25 August 2008
Lagos — Founder of Micro Finance Banks (MFBs) and Nobel Laureate, Professor Muhammed Yunus, has said that only the poor should manage microfinance banks.
Yunus told a conference on microfinance on Saturday in Lagos, that microfinance banking should be for the extremely poor, who should have access to loan without collateral.
He warned against raising fund from international donors to finance banks and suggested that local financing was the best option for any economy.
He explained that the condition for accessing loan in Bangladesh was being poor and suggested that women should be made the bedrock of the sub sector because of their sense of sacrifice and incorruptibility.
According to him, microfinance banks should not compete with conventional banks since their objectives differ and the commercial banks give out loans based on collateral while microfinance banks give out loans based on trust.
He said that Grameen Bank, which he founded in Bangladesh, had about 2,500 branches with 27,000 staff and that 80 per cent of the borrowers fulfilled the conditions given to them within two months.
The remaining 20 per cent, he said, defaulted and that the bank was able to recoup 99 per cent of the loan in 18 months.
He disclosed that the bank had 4,500 borrowers, representing 45 per cent of the people that have crossed the poverty line.
The development, he said, had reduced poverty level in Bangladesh and improved the standard of living because the borrowers had access to fund the education of their wards.
"Today we have over 7.5 million beneficiaries of microfinance bank loans in Bangladesh.
"The advantage of the loans given to these poor was that majority of the wards of the beneficiaries are now graduates who run their own businesses without looking for job from the government," he said.
With the belief that credit is a fundamental human right, Yunus established the Grameen Bank in Bangladesh in I983 with the objective of helping the poor people to escape from poverty by providing loans on terms suitable to them.
In his remarks, the Minister of State for Finance, Mr Remi Babalola, said that the poverty level in the country had declined from 65.6 per cent in 1996 to 54.4 last year .
Babalola noted that the goal of reducing poverty by 50 per cent might be hampered unless a combination of strategies were adopted and pursued.
"The situation posses a big challenge to Nigeria in meeting the Millennium Development Goals and the desire to join the league of the 20 largest economies of the world by 2020," he said.
Be the first to Write a Comment!
Copyright © 2008 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
