Word: microcredit
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...there's surprisingly little evidence that promise can be met. No long-term study has measured how often borrowers graduate to the middle class. "Is microcredit a cure for entrenched poverty?" asks Northeastern University professor Rashmi Dyal-Chand, who focuses on microfinance. "There aren't the statistics to prove that...
Even without such hard data, microcredit has captured the imagination of philanthropists. The Bill and Melinda Gates Foundation, with an endowment of $33 billion, has pledged as much as 25% of its total spending to its "global development" program, including microfinance. Such programs account for only a small slice of the nearly $250 billion Americans gave to charity in 2006, but they're becoming more popular, partly because microfinance has a reputation for transparency and efficiency...
Some development experts warn that microcredit programs do little to alleviate overall poverty, even in countries like Bangladesh, where they are well established. About 45% of the country's population lives below the poverty line, down just 2 points in the past two decades. In southeastern Bangladesh, recipients often use microlending to pay off old debts or buy consumer goods, not to generate income, according to a 2004 study by the aid group CARE Bangladesh. When it came time to pay up, the study found, borrowers were often forced to go into further debt. "If these new philanthropists did their...
...Bautista is back - working for his uncle in a new carpentry business financed by a microcredit bank that the wives in Santa Cruz founded recently with all that remittance cash. Bautista made $6 an hour picking strawberries in Arizona, more than many laborers in Mexico earn in a day. But he's hopeful that he can comfortably support his wife and new baby by crafting doors, cabinets and coffins, products that people in Santa Cruz and surrounding villages once had to travel miles to buy. "I didn't want to start a family al otro lado," Bautista says, as wood...
...Ndavi, whose capitalization today is nearly $1 million, offers loan values at a level beyond typical microcredit operations, which are sometimes criticized as the purview of First World do-gooders helping Third World women market tribal shawls. The handful of institutions like it are the first real banking system most rural Mexicans have ever known. In developed countries there are usually fewer than 2,000 people per bank branch. In Oaxaca the number is 38,000, according to AMUCSS. Mexico's big banks have failed to help. The few large banks that make up Mexico's financial oligopoly have...