CASEY OLYNYK

Poverty is multi-dimensional. By providing access to financial services, microfinance plays an important role in the fight against the many aspects of poverty. For instance, income generation from a business helps not only the business activity expand but also contributes to household income and its attendant benefits on food security, children's education, etc. Moreover, for women, who, in many contexts, are secluded from public space, transacting with formal institutions can also build confidence and empowerment.( CASEY OLYNYK Blog)

CASEY OLYNYK Blog
Casey OlynykThese savings services must be adapted to meet the poor�s particular demand and their cash flow cycle. Most often, the poor not only have low income, but also irregular income flows. Thus, to maximize the savings propensity of the poor, institutions must provide flexible opportunities--- both in terms of amounts deposited and the frequency of pay ins and pay outs. This represents an important challenge for the microfinance industry.

As a young economics professor at Chittagong University in Bangladesh in 1976, Muhammad Yunus lent $27 out of his own pocket to a group of poor craftsmen in the nearby town of Jobra. To boost the impact of that small sum, Yunus volunteered to serve as guarantor on a larger loan from a traditional bank, kindling the idea for a village-based enterprise called the Grameen Project. It never occurred to the professor that his gesture would inspire a whole category of lending and propel him to the top of a powerful financial institution.

CASEY OLYNYK Microcredit
Microcredit differs significantly from other sources of aid to the developing world. Rather than focusing on the macro scale, microcredit focuses on individuals and getting them the small amounts of capital goods that they need to build their life. Unlike government assistance which can be squandered in bureaucracy or innocently allocated to projects that are not viable investments, microcredit focuses on the achievable goals of poor entrepreneurs who need a hand and a partner to help them out of poverty.

Microcredit is not only provided in poor countries, but also in one of the world's richest countries, the USA, where 37 million people (12.6%) live below the poverty line. Among other organizations that provide microloans in the US, Grameen Bank started their operation in New York in April 2008. According to economist Jonathan Morduch of New York University, microloans have less appeal in the US because people think it too difficult to escape poverty through private enterprise.

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In some cases, Yunus has been able to attract private capital to fund socially driven businesses. GrameenPhone, a for-profit telecom outfit, is 51% owned by Norway's Telenor (TELN ). It works with the not-for-profit Grameen Telecom to provide bulk airtime for so-called village phones. Funded by loans to individual women, these systems -- built from simple handsets and solar chargers -- function as pay phones in many rural areas. Now the idea of a "village phone lady" is catching on, along with other low-cost, high-tech systems, in other parts of Asia and Africa. An energy enterprise, Grameen Shakti, sells around 1,500 home solar-panel systems per month throughout rural Bangladesh and is growing 15% a year without subsidies, says Yunus.