THE recent announcement by President Donald Ramotar that a special fund for the disbursement of loans to small producers in Linden using the dividends from the defunct Linden Economic Advancement Fund (LEAF) is soon to be realized, is a most welcome one.
According to a report in this newspaper, instructions were given for Minister of Finance, Dr. Ashni Singh, to engage in discussions with three commercial banks in the town to support a progamme similar to the Women of Worth (WOW) programme whereby small producers can access loans with low collateral.
“We think that when you look around the world, you need both big and small investments. Big investments sometimes act as a pull factor for more investments…but small investments are the ones that sustain development in this country. It might be a surprise for you to know that the largest contributor to the most powerful country in the world, the United States, comes from small producers,” the President said.
The President is perfectly right as, indeed, the experience from other parts of the world has tangibly demonstrated the vital role micro-credit plays in economic development and reducing poverty levels.
Micro-credit helps small business owners in many ways. This includes assistance with working capital, purchase of office equipment, machinery, inventories, etc. Compared to traditional bank loans, micro-loans are easier to reach. These loans are usually split by the lenders in the community. This is after a careful assessment of the creditworthiness of borrowers.
One notable and outstanding example of a successful micro-credit scheme is the experience of the Grameen Bank (GB) in Bangladesh.
GB has reversed conventional banking practice by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. GB provides credit to the poorest of the poor in rural Bangladesh, without any collateral. At GB, credit is a cost-effective weapon to fight poverty and it serves as a catalyst in the overall development of socio-economic conditions of the poor who have been kept outside the banking orbit on the ground that they are poor and hence not bankable. Professor Muhammad Yunus, the founder of ‘Grameen Bank’ and its managing director, reasoned that if financial resources can be made available to the poor people on terms and conditions that are appropriate and reasonable, “these millions of small people with their millions of small pursuits can add up to create the biggest development wonder.”
As of October, 2011, it has 8.349 million borrowers, 97 percent of whom are women. With 2,565 branches, GB provides services in 81,379 villages, covering more than 97 percent of the total villages in Bangladesh.
Grameen Bank’s positive impact on its poor and formerly poor borrowers has been documented in many independent studies carried out by external agencies including the World Bank, the International Food Research Policy Institute (IFPRI) and the Bangladesh Institute of Development Studies (BIDS).
However, the critics of the government were highly vociferous when the government signalled its intention to align electricity tariffs in Linden with that of other parts of the country in a phased manner.
They were quick to shout that it is a vendetta against the people of Linden because they did not vote for the ruling party at the November polls last year.
Interestingly, the critics seem to have gone cold on the announcement of the micro-credit scheme for the people of Linden. And this is understandable because the micro-credit move has debunked the notion of a vendetta by the government. Therefore, they will remain silent until they find another issue to create mischief.
The reality is that this government has done more for Linden than in all 28 years of the PNC government, despite the fact that the residents have been overwhelmingly traditional supporters of the party.
So the announcement of the micro-credit scheme by the President comes as no surprise, because successive PPP/C governments have been focusing on development in every administrative region, regardless of whether the people there voted for it or not.
