AFP :: 2 October 2008

Microfinance unscathed by financial crisis: Yunus

GENEVA (AFP) — The financial crisis has not hit the microfinance system, Nobel Peace Prize winner Muhammad Yunus said Thursday, as he called for tougher regulations to prevent such shocks in future.

"One good news in the middle of all these bad news: microfinance still works. Not hit by the meltdown process," Yunus said at the sidelines of an International Labour Organisation symposium on microfinance.

Yunus, nicknamed the "Banker to the Poor", won the 2006 Nobel Peace Prize for helping millions escape poverty through so-called "micro-credit" financing projects which enable people without collateral or steady income to get small loans.

Jean Zwahlen, who chaired the symposium, also shared Yunus' optimism about microfinance, saying that it would "show its resilience" in the face of the financial crisis.

But Yunus warned that a global economic slowdown would "affect the lives of the poor people much more" than others.

He described the current financial crisis as a "failure from all sides" and said regulations were required to prevent future crises.

"This is what is missing, " he said. "This is a failure of the market itself."

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