STEVE EMBER: I'm Steve Ember.

BARBARA KLEIN: And I'm Barbara Klein with EXPLORATIONS in VOA Special English. Today we talk about a method that helps provide low-income people with the financial services they need to improve their lives. Organizations around the world are showing how microfinance methods can help lift poor people out of poverty. We also discuss a book that shows how the answer to economic progress in the developing world lies in opening up possibilities for women.

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STEVE EMBER: You do not need to be an economist to understand microfinancing. The idea is to provide extremely poor people with small loans so they can start and operate a business. The borrowers are able to save money and pay back the loan over time. Microfinance helps support financial security because it is not just a donation. The idea behind microfinance is to empower borrowers by helping them build a business which can create income and grow.

BARBARA KLEIN: Microfinance is different from other kinds of aid. Huge organizations like the United Nations or International Monetary Fund might provide millions of dollars in aid to build systems in a developing country. The government that receives the aid can make extensive long-term plans about what to do with the money. But local people might not see the effects of such aid. Microfinance, however, is a kind of aid that helps on a small scale in ways that are direct and local.

STEVE EMBER: Poor people in rural areas often cannot get banking services. Also, banks generally do not provide very small loans because administrative costs are too high. Microfinance provides poor people with a way to build savings and work toward becoming part of a country's official financial system.

The terms "microfinance," "microcredit" and "microlending" are often used interchangeably. Several people are credited with being the first to use microfinance as a tool for social improvement.

BARBARA KLEIN: Akhtar Hameed Khan began experimenting with microcredit in nineteen fifty-nine. He began loaning small amounts of money to people in poor areas of Pakistan. His efforts grew into a project that would later be called the Bangladesh Academy for Rural Development.

In nineteen seventy-six the economist Muhammad Yunus helped develop a research project in his native country of Bangladesh. He began by studying the lives and activities of poor people in small villages. He said these people taught him a whole new kind of economics. He loaned twenty-seven dollars of his own money to a group of women so they could buy the materials they needed to make objects to sell. The women wanted to work and earn money, but they needed money to get started. And, Mr. Yunus observed that every woman paid back her loan on time.

STEVE EMBER: Mr. Yunus created the Grameen Bank project with the aim of extending banking services to the poor and ending unfair loans by moneylenders.

The program was designed to help people in Bangladesh gain employment and learn to earn and save money. The project started in one village. Then it was successfully repeated in additional villages. In nineteen eighty-three, the project was turned into an independent bank owned mainly by its borrowers.

Mr. Yunus won the Nobel Peace Prize in two thousand six for his work with Grameen Bank. When he accepted his award, he stated that poverty goes against human rights. He said that people accept that poverty will always exist, so it does. But he said if people changed their mindset, there could be a world without poverty.

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BARBARA KLEIN: Many organizations provide microcredit mainly for poor women. This is partly because women are often more excluded from financial services and educational opportunities than men. Women usually spend their money in ways that improve their families' nutrition, health and education. Also, studies have shown that women are better than men in repaying their loans on time.

To learn more about women and microfinance, we spoke to Robyn Nietert in Bethesda, Maryland. She is the president of a small non-profit group of volunteers called the Women's Microfinance Initiative. She started the organization in two thousand seven with a group of friends.

STEVE EMBER: The Women's Microfinance Initiative made contact with a group of women in the Ugandan village of Bulambuli. All the women were widows, meaning their husbands had died. W.M.I. agreed to put together a loan program for the women. Ms. Nietert first travelled to Uganda in December of two thousand seven. She met with twenty women that the widows' association had chosen as good candidates to take part in the program. She discussed a business proposal with the women. She helped each woman organize a business plan. And she showed them how to keep careful records. The Women's Microfinance Initiative loaned each woman between fifty and one hundred fifty dollars.

ROBYN NIETERT: "We gave them little business plans to work through. We made sure their cash flows were sufficient to cover the loan repayments and to make a profit and we issued the first twenty loans."

BARBARA KLEIN: Robyn Nietert says the women in this group never failed to make a payment. But if a woman does miss a payment, the nineteen other women in each loan group help to repay the money. After thirty-six months, the women graduate to independent banking with a financial company.

ROBYN NIETERT: "We've taken our lead from the women on the ground. This is a grass roots program. It grows from the ground up. We don't impose regulations from the top down. We ask the women how they want the loan program to work, and what's suitable, what is culturally appropriate for the area. And then, we just implement it!"

STEVE EMBER: Today the Women's Microfinance Initiative has given more than one thousand loans to women in Uganda and Kenya. It has about one hundred and seventy thousand dollars in a rotating loan fund.

ROBYN NIETERT: "The program actually generates income on the local level. When these loans are repaid, the money goes into the local village women's bank account. It never comes back to the United States.

BARBARA KLEIN: Robyn Nietert says the income created by these loans is not only useful for the individual women and their families. She says the increase in income has a huge effect on the whole community as well.

ROBYN NIETERT: "You jump from making my family stronger and raising my own living standards, to raising my community's living standards hopefully to raising my sub-county's living standards to raising my district's living standards, to raising my country's living standards."

STEVE EMBER: We asked Ms. Nietert what advice she had for someone who might want to get involved in helping others through microfinance. Her advice is to do research and volunteer.

ROBYN NIETERT: "Get on the Internet. Do some research. This industry is like the Wild, Wild, West right now. It goes from Grameen Bank, from someone who has won the Nobel Peace Prize to moneylenders who are ripping people off every day with hundred percent a month interest rates. It's all over the place with little regulation."

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BARBARA KLEIN: Newspaper reporters Nicholas Kristof and Sheryl WuDunn feel very strongly about empowering women in the developing world. They wrote a book on the subject called "Half the Sky: Turning Oppression into Opportunity for Women Worldwide."

The writers discuss how women represent the most pressing human rights problem in the world. And, they show that women are the answer to successful economic and social development in the world.

STEVE EMBER: Mr. Kristof and Ms. WuDunn explain how all over the world women are subjected to violence, sexual slavery and other forms of severe oppression. They show how the abuses are rarely reported or discussed. For example, in some South Asian and Muslim countries it is estimated that millions of women are missing.

This is because parents give resources, education and medical care to their boys before giving them to girls. So, many girls do not survive childhood.

The writers say microfinance is one of the important tools for empowering women and lifting them out of these conditions. They use the example of a woman named Saima who lives in Pakistan. Saima's unemployed husband used to take out his anger on his wife by beating her. Saima did not even have enough money to feed her children.

BARBARA KLEIN: She took action by joining a woman's group linked to a microfinance organization. With a sixty-five dollar loan, she began a sewing business and began to earn money. She became so successful that she employed other people. She has been able to send her children to school so that they can have a better life.

The writers also point out that microfinance does not work in all situations and will not solve all problems. No loan will replace the need for education and health services. However, microfinance does show how it is possible to change the lives of women and girls around the world with just a little help.

STEVE EMBER: This program was written and produced by Dana Demange. I'm Steve Ember.