By James Anyanzwa
Nobel Peace Prize winner, Prof Muhammad Yunus, has called for a redefinition of the global financial system to prevent a recurrence of the financial meltdown that brought down big banks in developed nations, plunging emerging economies into ruin.
Yunus, who won a Nobel Prize in 2006 for his unique model of dispensing microcredit through his Grameen Bank in Bangladesh, said the financial system ought to be modified to integrate all persons, including the poor.
"We need to redefine the whole banking system in order to ensure everybody is in the financial system," Yunus told reporters in Nairobi. He was speaking ahead of the four-day Africa-Middle East MicroCredit Summit in Nairobi.
"Microcredit is about lending money to the poor in order to help them get out of poverty," he said.
The 70-year-old Bangladeshi economist from Chittagong University said lack of microcredit laws in many African countries is denying millions of the continent’s poor access to loans.
Yunus said time was overdue for microfinance institutions to take centre stage in the provision of financial services.
Access to credit, he said, should be taken as a human right issue and that the financial system need to me redefined to make this possible.
"It is time for new thinking, new mindset and redefining the financial system. The task is enormous but it can be done," he said adding that "this is the greatest opportunity to redefine our financial system." He reckons that while mainstream commercial banks were collapsing as a result of the financial crisis, MFIs were flourishing due to their proximity to the real economy. He urged MFIs to raise funds locally either through collection of deposits or creation of wholesale funds to enhance their financial stability.
Yunus is attending an annual microcredit summit in Kenya, where Africa’s microfinance institutions hope to emulate the success and growth of the industry in Asia, which hosts more than 80 per cent of the world’s 150 million microfinance beneficiaries.
"African women are very active compared to any women anywhere in the world and micro credits have the best chance of succeeding in Africa particularly in women but the financing is never brought to them," he said.
Most African governments are still heavily dependent on donor aid from the West and some microfinance institutions are run by NGOs. Yunus warned against continued channelling of donor aid through governments.
The first microcredit summit held in February 1997 in Washington, DC brought together more than 2,900 people from 137 countries. They launched a nine-year campaign to reach 100 million of the world’s poorest families, especially the women of those families.
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These goals were nearly reached and in November of 2006 the Campaign was re-launched to 2015 with two new goals.
These include working to ensure that 175 million of the world’s poorest families receive credit for self-employment and other financial and business services by the end of 2015.