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5 Microfinance Pioneers who changed the BOP finance landscape
Submitted by admin on Wed, 04/13/2011 - 11:38
Microfinance Focus, April 13, 2011: Microfinance is a globally recognized concept in today’s era and it has made a significant difference in the lives of millions of people across the globe and has helped in the significant development of the rural sector. The development and practice of it did not just happen over-night, it took years of hard work and innovative contributions from a lot of people. These people dedicated their lives for the upliftment of the rural society and through consistent research formulated different ideas which now form the guidelines of the micro-finance segment.
Let us walk through the pioneers who have made a difference and how their contributions have helped millions of people rise above poverty.
Who is he? : Professor Muhammad Yunus, a Bangladeshi economist, founded the Grameen Bank in Bangladesh in 1983, fueled by the belief that credit is a fundamental human right. He is also the founding board member of Grameen America and Grameen Foundation. He is one of the founding members of Global Elders. Yunus also serves on the board of directors of the United Nations Foundation, a public charity created in 1998 with entrepreneur and philanthropist Ted Turner’s historic $1 billion gift to support United Nations causes.
Innovation: He is the developer and founder of the concept of microcredit and microfinance. Grameen Bank, set up by him in 1983, was the first lender to provide microcredit, giving very small loans to poor Bangladeshis who did not qualify for loans from conventional banks. No collateral is needed, and repayment is based on an honor system, with nearly a 100 percent repayment rate. Starting with a small loan of US$ 27 to destitute group of 42 families in Bangladesh in the mid-70s, the Grameen Bank has advanced to the forefront of a burgeoning world movement toward eradicating poverty through micro lending.
Impact: Yunus has helped lift millions out of poverty by disbursing $6.6bn in millions of tiny loans to the poor. The Bank today has over 2100 branches and continues to expand across the nation. Its success has inspired similar projects in more than 100 countries around the world and has made World Bank to take an initiative to finance Grameen-type schemes.
Awards: Yunus has received several national and international honors. However, the greatest recognition of the bank's achievements came on October 13, 2006, when the Nobel Committee awarded Grameen Bank and its founder, Muhammad Yunus, the 2006 Nobel Peace Prize "for their efforts to create economic and social development from below. Grameen Bank is the only business corporation to have won a Nobel Prize.
Mr. Aloysius P. Fernandez
Who is he?: Mr. Aloysius P. Fernandez is the former Executive Director (1982-2009) and currently, the Member Secretary of MYRADA, one of India's foremost development NGOs. He is also Chairman of the Board of Sanghamitra Financial Services, a wholesale financial institution serving self-help groups. He is also Chairman of NABARD Financial Services Limited (NABFINS). Mr. Fernandez has been a member of various national and state government committees and has designed micro-credit programs for IFAD in 9 Indian states. He has been an advisor to microcredit programs in Kampuchea, Indonesia and Myanmar. He has undertaken extensive consultancy work for the World Bank, DFID, CIDA and IFAD on a wide range of programs with a focus on natural resource management, rural development and micro-credit.
Innovation: Under Mr. Fernandez’ leadership, MYRADA began working with rural poor communities, initially in Karnataka, and later in several states. Mr. Fernandez is well known for introducing and developing the concept of SHGs (self help groups) in MYRADA since 1986 and then convincing NABARD of its value as an alternative way of accessing credit by the poor.
Impact: Starting with a pilot project in MYRADA in 1988, the SHG-Bank Linkage Program today reaches over 6.2 million SHGs in the country with a membership of 90 million women, making it the largest micro credit and women's empowerment program in the world. Today, MYRADA is a support institution for community organizations, not-for-profit companies and societies. It works with over 1.5 million rural poor in several states in India and supports programs abroad on a long-term basis.
Awards: Mr Fernandez has been honoured with Padmashree award by the Government of India in 2000 for his contribution in the field of poverty alleviation and refugee resettlement.
Who is he?: Dr. John Keith Hatch is an American economic development expert and a pioneer in modern day microfinance. He is the founder of FINCA International and the Rural Development Services (RDS), and is famous for innovating village banking, arguably the world’s most widely-imitated microfinance methodology.
Innovation: John Hatch developed the village banking method, which uses the philosophy "Give poor communities the opportunity, and then get out of the way!" The village banking method is unique in the responsibility and autonomy given borrowers in running their banks and in its emphasis on community, as well as individual, development.
