From Muhammad Yunus's Grameen Bank to present-day Europe, microcredit is now an established reality supporting entrepreneurship and social inclusion.
In the beginning there was Muhammad Yunus. It was 1974, Bangladesh had been struck by a violent flood followed by a severe famine, and Yunus made a loan of 27 dollars to a group of women in the town of Jobra, near the university where he taught. The women made bamboo baskets but were forced to sell them at such a low price that they could barely cover the cost of raw materials. With the small sum they received, they were able to give their business a boost and repay their debt with perfect punctuality. That was how microcredit was born — something that would literally revolutionise the lives of entire rural areas across the Global South.
Forty-two years have passed. The daughter of that pioneering experiment is called Grameen Bank, and in India and Bangladesh it is known as "the bank of the poor" because it was created to guarantee local people access to credit, granting micro-loans without requiring collateral. With more than 2,500 branches, Grameen Bank is currently present in 81,393 villages in Bangladesh and serves more than 8.8 million customers: 96.5 per cent of them are women. According to the latest available data, published in October 2016, over these 42 years the institution has disbursed micro-loans with a total volume of 19.9 billion dollars. And the average recovery rate is remarkable, especially considering that the beneficiaries are individuals excluded from traditional banking circuits: 98.96 per cent of loans are regularly repaid.
Muhammad Yunus (awarded the Nobel Peace Prize in 2006) has not been at the helm of "his" bank since 2011, when he was forced by the Bangladeshi central bank to retire. The official reason given was that he had reached the statutory retirement age, but according to him the real motivations were political. During the same period, Yunus became embroiled in serious controversies, which were later partly clarified. And in 2013 the Bangladeshi government nationalised the institution, marking the end of an era. But, beyond the difficulties it has experienced over the years, Grameen Bank laid the first stone of a radically new model.
Microcredit has, in fact, moved beyond the borders of India and Bangladesh to become a system. All the more so after the global financial crisis, which forced banks around the world to turn off the taps, cutting off entire sections of the population and of the business community. One figure says it all: between 2009 and 2014, in Italy, the ten largest listed credit institutions slashed loans to customers by 120 billion euros. In other words, 10 per cent of the loan portfolio at the end of 2009 literally evaporated — just as the tsunami of the crisis, which originated on the other side of the Atlantic, was sweeping through our country. We are no longer talking about "distant" realities like Bangladesh, but about the banks where we keep our savings safe: Unicredit, Banco Popolare, Ubi, Intesa Sanpaolo. That is why a reality such as microcredit concerns us too — our businesses and our families, increasingly on the margins of the usual banking circuits.
But what, specifically, does microcredit mean? The European Commission distinguishes between social microcredit and business microcredit. The first term refers to small loans granted to individuals and families in financial difficulty, to support them but also to give them a sense of responsibility, since they will have to repay the sum. Business microcredit, on the other hand, aims to guarantee the right to economic initiative, creating a virtuous circle whereby entrepreneurs gradually become capable of generating income and freeing themselves from external support. Beneficiaries are therefore not required to provide tangible guarantees in the form of capital, but rather to demonstrate that their project is viable and credible.
The European Microfinance Network publishes a comprehensive study on microcredit in the Old Continent every two years. The latest edition, published in 2014 and covering the 2012–2013 period, surveyed 150 microfinance institutions from 24 different countries. In 2013, these institutions disbursed 387,812 micro-loans (+69 per cent compared with two years earlier) for a total volume of 1.52 billion euros, 45 per cent more than in 2011. The balance is gradually shifting towards business microcredit, which in 2013 accounted for 79 per cent of the total value of loans disbursed; just two years earlier, that figure stood at 74 per cent. Producing a reliable assessment — the European Microfinance Network notes — is far from straightforward, but it is estimated that in 2013 the institutions covered by the study supported at least 121,270 microenterprises and start-ups, creating around 250,000 jobs across Europe.
To explore the dynamics of microcredit in Italy in greater depth, one can turn to the data provided by the Ente Nazionale per il Microcredito, which coordinates and monitors microfinance instruments on behalf of the Presidency of the Council of Ministers. In the period between 2011 and 2014, it reveals, more than 370 million euros were disbursed in Italy: the majority of this sum (277 million euros) was used to finance productive activities. Thanks to microcredit, around 14,000 Italians were able to start or sustain a working activity. On average, each recipient of productive microcredit generates 2.43 jobs (including their own): this means that from 2011 to 2014 microcredit created more than 34,000 jobs in Italy.