The Afghan School Project

There are certain ideas that are able to dramatically improve people’s quality of life, without the need for large amounts of money. One of these ideas is that of “microcredit lending”, popularized by the efforts of the Grameen Bank and Nobel Prize winning economist Mohammad Yunus.

Microcredit lending is when small loans, usually less than $100, are provided to establish businesses, regardless of whether the borrower has “collateral” (assets used by most banks as insurance for the loan). Once received, the loan is then gradually repaid over a reasonable length of time. This allows borrowers to purchase the items they need in order to start a business, without having to pay unreasonable amounts of interest to money lenders.

Microcredit loans allow people to recover after disasters or illness, and help them to provide a better life for themselves and their families. The majority of people who borrow money from institutions like the Grameen Bank are women, who then use the loan to purchase the supplies they need to produce goods, such as rugs, baskets, furniture, or other products, which they can sell for a profit.

The loans are usually supported by education and social systems, which help ensure the loan’s success. The borrowers work together through solidarity circles, which allow recipients to receive support and motivation during difficult times. When the loans succeed, it is the whole community that benefits. The borrowers are able to reinvest their money into their businesses and their families. They create jobs, share knowledge and give their community hope for the future.

One of the greatest benefits of microcredit lending is that it often costs much less than traditional development assistance, and may have a much greater and longer-lasting impact on the recipients’ quality of life. Mohammad Yunus’ work has changed thousands of lives for the better, and shows how a single good idea has the potential to have a huge impact.

To learn more about the Grameen Foundation and microcredit, please watch their introductory video (“Breaking Through”) here on the Grameen Foundation website.