Environmental Engineering Reference
In-Depth Information
Global Outlook: Microloans for the Poor
Most of the world's
poor desperately
want to earn more,
become more self-
reliant, and have a
better life. But they
have no credit record. Also, they
have few assets to use for collateral
to secure a loan to buy seeds and fer-
tilizer for farming or tools and mate-
rials for a small business.
During the last 28 years, an in-
novation called
microlending,
or
mi-
crofinance,
has helped deal with
this problem. For example, since
economist Muhammad Yunus
started it in 1976, the Grameen
(Village) Bank in Bangladesh has
provided more than $4 billion in
microloans (ranging from $50 to
$500) to several million mostly
poor, rural, and landless women in
40,000 villages. About 94% of the
loans go to women who start their
own small businesses as seam-
stresses, weavers, bookbinders, or
vendors.
To stimulate repayment and
provide support, the Grameen Bank
organizes microborrowers into five-
member “solidarity” groups. If
one member of the group misses a
weekly payment or defaults on the
loan, the other members of the
group must make the payments.
The Grameen Bank's experience
has shown that microlending is
both successful and profitable. For
example, fewer than 3% of micro-
loan repayments to the Grameen
Bank are late, and the repayment
rate on its loans is an astounding
90-95%.
About half of Grameen's borrow-
ers move above the poverty line
within five years, and domestic vio-
lence, divorce, and birth rates are
lower among borrowers. Microloans
by the Grameen Bank are being
used to develop day-care centers,
health clinics, reforestation projects,
drinking-water supply projects,
literacy programs, and group insur-
ance programs. Microloans are also
being used to bring small-scale solar
and wind power systems to rural
villages.
Grameen's model has inspired
the development of microcredit
projects in more than 58 countries
that have reached 36 million people
(including dependents), and the
number is growing rapidly.
SOLUTIONS
Critical Thinking
Why do you think international de-
velopment and lending agencies
such as the World Bank and the
International Monetary Fund have
largely ignored microloans? How
would you change this situation?
Economics
Environmentally
Sustainable
Economy
(Eco-Economy)
Resource Use
and Pollution
Reward (subsidize) earth-
sustaining behavior
Reduce resource use
and waste by refusing,
reducing, reusing, and
recycling
Penalize (tax and do not
subsidize) earth-
degrading behavior
Improve energy
efficiency
Shift taxes from wages
and profits to pollution and
waste
Rely more on
renewable solar and
geothermal energy
Use full-cost pricing
Shift from a carbon-
based (fossil fuel)
economy to a
renewable fuel-based
economy
Sell more services instead
of more things
Do not deplete or degrade
natural capital
Live off income from
natural capital
Ecology and
Population
Reduce poverty
Use environmental
indicators to measure
progress
Mimic nature
Preserve biodiversity
Certify sustainable
practices and products
Repair ecological
damage
Figure 18-14
Solutions:
principles for
shifting to more environmentally sustain-
able economies or eco-economies during
this century.
Critical thinking: which five of
these solutions do you believe are the most
important?
Use eco-labels on
products
Stabilize population by
reducing fertility
