http://www.grameen-info.org/.

This is  practical economics

I just finished reading Yunus' book, Banker To The Poor. It was an enthralling and insightful read, one of the best personal stories I have read in a very long while.
The book, rather than the typical self-promotion efforts, or personal apologies/justifications we see in modern biographies, is a very detailed story tracing the developments that led to the creation of the institution known as the Grameen Bank. It also provides a good overview of the underlying philosophies that drive their business model, as well as the economic perspectives of Yunus himself, some of which I'll summarize below:

1. The poor don't need charity or training, they need empowerment at their level. This forms the very basis for providing micro-loans.

2. Yunus believes that poverty alleviation programs that are aid-based, such as those promoted by the World Bank and governments around the world, do very little if anything to alleviate poverty. That kind of rings a bell; most of the World bank funded or assisted projects in Nigeria are usually some sort of smoke screen projects that do very little to address anything. You only see a random borehole somewhere, or a totally impractical project like Prof. Negroponte and his One Laptop Per Child project that never went anywhere. I very much share this sentiment.

3. Contrary to popular beliefs, micro-loans have a much higher repayment rate than conventional bank loans. In fact, Yunus postulates that conventional banks are set up to provide loans to the very customer base that is unlikely to repay, just so they can charge a premium on the repayment rate. Micro-loans don't provide such opportunities for profiteering, and you can't charge premium interest rates. Amounts will be smaller, and likewise loan tenures.

4. Micro-credit is based on social capitalism. Capitalism, as in it can only function effectively under free markets, and socially in that it is not based on profit maximization as the primary objective. Communism doesn't really empower anybody, it only empowers the state. Capitalism on the other hand empowers only the profiteers, who are usually the ones with the inside track, or the reins of power. So the Grameen principle is leftist, but not really Marxist. More like social welfarist.

Would like to read other contributions.

AjanleKoko:

most of the World bank funded or assisted projects in Nigeria are usually some sort of smoke screen projects that do very little to address anything. You only see a random borehole somewhere, or a totally impractical project like[b] Prof. Negroponte and his One Laptop Per Child project [/b] that never went anywhere. I very much share this sentiment.

the impracticality and irrelevance of that project is mind boggling.
sometimes even seemingly intelligent people blow your mind in a negative way.

On the topic at hand, Yunus was here weeks back.Spoke at a First bank conference and afterwards the big suits made all the right noises but i guess not much will change.
In my view, i think the foundation of micro finance in this country is faulty.With a faulty foundation, there is little that can be achieved.
these micro finance banks have not being set up as social capitalist ventures but solely as capitalist ventures.
The cost structure alone is enough proof that it has been set up for failure.
the cost structure (OPEX and CAPEX) needs to be as minimal as possible.
All these big buildings and official cars are not it.
the banks needs to be as accessible to the grassroots as possible.
Its sales mechanism needs to be as integrative and collaborative as the 'follow up' folks in pentecostal churches.
Amounts ought to be smaller,teure smaller and the banks should monitor the customers every step of the way.

mbulela:

the impracticality and irrelevance of that project is mind boggling.
sometimes even seemingly intelligent people blow your mind in a negative way.

On the topic at hand, Yunus was here weeks back.Spoke at a First bank conference and afterwards the big suits made all the right noises but i guess not much will change.
In my view, i think the foundation of micro finance  in this country is faulty.With a faulty foundation, there is little that can be achieved.
these micro finance banks have not being set up as social capitalist ventures but solely as capitalist ventures.
The cost structure alone is enough proof that it has been set up for failure.
the cost structure (OPEX  and CAPEX) needs to be as minimal as possible.
All these big buildings and official cars are not it.
the banks needs to be as accessible to the grassroots as possible.
Its sales mechanism needs to be as integrative and collaborative as the 'follow up' folks in pentecostal churches.
Amounts ought to be smaller,teure smaller and the banks should monitor the customers every step of the way.

LOL@ Negroponte's 'intelligence'. That's probably one of our problems as Africans. We seem to use 'intelligence' as our benchmark for sensibility. When someone has gone to many colleges, and passed many exams, we assume the fellow is 'intelligent' and must possess all the answers.

Like the OLPC, most World Bank stuff in developing nations are usually consultant-heavy, and 70 percent of the grants usually go towards travel and professional fees, as well as meaningless 'seminars' and 'workshops'. Very little actually goes in the direction of the grassroots.

I was chatting to an elder engineer who once told me of a World Bank project during Mike Akhigbe's time as Governor of Lagos State. The World Bank wanted to borrow the state money to fund refuse collection. Refuse collection? How asinine is that?

I heard about Yunus' visit a few weeks back. Some of my colleagues attended. It was sponsored by FBN. Pity I heard about it late, and was otherwise tied up.
Regarding micro-loans in Nigeria, forget the headline MFBs. They have already missed the boat, trying to function like they are regular commercial banks. But there are some cottage institutions performing micro-lending to the grassroots, outside the CBN framework. A friend of mine runs a company like that.

Microcredit is the missing link in financial inclusion.

If you get microcredit right it boosts a lot of people to step out of poverty.

I will take a hard look at this Grameen model. who else is up with me? PM lets see what we can do for the poor.