The desire for achievement is a natural human precondition. Individuals seek to add value to their lives and communities through the realization of success and a lasting legacy. This capacity is engrained in the human psyche.

While handouts can provide individuals with crucial short-term necessities like food and water, they do not address the root causes of poverty. Whether rich or poor, people want to wake up in the morning with a purpose; they want to further themselves in life. Underprivileged individuals are at a disadvantage because they lack the ability to ’spend money to make money.’ For example, university students borrow upwards of $20,000 per year for education and living expenses because they know these high costs will result in long-term gains. The poor have the human capital to succeed, but they lack the finances necessary to transform their intellect into cash.

This is where micro finance comes in. Lending an impoverished person a small amount of money with a very low interest rate can help them progress economically in a much more efficient way than a simple handout. For example, a small loan for a woman in the Third World to buy fabric can help kick-start her small clothing business in the informal sector. This small risk is well worth the reward.

Reasons for the need of effective low-interest loans to the poor are abundant. Exploitative moneylenders in rural parts of developing countries charge excessive interest rates, which prevent smallholders from investing in more sustainable, profitable, and efficient agricultural practices. This is partly due to a lack of property rights, as poor farmers have no land titles to borrow against. In turn, smallholders have to forfeit their land to lenders which effectively turns them into landless labourers; they essentially become slaves to ’loan sharks’ in order to pay back not only the loans, but the absurdly high interest associated with them.

Global stratification of social classes is a key reason for worldwide social inequality. The Grameen Bank and other micro lending firms realize this so they have come up with an unorthodox method of closing the gap between the rich and the poor. In effect, they are helping to upgrade people’s social statuses from poor to middle class. While there remains much controversy around the Bank’s practices, it is evident that they have excellent intentions coupled with a proven model. They should undoubtedly be encouraged to continue on their mission to reduce global inequality.

A famous 19th century British proverb sums up the message that the Grameen Bank is trying to convey quite nicely: “Give a man a fish, and you feed him for a day; show him how to catch fish, and you feed him for a lifetime.”