MICROCREDIT: THE NEXT GENERATION

 

Over the past two decades microcredit programs have emerged as one of the leading strategies in the overall movement to end poverty. The idea began when Bangladeshi economist Professor Mohammad Yunus first demonstrated that poor people, especially poor women, could produce near-perfect repayment rates. Since then, his innovative scheme has attracted a range of non-governmental and state-sponsored institutions that today reach over 16 million people in developing countries and have a total portfolio of $US 2.5 billion!

 

So what is microcredit? According to Oxfam, microcredit consists of "very small scale financial services, including savings, loans for emergencies, day-to-day living, and investment in productive activities" Credit is usually provided to groups of individuals or village organizations who use joint-liability (a.k.a. peer pressure!) to enforce loan repayment. Through group savings and loans, poor people very often increase their economic security and well-being.

 

The Asia-Pacific region is home to many microcredit institutions, and the majority of programs are directed at women in rural areas. Targeting women as clients of microcredit programs has been an effective method to ensure that the benefits of increased family income are directed towards the general welfare of the family, and particularly the children.

 

At present, very few microcredit programs in Asia have been targeted directly at youth. However, as many of the women participating in programs are undoubtedly young women, many with children of their own, then the potential for microcredit programs to reach youth and positively impact their lives is great. Some financial organizations that are reaching out to young people are the Credit Union League of Thailand who offer specific credit and savings programs to youth, and India's Syndicate Bank "pigmy account" program that is open to children.

 

An example of how microcredit programs might be directed towards youth in Asia comes from the Dollars for Dreams (DFD) Youth Credit Union branch of Alternatives Federal credit Union in the United States. DFD is run both run for and by kids. Membership is open to anyone age 18 and under, and is obtained by submitting the two dollar membership fee and keeping a minimum balance of one dollar in the account.

 

The program goals include teaching youth about sound money management, the legal and moral responsibilities of borrowing money, corporate procedures and provide leadership training relevant to the world of work. Adult advisors serve only to guide meetings and to train committee members (all of whom are members of the youth credit union) in the skills they will need to complete their projects. All of the final decisions are made by the kids.

 

Such a program might be adapted to the needs of young people in Asia, especially those in especially difficult circumstances who have little if any financial support from their parents and who often are income-providers for their family. Incorporating leadership, microenterprise, and vocational training into programs like the Dollars for Dreams initiative could bring the success of microcredit programs to a new generation of Asian youth!

 

For more information on microcredit and youth credit programs check out the following websites!

 

http://www.ualberta.ca/~ckunzle/results

http://www.soc.titch.ac.jp/titsoc/higuchi-lab/icm

http://www.soc.titech.ac.jp/titsoc/higuchi-lab/icm/inspire/pigmy/html

http://www.soc.titech.ac.jp/titsoc/higuchi-lab/icm/alternatives/dfdreams.html

 

Sources:

 

Dollars for dreams (DFD) http://www.soc.titech.ac.jp/titsoc/higuchi-lab/icm/alternatives/dfdreams.html

"Oxfam calls for wider debate at the Microcredit Summit." 29 Jan 1997 http:www.org.oneworld.org/oxfam

Wheat, Sue. "Banking on a better future" The Guardian Weekly Feb 9, 1997: 19.

1997 Microcredit Summit Documents. Microcredit Summit Secretariat c/o RESULTS

Educational Fund, Washington, DC: 1997

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