Extending a helping hand

Cast thy bread upon the waters: for thou shalt find it after many days. Ecclesiastes 11:1

Not many people from this part of the world have ever heard of Mohammed Younus, but this man has managed to make a world of difference in the lives of otherwise impoverished third-world citizens. Dr. Younus, a Bangladeshi banker, is the man who, with his financial institution, the Grameen Bank, took the concept of the microloan to new heights, and for his efforts, he was awarded the Nobel Peace Prize in 2006.

Microloans and microcredit are terms that go hand-in-hand. Microcredit is the concept that allows for the microloan, and a microloan is made to entrepreneurs or to others, usually living in developing countries, whose standard of living are low enough so that they do not qualify for consideration by normal banking regulations. The extension of credit to these people, however, will allow them to start up small businesses, and allow them to make enough money to repay the loan, and to establish a higher standard of living for themselves.

As a concept, microloans and microcredit go back to the Marshall Plan, whose basic aim was to rebuild Europe following World War Two, but this concept came into its own starting in the 1970’s. According to the Wikipedia entry for Microloan, one of the first one in this decade went to a Columbian by the name of Carlos Moreno. It was given by an organization called Opportunity International, which was founded Al Whittaker, one-time president of Bristol Myers, and was used by its recipient to expand his spice and tea business. Later Whittaker combined his efforts with those of Australian David Bussau, and Opportunity, International was born. Loans from this organization range from amounts as low as $25.00 on up to $500.00, and are a positive boon to those who are blessed by them.

Of course, the whole concept of loaning money to anyone under any circumstances is successful only if the money is repaid. So, does this idea of loaning money to people who do not qualify for a traditional loan, work? Again, according to Wikipedia, and citing loans given by another organization, ACCION, International during a four-year period from its inception in 1973, in the country of Brazil, of 885 loans made, over 90% were repaid. And how much of an impact did these loans make in the communities where they were made? These loans either stabilized, or created 1386 new jobs. The success of these first loans allow ACCION to switch from building infrastructure to creating opportunities for poor people, not only in Brazil, but throughout Central and South America, Africa, and even in the United States.

Back to Dr. Younus and the Grameen Bank, whose efforts in microcredit began at about the same time as ACCION and Opportunities, International. Dr. Younus made his first loan of $27.00 in 1974 from his own pocket to a group of people, one of them a woman, who used her money to create bamboo furniture, which she sold to feed her family. In 1976, Dr. Younus founded the Grameen bank, an institution that has, in the interim, made over $5 billion in loans to several million borrowers. To insure repayment, small groups of those who benefit from these loans meet each week with bank representatives, and encourage each other in their entrepreneurial efforts. Again, according to Wikipedia, the success of this program has allowed Grameen to branch out into other areas, such as home loans, or projects that benefit whole communities with projects such as irrigation for farmland.

Worldwide, it is worth noting that most of these microloans are made to women., and for some very good reasons: Women are more apt to repay them, and they use their profits to support their families.

Seeing the success of the microloan in the improvement it has made in the lives of poor people worldwide, I have always wondered if such an idea might not be used here in Eastern Kentucky. This is an area, after all, that is known for it endemic poverty. And while it might not exist on the same scale as it does, say, in Bangladesh or other third-world countries, it is still here, and there certainly are those who would benefit from a microloan, and again, these are people who would not otherwise qualify for credit from local banks. The only thing that is needed is a source of money, and a method to get these small loans to those who need them.

Of course, that poverty exists in an area that has been as blessed as this one has with natural resources is a paradox. Yet we all know the story of the broad form deed, and how these came into being. Having conned the locals out of their birthrights, the big coal companies then took a lot of the wealth out of the area with them, leaving in their wake blighted land, and used-up miners. It was for this reason that the coal-severance tax was first enacted. Taxing coal to make up for its removal was a way to see to it that there would be opportunities afterwards.

And the coal severance tax has been put to good use, as it has been used to build local parks, for the benefit of senior citizens, to help maintain local fire departments, to expand potable drinking water to county residents, for expansion of sewage services, or elimination of straight pipes, and even to build the Exposition Center in Pikeville. But it occurs to me that if a pittance from the proceeds of this tax were set aside for microcredit and microloans, those citizens who live outside the few cities of our area, such as Pikeville, and who do not so directly benefit from this tax, might then be able to support themselves and their families by starting up some small business.

Of course, the same safeguards would be in place to see that the loans were used wisely, and were repaid, and that those who receive them also get as much help as they need to keep their new businesses healthy and viable. But if these loans are half as successful as those made by the organizations cited previously, then not only would those who would be recipients of these loans benefit greatly, this area as a whole would gain, and more of our citizens would be able to hold their heads up and show the world that they have what it takes to be successful.