PLANS for a Third World-style micro-bank to help small business get off the ground in Scotland are under threat over fears that those getting help will lose their benefits.
Professor Mohammad Yunus, whose micro-credit system offers loans to millions of disadvantaged people around the world, has set his sights on opening a branch of his Grameen Bank in Glasgow. But the Nobel Peace Prize winner fears his attempts may be s
cuppered because of government bureaucracy.
A number of jobless women in the Sighthill area, which has been earmarked by the bank, have expressed an interest in using loans to start up small-scale businesses. But some of them fear they will lose their benefits in the run-up to their enterprise being launched.
The Bangladeshi economics guru said: "The problem we try to avoid is welfare and I don't think we can avoid it in Glasgow. We are not worried about the cultural part of it, because we always create a counter-culture. Our problem is the legal issue. Does the law also allow someone to take a loan when they are still on welfare?"
Yunus insists his banking model has thrived because of its difference to the traditional capitalist model which has been discredited by the recent global financial crisis: "The difference between us and conventional banks is that we are close to people and they are not."
BBC Scotland are investigating the situation, but the UK Department of Work and Pensions was unable to clarify the situation. BBC reporter Sally Magnusson said: "They were unable to say what flexibility might be available for Grameen borrowers or how they would be affected by the current benefit situation."
Ray Perman, of Social Investment Scotland, called for flexibility in the benefits system in order to give the new venture a chance to succeed.
He said: "The things we have tried have not worked, so trying something – even something new from Bangladesh – has to be worth a shot."
Former Minister for Welfare Reform Frank Field, who Tony Blair appointed to "think the unthinkable", has given his backing to Yunus' proposals.
The Labour MP claimed taxpayers would become increasingly disgruntled if people who were trying to succeed were penalised, while those who were happy to remain on benefits were rewarded.
Around the globe Grameen typically loans relatively small amounts to women in developing countries.
The idea is that they use the cash to start businesses collectively or individually to earn their way out of poverty, with the loans repaid in small amounts along the way.
• Scotland's Brand New Bank is on BBC1, 10:35pm, Tuesday
