Introduction
According to Peng (2014), " Recent research suggests
that firm size and age are not defining characteristics of entrepreneurship."
(pg 128), this suggests that an entrepreneur can arise from anywhere and it's
not necessary that they need enough fund to start. Microfinance Institutions
(MFIs) are a type of banking system which provides loans to those group who
have low-income or unemployed without any financial guarantees. MFIs are
directly contributing to the national economies by putting an effort to raise
the people from poverty. The MFIs are playing smart by providing 80 percent of
its lending to women since they are likely to support their family and less
likely to adopt bad habits like drinking, gambling in comparison to men.
Muhammad Yunus, a visionary person has come up with an idea to lent people less
and raise them out of poverty, and make them the practice of self-dependence
which has led him to get the Nobel Peace Prize in 2006.
The case arises questionable debate of the Nobel Peace Prize
to Muhammad Yunus instead of the Nobel Economics Prize. It has also raised
ethical questions to MFIs about its investors being richer and richer, charging
up high loan interests, using unethical ways to recover, and forcing the
customer to take the suicidal way out. Also, the Government of Bangladesh has
been intervening and arising questions of wrongdoing by the Grameen Bank.
Discussion
1. Why was Yunus awarded the Nobel Peace Prize (as opposed
to the Nobel Economics Prize?
Muhammad Yunus, a citizen of Bangladesh was awarded the
Nobel Peace Prize in 2006 for the contribution he has made to create economic
and social development. According to the article in the Nobel Prize website,
" Lasting peace can not be achieved unless large population groups find
ways in which to break out of poverty". Due to this reason he was awarded
the Nobel Peace Prize as opposed to the Nobel Economics Prize. To develop and
maintain peace in the country, any country should rise above the poverty line.
Yunus has developed a vision that a small contribution to
them in terms of money can raise their earnings as an example, he has lent $27
from his pocket to a group of poor craftsmen who were not able to even buy a
fishing rod. His vision was to provide loans to poor people without any
collateral that developed Microfinance Institutes (MFIs). With this vision, he
had established a village-based enterprise called Grameen Project which later
on turned to the Grameen Bank. MFIs played an important role in liberating
economically poor especially women to come forward and start on their own. The
continuous effort in improving the lives of poor people, adding up in
development, and the movement become world-wide, Muhammad Yunus was awarded the
Nobel Peace Prize.
2. ON ETHICS: As an
investor in a developed economy, do you have any problem investing in MFIs?
Few ethical questions will arise while investing in
MFIs as an investor:
·
Can I make a profit from poor people by doing
business?
·
Is it ethical to charge a high-interest rate
from poor people?
·
What is my ethical responsibility to do business
avoiding the burden?
Providing loan to poor people without any financial security
will certainly help them to start their own business. There are lots of people
who are intelligent, and hard-working for whom money becomes an obstacle to be
an entrepreneur. Economic stability will establish the base for the development
so it will be ethical to do business by making some profit from the poor.
As we know business is for making a profit but charging a
high-interest rate in the name of creating opportunities is an unethical
practice. The low investment is always volatile, the income from the low
investment is less and charging high-interest rate will never give anything in
the hand of the poor people. Ultimately the poor people get nothing, they will
work hard and MFIs enjoy from their earnings and this cycle goes round and
round. Their life ends only paying interest of the loan taken.
To fulfill social responsibility, customer should be always
kept happy and help them grow their business by maximizing profit at both ends.
The MFIs should start a policy to look after the business, start some training
programs to groom them as an entrepreneur, guide them in scaling up the
business.
So as an investor from a developed company, I do not have
any problem investing in MFI as long as the institution works ethically, profit-sharing
concept, fulfill social responsibilities, and create sustainable opportunities.
3. ON ETHICS: As CEO of a leading MFI in Kenya, Indonesia,
or Mexico, you have been invited by your country's leading newspaper to write
an opinion piece in defense of MFIs. This defense is prompted by the Indian
government bailouts of MFIs and the Bangladesh government investigation of
Grameen Bank. How would you proceed?
Success comes with obstacles and every business is not a
success so while doing business ups and downs come in the way. There is a huge
population in the world who are living under the poverty level and MFIs has
certainly contributed to bringing down those number by some extent. The MFIs
have been providing loans without collateral which has motivated the people to
do their own, mostly women have benefited highly. With a small loan, people
have achieved a better life and started to see their life in a better way.
Government of India would not have a bailout $221 billion if MFIs have not
impacted positively in the national economies. The bailouts are a positive sign
that the government believes that MFIs are a strong foundation to diminish
poverty from human rights prospect.
As per the investigation made by the Government of
Bangladesh on Grameen Bank, it is totally wrongdoing of the government. The
Grameen Bank is doing the right thing with it management else it would not have
been copied worldwide. Through its unique model, the bank has provided millions
of women to smile in a masculine society. The process of MFIs is based on trust
since people are the owner and with the government anticipation people will
have to face hard times and more likely corruption in the system will arise.
Conclusion
A good thing is needed to start and people start following
you, the MFIs all over the world has done the same thing and lots of thanks to
Muhammad Yunus for his brilliant idea. The concept has eventually started a new
entrepreneur era by giving a small loan amount with no securities. They have
helped mostly in women empowerment. There is criticism that richer people have
become richer due to MFIs. The rich were already rich and added few to it but
looking from the perspective of poverty the poor people have now something to
smile for. They have earned something from nothing. The investment has helped
in creating a stable environment, stable society, and helped to drop in the
poverty line.
References
Peng, Mark W. (2014). Business Strategy, Business-level
Strategies. Retrieved April 26, 2019, from
The Nobel Prize. (2006, October 13). The Nobel Peace Prize
for 2006. Retrieved April 26, 2019, from
Mahmood, Asad. (2013, July 1). Microfinance and Ethics:
Three Pivotal Questions. Retrieved April 26, 2019, from
