Letter: Helping the poor to help themselves

Sir: Nicholas Schoon writes ('Chalker urges Major to protect aid budget', 28 September) that Lynda Chalker is fighting for the Treasury to back down on its proposed cuts in development aid, which would devastate our programme of bilateral aid to poor countries.

It seems strange that an obvious choice for targeting our aid is being largely ignored. The success rate of well-managed poverty lending schemes is extraordinary. Here is an opportunity for aid to be used to enable poor people to help themselves. Not only will aid targeted in this way pump prime small-scale businesses, but the scheme can become self-financing in a short time.

The Grameen (Rural) Bank in Bangladesh is a classic success story. It was started in 1976 by Muhammad Yunus, who lent dollars 6 to a woman who made stools. Last year the bank lent dollars 52m and today it has 1.2 million members, 93 per cent of whom are women. A staggering 98 per cent of loans are repaid, putting to shame

the record of our banks and borrowers.

Destitution is the qualifying requirement for eligibility as a borrower and the bank goes to the customer - there are 8,000 employees and 973 branches scattered throughout the nation's most isolated villages. The Grameen Bank has served as a model for poverty lending programmes in other developing countries, including El Salvador, Malaysia, Ghana, Gambia and Malawi.

In view of the pressure on our bilateral aid budget, would it not be a more efficient use of resources to allocate a greater proportion to poverty lending schemes?

Yours faithfully,

BRIAN PEACE

Leeds

30 September