Yunus Sees Room for Microcredit in China
Wednesday, February 25, 2015
Microcredit has been met with immense enthusiasm in China in recent years, with both banks and business moguls pushing into the sector. Global Times (GT) reporters Gu Di and Liu Zhun talked to Muhammad Yunus (Yunus), a Bangladeshi social entrepreneur, economist, and microcredit icon. For founding Grameen Bank, a bank that makes small loans to the impoverished, he was awarded with the Nobel Peace Prize in 2006. Yunus shared his understanding with GT of why microcredit is flourishing in China and how China’s “One Belt and One Road” project could influence the field.
GT: Almost 10 years have passed since you were awarded with the Nobel Prize. In the interim, you have met many criticisms and doubts. What do you think of them?
Yunus: There are a lot of scathing voices against microcredit. Some said it is not really helping the poor, or the effect is not as apparent as we expected. Some said the system doesn’t work in many other countries, and even negatively influences poverty alleviation. But we can note that there has been little blame directed toward Grameen Bank. Grameen Bank has been operating very soundly. It is microcredit as a whole that has been blamed.
The reason why microcredit has encountered so much suspicion is that people have failed to understand what microcredit really is. Microcredit pursues profits, but it begins from helping the impoverished. Loans that simply aim at making more money cannot be microcredit. Grameen Bank has many branches around the globe.
In the US, there are 19 branches. Each one of them is working well, and the repayment rate is nearly 100 percent.
GT: Why do developed countries like the US need microcredit, as they have well-developed social welfare systems?
Yunus: Actually, this is the common problem of capitalism. Countries may be rich, but the living standard of ordinary people might be low. In the US, you see a lot of advertisements in newspapers and TV about payday loans with [annualized] interest rates as high as 500 percent. Many poor people are not qualified to ask for loans from banks because they have no collateral, and can’t even get payday loans because they are jobless.