,000 micro-lenders with 25 million clients worldwide. Its method of small loans has advanced the economic rights of women in particular and has contributed to national economic growth. Industrialised and developing countries have also adopted the Grameen Bank model to tackle poverty. Background Across the globe, women lack control over material resources and are generally less able than men to realise their full economic rights. The Grameen Bank in Bangladesh was set up to empower impoverished women. The Grameen (village) Bank was developed by Professor Mohammed Yunus in 1976, when the country was stricken with famine. Using $26 from his own pocket, he lent cash to poor village women so that they could invest in the livestock and materials they needed to make money of their own. He received sponsorship from the central bank of Bangladesh as well as commercial banks, and in 1983 the Grameen Bank became an independent entity. Reversing conventional banking practice, the Grameen Bank lends to the poorest in society. The bank rests on the principle that those who are too poor to get bank loans are actually good credit bets. Women, who make up 94% of its customers, use loans from the bank to invest in business ventures like matt-weaving and small-scale agriculture. The Grameen Bank now lends $1.3 billion to 2.3 million borrowers, most of them women. With 1,128 branches, the $2 billion operation serves 38,951 villages, covering more than half of the total villages in Bangladesh. The average loan is $160. In spite of a national illiteracy rate of 62% (78% for women), economic activity in rural Bangladesh has seen a marked increase since the launch of the bank. In 1998, Dr Yunus was awarded India's Indira Gandhi peace prize for his efforts to tackle poverty. A Worldwide Trend The Banco do Nordeste in Brazil and the Dagang Bali Bank in Indonesia have copied the Grameen Bank model. The United States and the United Kingdom have also welcomed micro-lending institutions for their own impoverished populations. The People's Fund in the US has been granting micro-loans to poor women and ethnic minorities since 1995. There is a significant micro-credit infrastructure in Britain. The British Bankers' Association said there are 62 local schemes lending 拢5,000 or less to help the 'financially excluded' begin self-employment or start a business. The British government has also promoted the expansion of credit unions. The UN has encouraged Western banks to lend more money to micro-lending institutions, and the World Bank is a major supporter of the Grameen Bank. Problems There are still many issues that constrain the aims of the Grameen Bank. Critics have charged that micro-lending institutions rarely provide loans to those who most need them and that the interest charged in micro-lending institutions can be prohibitive, as it is 30% to 50% higher than commercial banks. They argue that recipients often cannot make the most out of the loan they are given because they lack basic business skills. Moreover, the small sum they receive only enables people to trade goods, not become independent producers. Although women are the primary loan recipients, often men are the key beneficiaries, as many husbands assert control over the money once their wives have obtained it. In 2002, there were allegations in Western newspapers that the Grameen Bank had suffered an 85% fall in profits between 1993 and 2000. Dr Yunus, however, claims that the Grameen Bank is in its 'strongest position ever.' He noted that the bank is currently helping to finance renewable energy projects in 30 rural communities in Bangladesh. It is providing loans so that people can purchase solar panels and phone equipment to encourage Internet use. The Grameen model does not offer a global solution to poverty but by helping to empower some of the world's poor in the short term, it paves the way for more long-term poverty eradication programmes.