- Title: KENYA: Microcredit guru says Africa’s banking laws shut out poor
- Date: 6th April 2010
- Summary: NAIROBI, KENYA (APRIL 6, 2010) (REUTERS) (SOUNDBITE) (English) MUHAMMAD YUNUS, 2006 NOBEL PEACE PRIZE WINNER AND ECONOMIST, SAYING: "While you are in a crisis this is the best opportunity to re-design and re-design a way that we don't fall into the trap again and there the conceptualization of the new architecture of economy has to be done right now. So, instead of havin
- Embargoed: 21st April 2010 13:00
- Keywords:
- Location: Kenya
- Country: Kenya
- Topics: Finance
- Reuters ID: LVAPTUAZ1UOQD7OZQXO9XKDYDG4
- Story Text: Absence of microcredit laws in many African countries deny millions of the continent's poor access to loans, a Nobel Peace Prize winner known for inspiring a global microfinance movement, said on Tuesday (April 6).
Muhammad Yunus, who won the Nobel Peace Prize in 2006 for championing microcredit - tiny loans to the poor, initially in Bangladesh - is now pioneering an idea he calls "social business" as a way to fight poverty around the world.
"To create a new kind of bank which works with the poor people, with the poor woman, you need new legislation and in most countries that legislation has not taken place. So, we have left the microcredit scenario to the NGOs, and NGOs are doing that. So, NGOs don't have capacity to expand because they don't have the money. If I'm a bank, I can take money and lend it to the people," Yunus said, in an interview with Reuters.
Yunus started his movement 30 years ago with a 27 U.S. Dollar loan to women in Chittagong, Bangladesh.
It has since mushroomed and delivered millions of tiny loans to poor people who do not have access to mainstream banking.
Yunus is attending an annual microcredit summit in Kenya, where Africa's microfinance institutions hope to emulate the success and growth of the industry in Asia, which hosts more than 80 percent of the world's 150 million microfinance beneficiaries.
Yunus said African women are key to microlending on the continent.
"African women are very active compared to any women anywhere in the world. If you compare the African women with the Asian women or Bangladeshi women, there is a world of difference," Yunus said.
"If someone has invented microcredit in the level to that and looking for a country or region where it has the best chances of success, they would have chosen Africa because it works so well with women in Africa," he added.
Yunus warned against continued channelling of aid through governments saying it encouraged bureaucracy, corruption and inefficiency.
He said the global financial crisis showed that the world needed to embrace social business---business not for profit but to solve social problems.
"Instead of having one business world where there is only one kind of business to make money and makes us all look through the glasses of profit maximisation and see the world one way, I say let us have two business worlds; profit maximising business and also social business, business to change the world," Yunus said.
Africa's poor often cannot get credit from commercial banks because the amounts are too small or they do not have collateral to offer.
Kenya's microfinance trust, Jamii Bora or "better society", is the exception to the rule, offering loans for business, school fees, health, housing and various other needs for the poor. It was started in Nairobi's slums in 1999 and has loaned millions of dollars, most of which have been repaid.
Since winning the Nobel Peace Prize in 2006 jointly with Grameen Bank, the microcredit organization he founded, he has committed his portion of the 1 million U.S. Dollar prize money to developing social businesses and is trying to change the way the world views helping the poor. - Copyright Holder: REUTERS
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