The conundrum of microcredit

A few days ago Professor Muhammad Yunus has observed in two articles in The Financial Express that every person is an entrepreneur and should be viewed as such. He rightly blamed the current trend of education which prepares students as job-seekers, not job-givers. He is also critical of the current economic theories, according to which 'agents' are treated as suppliers of labour, rather than demander of labour. In fact, this is one of the most inspirational statements delivered by Muhammad Yunus, the founder of Grameen Bank.
But the question remains as to how we could bring about the change that Professor Yunus has called for?  Even if we change our education system enabling the younger generations to present themselves as entrepreneurs, the problem is hardly solved. To present the issue formally, if we take entrepreneurship development as 'dependent variable' and education system as 'independent variable' and take the other things to remain constant, we will see that changes in entrepreneurship development with respect to changes in education system that encourages entrepreneurship will be insignificant, unless some other concomitant changes take place. Therefore, correcting and changing the education system - even the economic theories - will not render any better solution than what we are currently in.
The strength of Muhammad Yunus' claim rests on his social business model or his microcredit-based system. Though this model has been pioneering in the sense that it has opened the path for financial inclusion of the marginalised people who don't have access to credit from conventional banking, it is not remarkable enough to falsify the adage "old wine in a new bottle". In other words, the micro-credit model is old wine in a new bottle. Whereas the conventional banking does not offer any credit to poor and marginalised people since they often lack the proper collateral, the micro-credit banking system has just lifted this curtain devising alternative ways. But what is more important is not getting credit, but what is the worth of your credit or what this credit means for you. Most often micro-credit borrowers use that money as those kinds of transaction that don't bring any direct benefit to them. Instead, ironically, such loans create for them further financial complexities, increasing the debt burden. Even if we set aside such concerns that they use that money for unproductive purposes, we can save our arguments. However, the matter is still worse.
The very rate of interest that the micro-credit banking system charges the poor people is nothing but 'equivalent to exploitation'. While Prof Yunus boasts highly of his social business model, he has avoided this concern in his above-mentioned articles. When we take into consideration the very exploitative interest rate charged on micro-credit, we hardly see any difference between the conventional banking and Yunus' model. Though Muhammad Yunus has created a financial structure that has opened the door of prospects for the poor, the door itself is a roadway to miseries.
Now if we listen to Professor Yunus and create many institutions (following his micro-credit model) that will spark the hope to become an entrepreneur on the part of everyone, while making concomitant changes in education and economic theories, can we expect to overcome our concerns over unemployment, as everybody will be a job-giver? The answer is, unfortunately, no. We have to create a financial institution that supports people -- not chokes them off; and the micro-credit model has not satisfactorily been forged in that direction.
Some days ago, an economist from our country diagnosed the European economic crisis as the mismanagement of fiscal and monetary policies of the countries concerned. He was alluding to Greece in his conversation. But this assessment is not a cogent. In a world, where banks and financial institutions are allowed the freedom to carry out their 'exploitations' through putting and charging a fixed rate on the money lent without taking into account whether one can repay it at all or not, we can't expect anything better. Disaster has just set in, but is yet to complete its full course. We will see that in the future.
It's an irony that economics cannot be put solely in the hands of economists and academicians. It has been already more than 1400 years since the revelation of the Holy Quran which has strictly prohibited charging interest on the money lent. Today, we hardly see any academician belabouring on that topic as to why interest was forbidden. What is the reason? Before we understand that, we could read Samuelson's texts and Irving Fisher's theory of interest that say money has opportunity cost, and it is ubiquitous. The great illusion is that lazy money kept in banks or the money lent out doesn't have any opportunity cost at all, and this lesson never appeared in the so-called textbooks of economics.
While Professor Muhammad Yunus has advised us to treat ourselves as entrepreneurs, would he advise us to believe that money lent has an opportunity cost and that it deserves a fixed rate of interest that doesn't take any care of the risks that borrowers will face while being indebted? If the answer is yes, then even if we change the theories, they will not reflect reality.  
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