A Solution to the Limited Success of Micro-Credit in the United States?

Written on 08/16 at 10:10 PM by Andy Posner 0 comments

Filed under: featured brown micro credit

Micro-credit has undoubtedly been a runaway success in developing countries as a tool of both poverty alleviation and economic development. To date, some 100 million people have been reached by micro-loans, and Muhammad Yunus, the founder of the Grameen Bank in Bangladesh, won the Nobel Peace Prize for his work. In addition, thousands of micro finance institutions (MFIs) have sprung up all over Africa, Asia and Latin America.

Micro-Credit’s Limited Success in the U.S.
Micro-credit has also made its way to the United States, a country that, despite being the world’s wealthiest, still has a poverty rate of over 13% (in 2006 over 39 million Americans were living in poverty.) In fact, one of the earliest U.S.-based micro-credit initiatives was begun in 1985 when Bill Clinton was governor of Arkansas and heard of Mr. Yunus’ work; however, the program, called the Good Faith fund, failed, because “the group lending model never caught on.” Since then, dozens of similar attempts have been made, and while many have been successful, the scale pales in comparison to that of Bangladesh and other developing countries.

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