Saturday, November 23, 2013

Post no 1: Traditional Approach for poverty alleviation.

Thousands of NGOs are working world-wide with millions of dollar fund to remove hunger and poverty. Those are playing significant (but not satisfactory) roles in poverty reduction. Among those, Grameen Bank, originated from Bangladesh, had been rewarded with Nobel Peace Prize for its remarkable contribution in poverty reduction through micro-credit system, although it is not uncontroversial. Micro-credit system, introduced by Nobel laureate Dr. Muhammad Yunus through Grameen Bank in Bangladesh has drawbacks like- incapability of the poor to repay the loan borrowed at a high rate of interest (around 20 percent), requirement of large volume of fund to operate the program with high management cost, misuse and abuse of the fund, binding the poor within loan cycles, force and punishment on loan default which may even provoke suicidal attempt by the victim to get relieved of the burden.

In general, micro-credit system is a form of micro-business utilizing the poor where profit making is the prime target for the micro-credit organization. The poor have to return majority of the profit to the lending authority that provided micro-credit at a high rate of interest to start micro-business. Therefore, this system is not very effective in improving the financial state of the poor. Yet, those have to borrow to start a micro-business because those have no alternative for survival. In this way, micro-credit system has now become a lucrative new business opportunity for the rich. This system has created alternative way to exploit the poor in the form of poverty alleviation initiative.

Realizing the limitations of micro-credit system, Dr. Muhammad Yunus has started new concept of “Social Business” for poverty reduction. Large volume of fund is also required to start a social business. The fund may be collected from donors or the fund utilized as Corporate Social Responsibility (CSR) by conglomerate may be diverted to start social business. It seems to me like that we maximize our profit by exploiting people in different ways and a fraction of the profit is utilized as CSR fund to help the poor to prove our generosity. We should not culture poverty to extend our hands with alms. Each of the people has right to live with dignity. Let everybody play a role in developing human civilization on earth to create a hunger free dynamic world.