Anup Shah claimed on the Global Issue website, “Almost half the of world’s population, which is over three billion people, live on less than two and half dollars a day” (Globalissue.org). This is the poverty level. To reduce poverty effectively many of us have donated money to aid the poor, the question arises weather there are other ways to reduce poverty effectively. Traditional approaches like charities, social programs and government assistance are conductors to reduce poverty levels. However, Mohammed Yunus proposes to reform the financial system and increase social awareness due to the escalating gap between the wealthy and poor. Specifically, Yunus plans for micro lending and social business are viable options he proposes as they may be more effective in bringing an end to world poverty.
Professor Yunus at Chittagong University, as an economics professor first realized these options when he became involved in fighting poverty during a 1974 famine in Bangladesh. He revealed that very small loans could make a significant difference to a poor person. According to a public attended interview, given in Thousand Oaks California in February 2010, his first loan of 27 dollars was from his own pocket, which he lent to women in Chittagong village. This loan helped women start a small business. Therefore, the concept of micro lending was coined because of these minor loans. Now more than thirty years later, the Grameen bank which was established by Professor Yunus has around 6.6 million borrowers at present, of which, “97% are women” (Yunus). This concept of micro financing has inspired a transformational movement that translated his vision into practical action for millions of workers in more than 100 countries.
Many Bangladeshi women started running self-sufficient businesses that have produced the income they and their children needed. According to Yunus their financial problems were “crippling at first, but they could be alleviated by the injection of small amounts of cash loaned on terms acceptable to them” (Yunus). Remarkably, 96% of these loans were repaid. There would be no chance the women could have borrowed the money from conventional banks, as banks require credit history, and charge high amounts of interest. Professor Yunus stated a very inspiring line at his interview, “To catch a dollar, you first need a dollar” (Yunus). In other words, in order to start any sort of business, capital must be obtained, even if that capital is initially donated.
Yunus argues that donations may lead to inequality in terms of the human value. He believes that people who provide the donation would feel glorious and proud, whereas the person receiving the donation may feel demeaned. Instead if money is lent, both the donor and recipient feel adequately compensated, monetary and emotionally. The person lending receives interest and the satisfaction of performing a donation, whereas the person borrowing, obtains needed funds at an affordable rate. In...