Hello everyone. Here's a research paper on micro-loans that I did for my English class. I'm not about to put it up for peer review or anything. It's far from perfect, but here you go.
Micro-Loans Solve Poverty Problems
No one denies that poverty is a large problem in today’s world. Approximately 1.1 billion people live in extreme poverty and 8 million people die each year because of shortages caused by the failures of their economies (Sachs 1-2). For the benefit of the United States economy, as well as for the benefit of the over-all world economy, it is imperative that we heed these concerns and arrive at a workable solution to the problem of global poverty. Although no one solution will do to solve the entire problem, micro-loans can play an effective role in reducing global poverty.
The idea of micro-loans originated in 1972, when Muhammad Yunus returned to Bangladesh to visit Jobra, a village near his home-town (Kurlantzick 1-2). There he discovered that a number of women were indebted to local loan-sharks, with no hope of escaping their plight. Mr. Yunus decided to help them. The way in which he decided to help them was very innovative. Rather than make an outright gift, he decided to loan 42 villagers $27 each. The result was very encouraging: Each and every villager who was given a loan paid Mr. Yunus back.
When Yunus took his idea to commercial banks, they ignored him, refusing to give credit without collateral of some sort. It was impractical to try to charge collateral: the poor people of Bangladesh had no collateral to pay. Undaunted, Yunus used personal funds to give loans to another 100 women. These too paid Yunus back. On the strength of these results, Yunus went on to establish an official bank named Grameen, a word which means “rural.” Grameen has now distributed around $3 billion to the poor of Bangladesh, and claims a rate of repayment greater than 90%.
Francisca Lucia Velli of Sao Paulo, Brazil, is an example of a micro-loan success story. Velli had worked as a seamstress in a Sao Paulo ghetto for a decade, and her equipment was aging. After receiving a $350 micro-loan, Velli was able to purchase a new sewing machine which sewed 7,000 stitches per minute. Soon she was able to hire three new seamstresses, and even advertised for a fourth. (Jones 1)