Micro-credit Brings Macro-benefits

In an era of heightened concern about global security, we would do well to look at one of the root causes of instability in developing nations. The lack of access to opportunity and capital among the world’s poor often gives rise to hopelessness and despair, which foments social unrest. True peace and security will not be possible as long as 2 of every 10 people on the planet are unable to meet basic human needs. America is the world’s leading nation because we have historically been willing to take on the hardest jobs. Fighting world poverty is undoubtedly a daunting task, but it is very much in our interest, and it can be done. Eliminating poverty is not quixotic; it is the possible, not the impossible, dream.

A powerful instrument for realizing that dream is micro-credit — small loans to help start a simple business. These are a proven tool for transforming suffering into hope, one individual at a time. As U.N. Secretary- General Kofi Annan has urged, “We must look seriously at the pivotal role that sustainable micro-finance can play and is playing in” helping the poorest of the poor. Micro-credit unleashes the entrepreneurial spirit. Simply to survive, the poor rely on their own ingenuity. When given an opportunity to succeed, they do it with a determination to break the vicious cycle of misery that was their inheritance. With loans as modest as $50, women in Bangladesh have started small businesses such as dressmaking, weaving or farming that help lift them and their families out of poverty.

Coincidentally, the poor have proved to be an excellent credit risk. Over the past 2 1/2 decades, the Grameen Bank of Bangladesh has made more than $4 billion in loans averaging less than $200, and has a loan repayment rate greater than 98 percent. In addition to the life-changing impact on individuals and families, micro-credit has macro-economic benefits. When combined with information and communication technologies, micro-credit can unleash new opportunities for the world’s poorest entrepreneurs and thereby revitalize the village economies they serve.

Grameen Bank founder Muhammad Yunus launched one of the largest telecommunications companies in South Asia with more than a million subscribers. What is most remarkable is that 50,000 of the subscribers are Grameen Bank borrowers who have taken a micro-loan and gone into business providing telephone services on a per-minute basis to customers in rural villages. A second project is now underway in Uganda in a partnership between Grameen Foundation USA and MTN Uganda to provide opportunities for the impoverished to become phone operators. The goal is to deploy 5,000 village phones over the next five years. Based on the success of Grameen Bank, the Grameen Foundation USA in Washington was established to accelerate the growth of programs around the world that are working to replicate it.

Grameen Foundation USA has partnered with more than 45 micro-credit institutions in nearly 20 countries to help them overcome the constraints to growth. Like any smart investor, this organization seeks out opportunities with the highest potential to benefit the greatest number of people. In the next five years, it hopes to reach 5 million new borrowers. The return on these investments reaches far beyond the financial benefits; we are also rewarded with social progress and a safer, more secure world. By partnering with organizations like Grameen Foundation USA, philanthropists, social investors and governments can support the global growth of micro- finance. Yunus has a compelling vision. He calls on us all to bring opportunity and technology to the destitute so we can “put poverty in the museum where it belongs.” It is hard to conceive of a worthier goal or a more important one for the future of us all.

Madeleine K. Albright was the U.S. secretary of state from 1997 to 2001. She previously served as the U.S. permanent representative to the United Nations. John Doerr is a venture capitalist with the Bay Area firm of Kleiner Perkins Caufield & Byers. He has 23 years of experience investing in technology companies.


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