Traditionally, banks have not provided
financial services, such as loans, to clients with little or no cash income.
Banks incur substantial costs to manage a
client account, regardless of how small the sums of money involved. For example,
the total profit for a bank from
delivering 100 loans worth $1,000 each will not differ greatly from the revenue that results from delivering one
loan of $100,000. But the fixed cost of processing loans of any size is considerable as
assessment of potential borrowers, their repayment prospects and security; administration of outstanding
loans, collecting from delinquent borrowers, etc., has to be done in all cases.
There is a break-even point in providing loans or deposits below
which banks lose money on each transaction they make. Poor people usually fall
below that breakeven point.
In addition, most poor people have few assets that can be secured by a bank as collateral.
As documented extensively by Hernando de Soto and others, even
if they happen to own land in the developing world, they may not have effective
title to it.[2] This means that the
bank will have little recourse against defaulting borrowers.
Seen from a broader perspective, the development of a healthy national financial system has
long been viewed as a catalyst for the broader goal of national economic
development (see for example Alexander Gerschenkron, Paul
Rosenstein-Rodan, Joseph Schumpeter, Anne Krueger ). However, the
efforts of national planners and experts to develop financial services for most
people have often failed in developing countries, for reasons summarized well by
Adams, Graham & Von Pischke in their classic analysis 'Undermining Rural
Development with Cheap Credit'.[3]
Because of these difficulties, when poor people borrow they often rely on
relatives or a local moneylender, whose interest rates can be
very high. An analysis of 28 studies of informal moneylending rates in 14
countries in Asia, Latin America and Africa concluded that 76% of moneylender rates exceed
10% per month, including 22% that exceeded 100% per month. Moneylenders usually
charge higher rates to poorer borrowers than to less poor ones.[4] While moneylenders
are often demonized and accused of usury,
their services are convenient and fast, and they can be very flexible when
borrowers run into problems. Hopes of quickly putting them out of business have
proven unrealistic, even in places where microfinance institutions are
active.[citation needed]
Over the past centuries practical visionaries, from the Franciscan monks who founded the community-oriented
pawnshops of the 15th century,
to the founders of the European credit union movement in the
19th century (such as Friedrich Wilhelm Raiffeisen) and
the founders of the microcredit movement in the 1970s (such as Muhammad Yunus) have
tested practices and built institutions designed to bring the kinds of
opportunities and risk-management tools that financial services can provide to
the doorsteps of poor people.[5] While
the success of the Grameen
Bank (which now serves over 7 million poor Bangladeshi women) has inspired
the world, it has proved difficult to replicate this success. In nations with
lower population densities, meeting the operating costs of a retail branch by
serving nearby customers has proven considerably more challenging. Hans Dieter
Seibel, board member of the European Microfinance Platform, is in favour of the
group model. This particular model (used by many Microfinance institutions)
makes financial sense, he says, because it reduces transaction costs.
Microfinance programmes also need to be based on local funds. Local Roots
Although much progress has been made, the problem has not been solved yet,
and the overwhelming majority of people who earn less than $1 a day, especially
in the rural areas, continue to have no practical access to formal sector
finance. Microfinance has been growing rapidly with $25 billion
currently at work in microfinance loans.[6] It is
estimated that the industry needs $250 billion to get capital to all the poor
people who need it.[6] The
industry has been growing rapidly, and concerns have arisen that the rate of
capital flowing into microfinance is a potential risk unless managed well.[7]
Hamza Ali H on 11 Sep 09Home What's New About Contribute Submissions Rainforests Mission Introduction Characteristics Biodiversity The Canopy Forest Floor Forest Waters Indigenous People Deforestation Consequences Saving Rainforests Amazon rainforest Borneo rainforest Congo rainforest Country Profiles Statistics Works Cited For Kids For Teachers Photos/Images Expert Interviews Rainforest News XML Feeds Chinese French Japanese Spanish Other Languages Pictures Books Links Newsletter Education Mongabay Sites Kids' site Travel Tips Tropical Fish Madagascar Contact About this site Providing tropical forest news, statistics, photos, and information, rainforests.mongabay.com is the world's most popular rainforest site. [more] Deforestation in the Amazon DEFORESTATION IN BRAZIL: 60-70 percent of deforestation in the Amazon results from cattle ranches while the rest mostly results from small-scale subsistence agriculture. Despite the widespread press attention, large-scale farming (i.e. soybeans) currently contributes relatively little to total deforestation in the Amazon. Most soybean cultivation takes place outside the rainforest in the neighboring cerrado grassland ecosystem and in areas that have already been cleared. Logging results in forest degradation but rarely direct deforestation. However, studies have showed a close correlation between logging and future clearing for settlement and farming. [Português | Español | Français] Deforestation by state Deforestation Figures for Brazil Year Deforestation [sq mi] Deforestation [sq km] Change [%] 1988 8,127 21,050 1989 6,861 17,770 -16% 1990 5,301 13,730 -23% 1991 4,259 11,030 -20% 1992 5,323 13,786 25% 1993 5,751 14,896 8% 1994 5,751 14,896 0% 1995 11,220 29,059 95% 1996 7,012 18,161 -38% 1997 5,107 13,227 -27% 1998 6,712 17,383 31% 1999 6,664 17,259 -1% 2000 7,037 18,226 6% 2001 7,014 18,165 0% 2002 8,260 2
