How Muktii Works
The Muktii Project has been able to reap its success because of its simplicity. Anyone who wants to help the poor in a really powerful way can start their own system and become Directors in the fight against poverty. The most important part is to find a person in the locality of the area to act as Regulators to carry out the aims of the Directors.
The Muktii system uses interest free loans to give the poor the means to bring themselves out of poverty in a strong and dignified way. It is for this reason that Muktii gives loans and not just free charity. We hope to show you the fundamental ideas behind Muktii so that you may see how it is a simple and much more effective way of stopping poverty.
Many charity techniques do not provide long term help to the poor. In fact, charity methods such as providing food aid make the poor dependant on this for sustenance.
However, by giving loans to the poor with the condition that it is paid back does not encourage any form of dependency. They rely purely on their own hard work to use the loaned resources as means to become masters of their own lives.
In this way they can respectfully bring themselves out of poverty; leading them to financial prosperity and enabling them to pay back the loan so that the same money can further benefit someone else.
This cycle of money is what makes Muktii so much more successful than many other charity systems: The resources that drive the system can be used a limitless number of times. Therefore, if you give 100GBP to a charity, once it has been used to help the poor, that is the end of its effectiveness. However, if you use that money as a loan and spur the small business of a poor person, not only are they able to gain financial stability, but you will have that 100GBP back in your hands, ready to help someone else in need.
However there are of course many Non-Government Organisations that do this; the term microcredit has become synonymous with giving the poor small investments. However, in Bangladesh, any positive effect that these loans may have is wiped out by the fact that there is interest and other fees- of extortionately high rates. In Bangladesh it has been seen that virtually no one who has taken microcredit loans has actually been able to put themselves in a better position, unless they already had a steady income in the first place. Many have been put in an even worse situation. (You can find out more about the situation of microcredit and its effect in Bangladesh at What is the Muktii Project?)
It is by seeing the lack of impact that microcredit is having in Bangladesh, that the Muktii Project has strived to give interest free loans to the poor. The Project has been able to navigate around all of those “administration” costs that siphon off the amount of money that goes forward to help the poor – making the need for adding an interest charge to the loan completely unneeded.
In communities where the Muktii system has been established, there are Regulators, people that would once receive loans from the Founders, who are now in charge of distributing and collecting the loans from the people in the surrounding area. People in need of a loan come to the Regulator, and because these Regulators have experience in the way in which the system works, they are able to guide those people through the process. (Note: not everyone who asks for a loan gets one- the Regulator does research into their background and refers back to the Founder- more information later)
The Regulators collects and holds the repaid money of the Recipients and keep it temporarily with themselves. They then benefit from using this collected money for their own needs with the agreement that whatever money they use, they return for the next redistribution of the loans.
In this way, money is not lost through the administration works of the Regulator, however there still remains a strong incentive for them to carry on this role.
The specific role of the Regulator is also what is able to make Muktii into a unique and outstanding charity system. Because they are chosen from the community in which the system itself works, they will have a good deal of knowledge about the people and their work. As a result, their role is not just to hand out and collect loans, but also help people if there are having problems with their project.
We put emphasis on the fact that Muktii is in place to serve the poor and help them out of poverty. So unlike many other microfinance organisations, there is an adjustable time period for the repayment. It is made to be lenient and fit around the people’s livelihood. The Recipient-Regulator relationship enables the Founder to give as much support to the poor as is possible.
It is for these reasons that Muktii is able to rise above many other Microfinance and charity Organisations. The Muktii system’s success lies in its distribution of loans for the sake of creating independence and its ability to provide them without interest by eliminating the cost of administration. But most importantly, it is Muktii’s core goal to serve the poor and help them to gain their own freedom that enables Muktii to be such an outstanding charity system.
If you would like to become Founder in the fight against poverty go to Guidelines for a Founder’s for an in depth view of the Muktii system.