Teaching Microcredit to Philanthropists, Investors and Academia
A Billion Bootstraps
Microcredit, Barefoot Banking, and the Business Solution for Ending Poverty
By Phil Smith and Eric Thurman (Foreword by Muhammad Yunus, 2006 Noble Peace Prize Winner)
Tata McGraw-Hill Publishing Company Limited
New Delhi, 2007
pp.i-xiv +1-225, Rs.495/- (Hardcover).
Birendra Suna
Two Worlds, one war. The Ultimate Battle Begins. (Pathfinder,2007). The two world, one is full of “haves” other one is full of “have-nots” but the ultimate combine war is against Poverty. Since time immemorial several means has been applied for win over poverty. It was in 1976 a massive campaign has been declared against poverty in Bangladesh with weapon call microcredit when the world was not flat. It is called headquarters of microcredit, and branches are opened all over the world. It was Prof. Muhammad.Yunus, the brilliant doyen who initiated the microcredit movement in Bangladesh with project called Grameen Bank and that has been spread all over the world, with his $27 credit or sword to the women group of forty-two or soldier and that amount ignited to fire the poverty. For which Prof.Yunus and his Grameen Bank has been awarded Noble Peace Prize in 2006.
Phil Smith and Eric Thurman simultaneously learners, philanthropists, and teachers infallibility measure the microcredit formulae in their marvelous book “A Billion Bootstraps”. Both of them discovered numerous concrete filed evidence of microcredit and its impact on poverty eradication on the basis of their visit to various regions in the world with the reality and of their own practice. We as a world against poverty as an enemy for us. We are capable of fighting the mighty poverty and how the fight would be, it is within our talent only. We can graduate the poorest of poor from the University of Poverty and can fulfill the dream of Prof.Yunus “Museum of Poverty”.
Many mistakes were made to eradicate poverty in the previous years. After microcredit revolutions in the world, early philanthropists and new donors realised that just pumping money is not the right way to alleviate poverty. Honestly, the early philanthropist did not realise but they did carry out an inspiration for struggle for over coming poverty. In a way, despite mistakes and setbacks, it was perhaps no misfortune that no ready-made cut and dried, symmetrical formulae were available to them. Such formulae are often lifeless and therefore, poor guides to action. Now it has been seen that poor people do not require any charity but credit and training to use the loan for income generating activities.
The basic objective of the book is to teach a method for philanthropists, investors, and academia. Spectacular participation of poor people in the field of microcredit and poverty eradication has an evaluative account by Phil and Eric. What should be our responsibility for the borrowers, how they can generate income and how that credit amount can be multiplied? It is undoubtedly true that, Prof. Yunus was impressed and quite rightly pronounced that “some failures of traditional poverty reduction approaches and the successes of the growing microcredit movement from their perspectives as successful entrepreneurs. They have demystified microcredit and given it a human face, as seen through the eyes of two businessmen who are serious about achieving social objectives such as the end pf poverty (p.vii).
In a social climate of modernisation, Phil and Eric pen-down on the universalistic perspective of microcredit is a purely practical concern and it strongly influenced to the social outlook. They lucidly formulated microcredit formulae which a lay man can understand easily and use it in the field.
The curtain opens with the forwarding remarks by Prof.Yunus. The book has contained ten chapters and four appendixes with notes, glossary and index. Each chapter begins with a famous quotation of influential people of the world. There are eleven field documents on microcredit in action.
The first chapter ‘The Power of what works’ by Phil Smith, discovered lots of own childhood experiences, and also giving example of Pierre Omidyar the founder of eBay and his understanding of microcredit. As Phil rightly said that, “a job is a priceless treasure for human being”. A business cannot be started without capital, and what will a $50 loan buy are the motivational factors which has made Phil a great philanthropy. Many things cause poverty, but one common thread is that there is absolutely no access to capital in poor countries, and without capital the people and their societies have no chance to grow their businesses. The financial engineer opined that “microcredit is well on its way to changing the world”. Microcredit makes common sense. Its impact is measurable both financially and in terms of lives changed. His agony for the 3 billion people who are living on less than $1 in developing countries and $2 in developed countries every day.
