| Grameen, the pioneering microlending institution, has seen a sharp rise in problems for millions of poor borrowers across the developing world in repaying loans as food prices soar, according to Muhammad Yunus, its founder and Nobel Peace Prize winner. Food prices have jumped in the past year, sparking riots in more than 30 countries and rising protectionism as governments seek to ensure food supplies. The rising food prices are hitting many of the 38 countries in Asia, Africa and the Americas where Grameen operates. Grameen lends directly to almost 8m people to help them start small businesses and supports other microfinance bodies that lend to more than 3m. “I would say [food prices are] a serious crisis. It’s not something temporary, something seasonal,” Mr Yunus told the Financial Times. “Whatever money they have, now they’re using a lot more of their income for buying food, so the strain on making payments becomes very, very difficult.” The poor, who are the focus of Grameen’s microlending model, tend to be hit particularly hard by rising food prices because food takes up a larger proportion of their income. India, the Philippines and Bangladesh – where the organisation was set up and is most extensive – had particularly suffered, he said. Borrowers from Grameen are lent amounts as small as $50 and pay back in weekly instalments. The bank claims a 98 per cent repayment rate and allows borrowers to reschedule a loan when they have trouble keeping up with payments. “Now it takes a lot of hardship to pull that money out of the pocket and pay [for a loan], but they’re paying it for the time being,” he said. “But it may extend in the future. Some of the instalments may be missed.” |