Can 'Micro-Credit' lead to 'Macro-Develpoment'?

Even if you have not heard about 'Micropayments', you have surly used it while using E-Bay or other shopping websites. Basically, a micro-payment is transferring small amount of money. ( see also -http://www.scottmccloud.com/home/essays/2003-09-micros/micros.html ).
Sometime those amounts are so small that we don't even 'feel' that they were charged on our credit card.

However, 'Microcredit' is another way of saying that we lend small amount of money to those who really can't borrow from any bank (i.e poor people with no collateral or steady employment and thus have no access to the traditional banking). Microcredit is based on a set of the following principles:
1. Dismissing the 'easy way out' of donations and grants to poor countries as the primary solution for the vicious cycle of poverty.
2.Focusing on building entrepreneurship within individuals rather than on corporations and large companies.
3. Building a system based on trust and support

That system was implemented successfully in several underdeveloped countries and have enabled extremely poor people to generate income by themselves. The most famous is the success story in Bangladesh by the Noble Prize Winner, Muhammad Yunus who is the guru of the micro credit-system ( http://muhammadyunus.org/) and Grameen Bank (http://www.grameen-info.org/)

Apparently it works!

Just for simplifying the debate, some articles talk about some resemblance between the term 'Micropayments' which is apparently much more familiar to us and the term 'Microcredit'. (See also- http://www.leftbusinessobserver.com/Micro.html) It means that in the same way a nickle charged on our credit card does not really affect us, a 100 dollar loan would not even 'tickle' a certain financial institution equity.

Hence, as an Internet website can base its B-model solely on micro-payments, a group of poor people can develop their small 'autarkic farm' based on 'micro-credit'. Although there is criticism about the system itself and about the way it was executed in some places, I still find it inspirational in the way that it attacks the problem of poverty from a different angle.

Gadi


"I did something that challenged the banking world. Conventional banks look for the rich; we look for the absolutely poor. All people are entrepreneurs, but many don't have the opportunity to find that out...". Muhammad Yunus