Micro-credit as a way to motivate entrepreneurship in the third world
In all of the world, credit is a very popular way for people to purchase items. Many times, people in large and wealthy countries will use credit to purchase items and also sometimes start businesses.
These people who receive credit have to pass a “credit check” in order to receive the funding. The prerequisites or gaining access to a loan are employment, stability, and the ability to repay the loan. Sometimes, collateral is used to gain a loan in which you own something of equal or greater value to the loan to be given to the creditor in the event you cannot pay back the funds.
In the third world, there is a new and innovative way to help drive people out of poverty. This is called micro-credit. Micro-credit is extended often to the very poor that cannot even pass the minimal of credit qualifications for any type of conventional loan. Most often they are without employment and live in poverty and things look quite dim. When given micro-credit, some of these people use the funds to begin their own self employment venture and many times it ends successfully with the person coming out of poverty. This is exciting and a great motivation to bring people out of poverty in the third world.
Micro credit began in Bangladesh and its idea was obviously to extend credit to those who may not have otherwise received it. Many people thought that it would be a disaster because of the high risk. However, it was hugely successful in that country and many people used the micro credit as a tool to come out of poverty and in fact become successful in some cases. Seeing the success of this, many other countries have started their own micro credit programs. The banks were often paid back their loans and even with some form of profit. It worked out so well that in 2005, the UN named it “The International Year of Micro Credit”.
This is a motivation for many countries. Seeing thousands of people come out of poverty and gain a form of income that may have not otherwise been possible is positively outstanding. Seeing this success proves that there is a possibility that we can take a bite out of poverty in third world countries. This could be something that defines the world's future and makes poor people more viable and able to earn an income. With success of this magnitude, it proves it is possible to uplift people and bring them out of poverty with the proper motivation.
Micro credit may be a new idea, but its success has proven that it is an innovative idea. It could very well be something that we see for many years to come. With its success far outweighing its failure, this is honestly something the world should really invest in. Seeing third world countries rise from poverty should be enough motivation to keep it going. With success stories to add, the micro credit industry may become much more common and mainstream.