Turning Bangladesh's Beggars Into Businessmen
Little Banks, Little Loans, Big Results
This news story comes from oneworld.net
One of Bangladesh's leading micro-credit groups, Grameen Bank, has launched an initiative to lend money to beggars at easy repayment rates, to wean them off the streets and into small scale ventures
The bank has already involved 3,000 destitute people in the scheme on a trial basis. It takes no collateral, does not pressure the borrowers to repay the money, and is even ready to forgo the amount for some who are unable to use it profitably.
The bank intends to take the micro-credit program to 10,000 beggars by the end of this year and keep expanding across Bangladesh, where around half the population lives below the poverty line.
One of those whose lives the bank has touched is wheelchair bound Kohinoor Mian, 60. Reminisces Mian, "I was a professional cook a year ago. But I became paralyzed after an accident. I was left with nothing to do but beg."
Mian would earn US $3-$4 a day through seeking alms and he had to share the money with a boy who pushed his wheelchair. "I always told myself that if I got some money, I would set up a dairy farm and give up begging," he recalls.
His dream came true when Grameen Bank lent Mian $17. He spent $12 to buy a goat and two chickens. Mian, a resident of Pathantola village at Dhamrai district near Dhaka city, now sells milk and eggs.
In the same village, physically challenged Khodeza, 35, retails flour thanks to the start-up money given by the bank.
As for Ismail, 45, of Nagarkunda village in Savar on the outskirts of Dhaka, the loan helped him start a business of selling pickles at busy road crossings and in front of schools. He makes a profit of $1-$2 daily.
Tuberculosis victim Ismail repays the loan through weekly payments of 30 cents. After Ismail began his business, his wife Jamila also stopped seeking alms. He is thrilled at not being a beggar, whom he says "people always look down on".
Most of the other former beggars whom Grameen Bank helped now raise poultry or run some other small-scale business.
Remarks Muhammad Yunus, managing director of the Grameen Bank, "The main objective of the program is to bring sunshine to the lives of people on the fringes of society by helping them erase the curse of begging."
He points out, "This is the first time a bank is standing behind beggars. The scheme is different from any other micro-credit or credit program. There is no collateral or compulsion for loan repayment."
The bank gives up to $34 in interest-free loans to beggars. These people mainly sell vegetables, eggs, bananas, chocolates and knick knacks. Unlike in other initiatives, a beggar does not have to belong to a group to avail of the scheme.
In some cases, the bank makes an arrangement with a wholesale shop under which the shopkeeper gives a borrower up to $34 in goods, for which the bank gives a guarantee to the shopkeeper.
Remarks Grameen Bank general manager Dipal Chandra Barua, "We are very hopeful about the success of the program as we have not received any complaints of fraudulent practices or embezzlement by beggars."
Agrees Finance Minister M. Saifur Rahman. "I am fully convinced that the poor never misappropriate loans. They have high moral standards. But rich people who take loans do not hesitate to misappropriate hundreds of millions of dollars."
Ironically, rich borrowers are the problem for impoverished Bangladesh. Loan defaults at commercial banks amount to a staggering $3.35 billion. Many private sector lenders tend to misappropriate money. The government is also a defaulter.
The Grameen Bank was launched in 1978. Its innovative approach to micro-credit brought Bangladesh international recognition in the field. Micro-credit programs have women as the focus group and 95 percent of the borrowers return their loans.
About 68 million poor families around the world today benefit from microcredit and the target is to reach 100 million by 2005. Of the world's six billion people, 2.8 billion live on less than $2 a day and 1.2 billion on less than $1 a day.
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