Interesting 7DAYS article by Benedict Paramand on microcredit:
Mahatma Gandhi said: “Poverty is the worst form of violence.” This implies that any effort that reduces poverty could bring down violence thereby increasing the chances of peace. If this is the case then why is The Economist peeved at the idea of a banker and an economist being given this year’s Nobel Peace Prize?
In a recent article..., the magazine said: “The purpose of the prize has become muddled. There is a risk that its worth is being eroded as the Nobel Institute scrambles to find an eye-catching recipient every year.”
.....Muhammad Yunus, 66, of Bangladesh and the Grameen Bank he founded, were given the Nobel Peace Prize for 2006. Yunus pioneered the concept of lending to the poorest, who live on under a dollar a day, to make a marked difference to their livelihood. Yunus has shown that this unconventional strategy is sustainable and can be implemented on a massive scale.
... Peace is not necessarily absence of war or conflict. The tribal wars in much of Africa are more to do with the absence of economic opportunities than mutual hatred. Therefore, there is a need to widen the definition of peace. While it’s true that absence of war encourages commerce, it’s also true that vibrant communities find little reason to squabble.
... Microfinance consists of providing small loans, usually less than $200, to individuals, usually women, to establish or expand a small, self-sustaining business. For example, a woman may borrow $50 to start a small poultry business. As the chickens multiply, she will have more eggs to sell. Soon she can sell the chicks. Each expansion pulls her further from the devastation of poverty.
... Microfinance is not just lending. The providers offer business advice and counseling, while clients provide peer support for each other through solidarity circles. For example, if a client falls ill, her circle helps with her business until she is well. If a client gets discouraged, the support group pulls her through. This contributes substantially to the extremely high repayment rate of loans made to microfinance entrepreneurs.
Here's the article in full.