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What is Microcredit?


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What is Microcredit?

Microcredit is giving small loans to people who are too poor to qualify for traditional bank loans, allowing them to become self-employed and support themselves and their families.

Microcredit began in 1974 in Bangladesh when an ecomomist called Muhammed Yunus set up the Grammeen Bank .Yunus was a university teacher who wanted to understand the reality of poor people's lives. In the town of Jobra, he met a young woman called Sufia Begum who made bamboo stools.

Sufia borrowed money for the bamboo from traders. In return she had to sell them the stools, leaving her a profit of just over a penny. She couldn't borrow from money lenders because their interest rates were too high. Yunus found there were 42 other people in Jobra who were borrowing from traders like Sufia. He realised that a loan of just £17 would enable them all to become independent and sell their products to anyone. This was the start of the Grammeen Bank.

Microcredit projects are now helping millions of people across the world. In February 1997 more than 2,900 people from 137 countries attended The Microcredit Summit . They launched a campaign to get 100 million of the world’s poorest families, especially the women, credit for self-employment and other financial services by the year 2005.


On The Line was founded by Oxfam GB, Channel 4 and WWF-UK and is registered charity, number 1073841

"More than 98% of our loans are repaid because the poor know this is the only opportunity they have to break out of their poverty"

Muhammed Yunis, The Guardian, 31 October 1998