In 1984, Hatch created his own nonprofit agency-the Foundation for International Community Assistance (FINCA). Its purpose was to provide the poorest families, particularly those headed by single-mothers, with loans to finance self-employment activities capable of generating additional household income. FINCA has been called a "World Bank for the Poor" and a "poverty vaccine” for the planet.
Impact:FINCA currently operates village banking programs in 23 countries and since 1984 it has assisted over 1,000,000families, lending over $360 million (in 2007) to the world's poorest families with a repayment rate of 98%, while also generating enough income to completely cover the operating costs of the field programs themselves. Moreover, there are now over 800 village banking programs worldwide in 60 countries created by about 30 other nonprofit agencies.
Awards: On June 26, 2009, Hatch was presented with the Sargent Shriver Award for Distinguished Humanitarian Service by the National Peace Corps Association.
Who is she.?: Elaben Bhatt ,the founder of the Self-Employed Women's Association of India (SEWA) is a respected leader of the international labour, cooperative, women, and micro-finance movements. She was one of the founders of Women's World Banking(WBB), founder director of 'Sa-Dhan' and was also in the advisory board of CGAP. She currently serves as the Chair of the SEWA Cooperative Bank, of HomeNet, of the International Alliance of Street Vendors, and of WIEGO. She is also a trustee of the Rockefeller Foundation. She is well known for her contribution to the uplift of poor women in India.
Innovation: Her pioneering work has been in creating institutions through which the lowest rungs of working women become self-reliant. She started a trade union,SEWA in 1972 , an organization of poor, it aimed at self-employment of women workers who earn a living through their own labour or small businesses. SEWA started as a trade union and gradually evolved into a women's movement. Creation of SEWA led to establishment of SEWA Cooperative Bank which was started to enable women working in unorganized sectors to take low interest loans. She also founded the microfinance institute for women in India.
Impact:SEWA currently has over 12, 56,994 women workers in nine states of India. SEWA is strongly supported by the World Bank which holds it out as a model to be replicated elsewhere. Today SEWA bank has 4, 90,000 women as members and working capital worth INR 165 crores. The success of SEWA and SEWA banks have inspired similar movements in many countries across the globe.
Awards: Elaben Bhatt was also awarded the civilian honour of Padma Shri by the Government of India in 1985, and the Padma Bhushan in 1986. She was awarded the Ramon Magsaysay Award for Community Leadership in 1977 and the Right Livelihood Award in 1984. She was recognized with the ET Business Woman of the year. US Secretary of State Hillary Clinton has presented the first Global Fairness Initiative Award to her.
Who is he?: Vijay Mahajan is an Indian social entrepreneur and chairman of BASIX, a microfinance company. He is the president of Microfinance Institutions Network (MFIN).
Innovation: He founded an NGO, PRADAN in 1983. PRADHAN is one of India’s more effective NGOs, specializing in rural livelihoods and microfinance. In 1996, Mr Mahajan set up BASIX as a “new generation livelihood promotion institution”. BASIX goes well beyond micro-credit to offer a “triad” of livelihood promotion services including savings and insurance services, agricultural/business development services and institutional development services to rural producers and their groups. It is among the first microfinance companies in the world to attract commercial debt and equity investments, both internationally and from within India.
Impact: Today, PRADHAN works with over 150,000 rural poor households in India. BASIX has helped support the livelihoods of over a million poor households in the agriculture, allied and non-farm sectors by extending micro-credit worth over Rs 2000 crore. BASIX works in 20,000 villages spread over 106 districts in the states of Andhra Pradesh, Karnataka, Tamil Nadu, Orissa, Jharkhand, Maharashtra, Madhya Pradesh, Rajasthan, Bihar, Chattisgarh, West Bengal, Delhi and Assam.
Awards: In 2002, Vijay was selected as one of 60 “Outstanding Social Entrepreneurs” by the Schwab Foundation for Social Entrepreneurship at the World Economic Forum, Davos. He has been a keynote speaker at the OECD Foreign Aid Ministers in Paris in 2004, the Geneva Private Equity Conference on Microfinance, 2005; and the Goldman Sachs global forum on microfinance, 2006. In 2003, Vijay was conferred the Distinguished Alumnus Award by IIT Delhi. In 2008, Vijay was elected as a Member of the Ashoka Fellowship, a global association of leading social entrepreneurs. Vijay was also selected in India’s 50 Most Powerful People 2009 by BusinessWeek. In 2009, he was given the HSBC Access award for outstanding contribution to the microfinance sector.
- http://www.peacecorpsconnect.org/about/awards/the-sargent-shriver-award, www.kiva.org/do-more/learn.