Phorn Hun Phorn Hun never owned property. She lived in a thatched-roof house next to a pagoda in Cambodia. Even loan sharks wouldn't lend to her. But in 1998 she told ACLEDA Bank about her idea to start a noodle business, and the bank gave her a loan?of US$25. Such a small sum to start a business seems laughable, but this was no joke梩his was "microcredit", designed for would-be entrepreneurs in poor areas. Mrs. Hun抯 business took off, and with her profits she bought land and built a better house, with wooden walls and a metal roof.
Millions of poor people have used microcredit to fund a new tool, a machine, or a shop in the marketplace, with surprising success. Studies in India, Kenya and the Philippines found that the average annual return on investments by microbusinesses ranged from 117 to 847 per cent. If they are so lucrative, why didn't these businesses start sooner? Lack of capital. Poor people either have no money to get started, or have to borrow from loan sharks who charge usurious rates that wipe out profits.
The UN named 2005 the International Year of Microcredit to highlight the potential of finance to lift people from poverty. On 7 November, representatives of 80 countries will meet in New York to discuss how to increase access to microfinance.
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