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The following article appeared in Left Business Observer #74, October 1996. It retains its copyright and may not be reprinted or redistributed in any form - print, electronic, facsimile, anything - without the permission of LBO.

Microcredit, microresults

by Gina Neff

Gina Neff is an economic journalist in New York City. Her piece on foundations is on this site. So is her follow-up report on the microcredit summit.

"If we can come up with a system which allows everybody access to credit while ensuring excellent repayment - I can give you a guarantee that poverty will not last long," proclaims Muhammad Yunus, guru to market partisans seeking "new solutions" to poverty. As founder of the widely acclaimed Grameen Bank, the Bangladesh bank that lends to poor rural women, Yunus has found a rapt audience in international development circles with his approach to poverty - one that doesn't involve old-fashioned ideas of expensive government programs, tiresome training, or clunky infrastructure. Instead, Yunus, a Vanderbilt-educated economist, is calling on the goodness of "social-consciousness-driven entrepreneurs" and pushing "home-based production by the self-employed masses." This translates as moving the responsibility for antipoverty programs to poor people themselves, using borrowed money - and not only in the Third World, but here in the U.S. as well.

In the Grameen model, "landless women in Bangladesh, the poorest of the poor" are miraculously transformed into businesswomen - with enterprises so small they are tagged with the prefix "micro." Rather than job creation, education, or training, the Yunus solution focuses on jump-starting self-employment, providing the capital for poor women to use their innate "survival skills" to pull themselves out of poverty. Instead of collateral, these "microloans" are secured by the honor and credit lines of a peer group: If one woman defaults, no one in her lending circle will receive another loan. This m