Yunus Deserves the Nobel

And We a Better Way to Cope
It is not possible for anyone who drives past the IIT flyover to miss her. Maya is a frail yet pretty twelve year old girl with dishevelled hair and tattered attire, who along with her family (which include infants), sells flowers, books and magazines, and also, the blessings of Lord Shani himself as a Saturday special. Maya is my regular supplier of Tehelka. During my brief interactions with her I learnt that her family is part of a large group that migrated from Bhilwara in Rajasthan to Delhi. They were small farmers and three consecutive years of drought, the burden of moneylender loans and lack of alternate livelihood opportunities forced them to migrate to Delhi. In their struggle for survival, they have not taken to begging or any other unseemly means to meet their basic requirements. At least not yet; but how long can they remain untouched by the ruthless realities of urban poverty?
I watch the radiance of Maya’s smiling face as she runs towards my car, even as the news reader announces Muhammad Yunus’ Nobel conquest, a question crosses my mind—will this family of such fine souls have left their village if they had access to micro credit? Quite possibly, yes. Micro credit can turn around destinies, a fact proven by countless women across the developing world.
The micro-credit movement started by Yunus back in 1974 in Chittagong when he lent $27 to 42 bamboo weavers. It now encompasses fifty million households deprived of essential financial services.
Numerous mechanisms such as dedicated micro-credit institutions like the Grameen Bank; Commercial Bank; Self Help Groups [SHGs]; SHG Federations; credit unions; co-operatives; non-banking financial companies; SHGs and State agencies are part of this movement.
Examples are aplenty in villages and cities across the globe where poor women, farmers, vendors, artisans, livestock rearers and countless others have transformed their lives with the help of loans ranging from $10 to $200. In India alone there are 30 million poor women who are members of two million SHGs who have mobilized over Rs. 80 billion as bank loans and have set themselves on the path to economic empowerment.
Micro-credit practitioners everywhere have followed one fundamental principle: belief in the native wisdom and enterprise of poor women.
Lending is based on trust and the collective word of the women’s group. Microloans all over the world have an average of 97 per cent recovery rate. It has attracted major international banks to pitch in with investments. In India, all banks have substantial exposure in the micro-credit business. The
end-user ultimately gets the loan at interest rates hovering around 18 to 24 per cent. Seems high, but the moneylender charges anything from 60 to 120 per cent. Micro-credit combines the ease of access and flexibility of the moneylender, with the efficiency and the financial muscle of mainstream institutions.
The Nobel Prize is greatly deserved. It is recognition of the sensitive heart of Yunus who perceived the potential in the poor women who were historically ticked off by the patriarchal institutions as incapable of any enterprise and only worthy of charity. It is a tribute to the genius of the poor women themselves, who whether in Sub-Saharan Africa or South East Asia have proved that the poor can be partners in progress rather than a drag on the economy; we just need to have sensitive policies and institutions.
It is not yet time for the proponents of micro-credit to rest on their laurels. Micro-credit is just one of a variety of financial services that the poor people require for a secure life. Savings, insurance, instruments for old-age security, and money transfers are services that have not achieved the phenomenal growth that micro-credit has. We need comprehensive micro-finance and not just micro-credit. Again micro-credit assumes that important support factors for livelihood promotion such as infrastructure, basic services, access to knowledge, technology, and market risks, and credit is the only missing link. But in majority of our rural hinterland, this is not the case. In such areas as Bhilwara there is a need to create irrigation facilities, improve school and health systems, enhance soil productivity, create alternate livelihood opportunities and reduce vulnerability of small and marginal farmers, which require State intervention. In the absence of such basic investments, could micro-credit alone have stopped Maya and family from escaping to Delhi?
Quite possibly, no.
Narendranath
The author is Programme Director, Pradhan.