How Access to Microfinance and Education Through Technology Can Alleviate Poverty in Third World Countries

Abstract World Bank has argued that the best way to help people climb out of poverty is to give them an education. Professor Yunus of the Grameen Bank (GB) has demonstrated that poverty alleviation can also occur through microfinance--the provision of small loans of money to very poor women who wish to commence a small business. After twenty-three years of working in Bangladesh which is still one of the poorest countries in the world, the GB has already taken the mobile phone to rural villagers who pay to use the cell phone to call relatives overseas; and Grameen Net is planning to bring the Internet to rural towns. author explores whether a combination of microfinance (GB Replicas) and access to education through communications technology could speed up the empowerment process in third world towns and rural areas at a time when globalization and the lack of access to technology is making many third world countries poorer. Introduction According to the World Bank Vice-President for Environmentally Sustainable Development, globalization is having some negative outcomes for all societies (see De Borchgrave, 1996). He believes that the way to reach the poor is through microfinance, microenterprises and self-employment. Not everyone is ecstatic about this route however. Ehlers and Main (1998) speak about the false promise of microenterprise in the USA and The Economist (1998) points to the possible dangers of the Community Development Financial Institutions (CDFI) funded programs which have not been tested by recession. However, Rahman and Wahid (1992), in a review of the Grameen Bank, in Bangladesh believe that of the flow of cash to the poor, the vulnerability of the rural poor has been greatly reduced (p. 314). McGuire and Conroy (1998) have observed that with the exception of Pakistan, both donors and governments have given substantial funds to support the development of microfinance in Asia. In 1997, just before economic tragedy struck Indonesia, Robinson reported the Bank Rakyat Indonesia (BRI) in Indonesia had proven that the demand for microfinance could be met sustainably on a larger scale. Certainly the Asian recession has increased the number of poor between 1996 and 1999, by at least 3 million in Thailand alone. World Bank's report on Attacking Poverty (World Development Report, 2000) indicates that this increase will be sustained in part even when the economy improves, because of the loss of assets including land and savings (Duang Prateep Foundation Monthly News, December, 2000: p. 4). CASHPOR (Credit and Savings for the Hard-Core in Asia-Pacific), in their newsletter Credit for the Poor reported on the situation of microfinance institutions (MFI) in Indonesia following the Asian economic downturn and were pleased to write that although there were serious consequences for the poor, whose numbers grew enormously over the first year after the crash, those who were in Grameen Bank Replicas appeared to have weathered the crisis better than those who had not been part of such a microfinance scheme. McGuire and Conroy (1998) report similarly on the Indonesian institutions they followed up, although earlier on, there appeared to have been a reduction in outreach of microfmance programs within the rural banks Particularly over the past two decades, the concepts of Microcredit and Microfinance schemes, have been introduced to developing countries to assist the very poor. Often there is some confusion about the terms microcredit and microfinance. Microcredit is a system of providing credit to poor people who cannot normally access it, while microfinance includes both a savings and a credit component. While many microfmance projects commence in urban areas (Jackelen & Rhyne, 1991), this article is concerned generally with rural areas. In most countries, access to banking services is restricted in rural areas, although in the more affluent countries, Internet Banking is changing that now. …