Investments in humanity could yield astonishing returns
Eric Thurman accounted in his chapter “Beyond the $900 Billion Black Hole”. He shared his experiences as a philanthropist and as businessman. According to him “any knowledgeable business person knows that price alone does not define whether a deal is good. Only principle deal makers know is that the structure of a transaction can be every bit as important as the face value”. He gave various examples, including the Warren Buffett and Bill Gates and their philanthropic vocabulary.
Step by step he tells the story of the philanthropists of USA and the nonprofit sectors functioning in USA. According to Eric, “theft is not the biggest problem in the nonprofit sector, the biggest problem is lack of meaningful results”. He has proposed three rules for responsible donors that (a) there should be bottom line for all the philanthropists that to whom they are giving way their money and what purposes (b) measure success-the popular web of Bill and Melinda Gates that “every life has equal value”. Here Eric has given a brief numerical method for the philanthropists and how one can help the poor. And the (c) support what works, meaning what should be a method for investor and where he/she can invest with proper manner and it will help thousands. He has given a total sketch of poverty and development, what he calls development pornography.
The third chapter, “Giving Credit where credit is due” has composed by Phil Smith. According to Phil, “a microcredit loan is often the only break impoverished people receive that can move them up the rungs of the economic ladder in their communities”. The fundamental premise of microcredit is that people can improve their incomes through hard work if given small loans to strength their businesses. This premise has been proven true by millions of borrowers who are now building their tiny business, supporting their families, and repaying their micorloans so that others can have a at the one break they too need to succeed. As a weapon against poverty in developing countries microcredit is as vital as education, health, human rights, and good government.
This is another great practical account of Phil which as full of evidences on microcredit action. He has posted here the real story of the third world where poor are not getting financial services by the public sector as well as private sector. Here, Phil has given a psychological account of the poor people, what exactly some poor people wants to start their home-based business.
The most crucial benefits of microcredit are far more than financial and cannot be measured on a balance sheet. The true benefits are dignity and self-esteem, along with respect for family and community. Microcredit enables people to become givers, not takers. Microcredit should not be seen as charity but rather as the opportunity poor people need to build a decent life. Through microcredit, donors can shed the old hand-out mentality and become true partners in progress with the people of the developing world.
Again “Barefoot Banking” chapter fourth of Eric Thurman is excited one. It as brief account of “barefoot doctors” in the time of Mao Zedong of China and its linkages today’s microcredit world. Microcredit has an impressive record of changing live, keeping in mind; however, that authority in microcredit rests more with members of the borrowers group than with the loans officers. Peer pressure within groups of borrowers guarantees that everyone pays on time. Eric has suggested methods of sustenance of microcredit and poorest of the poor can be graduated from the University of Poverty. The bank which can provide loan the poorest of the poor and poor people can have standard of livelihood, as Eric terms the bank “a pillar in the community but without a building”. Tag line of the chapter is that microcredit can bring the upward mobility of life “small loans often gigantic improvements in the lives of the people who use them properly in proper place”.
“Moving the World” the fifth chapter of Phil Smith accounts the world renowned investors and their bitter experiences of the nine-inch drilling in the earth to get more profit in the consumer world. But Phil has convinced them that how microcredit works and both the party gets some benefits. He cited example that, “business practices are basically the same whether using $50 or $50 million”. Here Phil has suggested that how come money can be multiply. Same amount of loan can be recycled and can loan to many poor who are away from financial systems. One can be a financial engineer if avid the hidden trap of the microcredit borrowers. But there is a realistic expectation because microcredit is booming in the developing countries. Money alone is not the panacea for alleviating poverty. Better diagnosis required to hill the deep rooted poverty to bring billion dollars smile on face of a hungry child.
