Solving world poverty
17 October 2007Step 1. Start with $27. Give it to 42 people in an impoverished country as a loan for income generating activities. They will use this money to do things like raise livestock, buy tools and equipment for trade, or to buy initial supplies to have them start a business.
Step 2. After 100% of them pay you back, you’ve proven the program is successful because you’ve built a system of microcredit based on trust. Now build a process for managing this so that it’s profitable and easiliy replicated. Now open a bank that specializes in doing this.
Step 3. Repeat step 1, 5.3 million times.
For those that don’t know already, I’m talking about Muhammad Yunus, the man who pioneered the idea of microcredit in 1976, by doing the above. The Grameen Bank has since loaned out over 5 billion dollars with a typical loan size of $50-500 and a 99% payback rate.
I was fortunate enough to hear him speak today at work, and it was incredibly inspiring. I understand why he was awarded last year’s Nobel Peace Prize.
Why is it that the richer you are, the easier it is to get money, and the poorer you are, the harder it is to get money?
I heard him talk about a time in our future where he wants to see "poverty museums" — where children don’t even know what it is and it has to be shown as a relic of our past. We should eliminate poverty by focusing on helping the poor up instead of continuing to establish systems where the rich get richer.
The talk also reinforced my beliefs of trust, he says that he has such a high payback rate because borrowers are never punished for non repayment, but the bank staff actively works with people that are having trouble to solve their problems and get them back on track. Those that know me well know that I trust first, much more than what is common in America today.
It was a life changing event for me, something that I will always remember. I encourage you to read more about Muhammad Yunus, microcredit, and the Grameen Bank.
2 Responses to ' Solving world poverty '
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on October 25th, 2007 at 10:26 am
Hey Nick,
Yeah, this stuff is pretty cool and there are sites where you can actually participate, including one just opened by eBay:
https://www.microplace.com/
on October 25th, 2007 at 10:27 am
This one too:
http://www.kiva.org/