Friday, February 02, 2007

Teach a Man to Fish

“Give a man a fish and you feed him for a day. Teach a man to fish and you can feed him for a lifetime.” It’s one of my favorite sayings. But what if he can’t afford a fishing pole?

Muhammad Yunus recognized that inherent problem of trying to help people exit the persistent poverty trap; they often didn’t have the small funds needed to buy a loom, plow, ox or even a fishing pole. Thirty years ago, the Bangladesh economics professor set up the Grameen Bank, setting up a new lending paradigm of lending to the poor for productive projects, in values as low as $50.

Microcredit, as it’s now known, has grown dramatically since then. Over 100 million of the world’s poor now have outstanding microloans. Yunus, 66, and his bank shared the Nobel Peace Prize in 2006, honoring his grassroots strategy as “development from below.” The microfinance revolution was shown to reduce poverty rates by 3%/year for the direct beneficiaries of its loans in his home country and had similar impacts in other countries where it has been used.

The largest such program in the USA is run along the Texas/Mexico border by Accion Texas, which has grown its portfolio of such loans from $610,000 in 1995 to more than $8 million in 2005.

And the impact?

Between 1992 and 2002, the number of one-person microenterprises along that border rose by 113% between 1992 and 2002, compared to a 32% growth of such enterprises in the state of TX and 25% in the USA.

Many of these new entrepreneurs are Hispanic, one of the fastest growing entrepreneurial groups in the USA. In the Accion Texas market area there was a 44% growth in Hispanic business ownership during the period from 1997 to 2002, compared to only a 17% increase in the region’s population during the same time period.

As I’ve said many times, the entrepreneurs of the future are going to come from many non-traditional backgrounds. The more that we are able to encourage the growth of an entrepreneurial spirit, the better we will be able to improve our country. Keep your eye on the growth of microlending. What could be the impact upon your region?

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