WASHINGTON – Micro-finance institutions that serve an estimated half billion of the world’s poor could be in a unique position to prepare developing countries for climate change, according to a report by one St. Mary’s College professor.
As President Obama and other world leaders visit Copenhagen for the United Nations Climate Summit next week, economics professor Asif Dowla, hopes poorer nations and their people will be kept in mind when decisions are made.
Dowla’s previous work with the Grameen Foundation, the largest microfinance institution in the world, and his concern about climate change prompted him to write the report. The founder of Grameen, Muhammad Yunus, was awarded the Nobel Peace Prize in 2006 for his efforts with the foundation to create economic and social change from below.
Micro-financial institutions offer small loans to poor people at reduced interest rates that larger banks consider too risky or too costly for the size of the loan. The Grameen Foundation has disbursed $6.5 billion in loans to more than 7.3 million members, 97 percent of whom are female. The bank has a repayment rate of 98.4 percent.
“Poor countries in Asia, Latin America and Africa will be at the brunt of consequences of climate change,” Dowla said. “The livelihood of the clients of microfinance will be affected adversely.”
Climate change could reduce the growth rate of gross domestic product in most of these poor countries, while higher sea levels could lead to flooding in delta regions.
Despite the risk, microfinance organizations are positioned to work with their clientele to stop climate change or prevent it, according to Grameen President and CEO Alex Counts.
“This network that’s been stitched together…through the collective reach of the microfinance organizations, these are very close customer relationships,” Counts said. “To potentially engage the 3 billion living on less than $2 a day in the battle for climate change is just beginning, and yet the potential to do it though microfinance has the possibility of fast-tracking some of these preparatory and preventative measures.”
Some countries like Bangladesh are already taking advantage of new green technology by leapfrogging over older, more wasteful ones.
“You can go straight from kerosene lamp to solar panel and that’s what they’re doing in Bangladesh,” Dowla said. “Grameen Shakti, a sister organization of Grameen Bank, is the largest solar company in the world right now. They have about 200,000 households who have bought the solar system from them.”
Cell phones are another example of a technology that poorer nations could introduce in place of spending money to install landlines.
“The case of Grameen Shakti shows that the poor, despite not having electricity before from any source including from the grid, are adopting and willing to pay market prices for solar panels,” Counts said. “The potential is do it much more aggressively and comprehensively.”