The best part for which microcredit supposed to work is the “Microcredit Plus”, the sixth chapter presented by Eric Thurman. Microcredit is the best method to wipe out poverty from the earth but problems are never ending processes. It’s like a chain which work together. In the stigmatize world, poor people not only suffer from poverty and hunger but also with the stigma, specially forth finger indicates towards vulnerable women (Widow, Divorce, HIV/AIDS infected, Black, and Caste based society like India). Presently microcredit is helping them like a bulletproof in the live World and helping them to survive with dignity. It is a “plus” for philanthropists, investors and borrowers. According to Eric tag line of the chapter is that “microcredit programs can have many pluses, particularly in the world’s poorest places”.
The chapter seventh “Beyond Good Intentions” by Phil is another bright guidance for the microcredit world. Here, Phil has drawn our attention towards the 3-T (Time, Treasure and Talent), that the professional fundraisers having. There are some encouraging examples presented by him, with six tips for the donors.
Chapter eighth compiled by Eric “A Thousand Battles a Thousand Victories”. The chapter begins with a tag line of novel The Art of War by Sun Tzu. What would the author asked to those of us determined to triumph over the best of poverty? His most quoted statements “know thyself, know the enemy. A thousand battles, a thousand victories”. Other way around we can ask question to ourselves, do we know who our enemy is? Eric said “poverty is not exclusively a financial problem. It is the leading cause of premature death in the world, affecting health, nutrition and safety. So in order to progress with human face we need to understand poverty and how we can win over it. Eric has given a succinct statistics on the intensity of poverty including its absolute and relative. Worldwide, the “haves” who hold more than half of the world’s wealth, make up just 10 per cent of the global population. To be exact, the wealthiest 10 per cent of people on Earth posses 54 per cent of the income. The remaining 90 per cent of people divided up the remaining 46 per cent. Further, analysis of poverty statistics shows that, 40 per cent of the world’s entire population lives with less than $2 per day. There are about 2.5 billion people in that group who struggle to survive on just 5 per cent of world’s income. Eric has linked poverty with variety of ways-Level of poverty, women and poverty, poverty and health, thieves of Childhood. Poverty can be defeated with a sword like Microcredit.
“The Best Due Diligence” chapter ninth of Phil Smith focused on the 24X7X365 working habit of the human. Meaning hard work round the year. He has narrated the tag line of the novel “the Ultimate Gift” by Jim Stoval. According to Phil, sharing own good experiences is gift for other people development. “A life experience becomes a gift, share the gift and change the face of the world”. Money is nothing more than a tool. “It can be a force for good, a force for evil, or simple idle”. Phil has given lots of example on microcredit and its upward functioning in the world. Poverty has to be solved one family at a time and that these families would eventually have a noticeable, positive effect on their communities. In chapter tenth “Tough love leads to happy endings” Phil described about the success ladder of William K. Warren and his generosity to the world. Phil pointed out that “use your business skills to further your giving goals, not just the goals of a charity organisation”. Phil has designed a graph to understand the profit on investments of microcredit and can change the peculiar acting of poverty.
The best part of the book is questions and answers section. Terry, a physician and businessman has several enquires on microcredit, his doubt has been cleared by Eric and Phil. The doubt on microcredit which has been cleared by Eric and Phil is not only to Terry but millions of people like us who are still immature about microcredit/microfinance.
“Money is the seed of money” (Jean-Jacques Rousseau) “but is not automatic at all” (Italic added). It takes conscious practice and awareness to nurture in the beautiful garden than only fruit can be distributed equally to all. There are sufficient opportunities to come out from the vicious cycle of poverty. Microcredit is one among them. Social businessmen hoped to use the social capital as a safety-valve, the philanthropists hoped to use microcredit as a lightning conductor.
And the curtain falls.
Sona.birendra@gmail.com
