Microcredit ( English  microcredit ) is one of the main types of microfinance , which consists in issuing small loans to people who do not have access to traditional banking for various reasons.

The cost of microcredits is usually several times higher than the rates for ordinary bank loans.

Since the early 1990s, this type of activity has spread, and the term has become popular after the emergence of a plausible hypothesis that microcredit allows very poor people to become microentrepreneurs and thereby achieve financial independence and sustainability.The United Nations General Assembly even declared 2005 the International Year of Microcredit,  and the creator of Grameen Bank, Muhammad Yunus, received the Nobel Peace Prize in 2006 . However, not all experts are convinced of the validity of such a theory, arguing that they can not find its confirmation in their studies in credit repair software license.

History

The concept of microcrediting was developed[ source is not specified 1191 day ] professor of economics Mohammed Yunus . The professor was educated in the US , but he was originally from Bangladesh , one of the poorest countries in the world. In 1974, Yunus joined the fight against hunger in his home country. In the course of the struggle, he found that even the most insignificant credit can play a decisive role in the survival of the poor. His first microloans he gave out of his own pocket 10 women who made furniture from bamboo , the loan amount was only 27 dollars . At the same time, Yunus found that ordinary banksare not interested in granting loans to poor entrepreneurs due to high risks of non-return of loaned funds.

In 1983 , Yunus founded the bank ” Grameen ” (sometimes referred to as Graminsky Bank), who was involved in issuing microcredits to poor Bangladeshis. Since 1983, this bank has already issued more than 4 million loans for a total of about 5 billion dollars. To ensure the repayment of loans by the bank used a system of collective responsibility : informal groups were formed, whose members are among the lenders were charged for each other and support each other. As the system developed, the Grameen Bank developed other alternative lending schemes. In addition to micro-credit bank also gave housing loans, household and agricultural loans, engaged in venture capital , took deposits.

The success of this model, implemented by Grameen, inspired financiers from many other developing and even developed countries, including the United States. Many (but not all) microcredit projects are targeted specifically at women, as the latter, in the opinion of the developers of such projects, disproportionately suffer from poverty and bear most of the cost of maintaining the family, especially when it comes to single-parent families. About 96% of Grameen microcredits were issued to women.

Microfinance agency of the Aga Khan ( Eng.  Of The Aga Khan Agency for the Microfinance, AKAM ) – it is one more innovative organization. The agency provides a wide range of financial services, including microinsurance, housing microcredits, savings deposits, accounts for education and medical services. The agency also offers a variety of support for microentrepreneurs whose business is related to the restoration of cultural values. The agency is part of the Aga Khan Development Network ( English  Aga Khan Development Network, AKDN ).

Achievements, shortcomings and prospects

According to the International Bank , the world is already there are more than 7 thousand microfinance organizations that serve about 16 million people in developing countries and third world countries . In November 2002, more than 2,000 delegates from 100 countries gathered in New York for the so-called “Microcredit Summit”. “Summit” set a goal by 2005 to cover microcrediting 100 million of the world’s poorest families. A number of well-known politicians and financial institutions have supported and are supporting this goal. Since 2005, the initiative of microcrediting has been actively supported by the UN.

The microcredit movement has critics who argue that some microcredit programs have excessive interest on the loan. There are also fears that money for microcredit will be allocated at the expense of other necessary humanitarian programs in the field of public health , education and purification of drinking water . Credit programs can help poor people to improve their financial situation, but they are not able to meet the need for infrastructure and other basic social services.

The following micro crediting problems stand out:

  • microcredit rates are high;
  • Practice shows that microcredit does not reach the poorest;
  • microcredits can cause borrowers dependence;
  • microcredit can give impetus to financial well-being, but without the borrower’s efforts, success can be short-lived.