Tonight I went with some friends to hear Muhammed Yunus, 2006 Nobel Peace Prize winner and "builder" of the Grameen Bank in Bangladesh. He piloted microcredit lending to the poorest of the poor in Bangladesh and Grameen Bank, which grew out of his initial work, has been incredibly successful. He has some very interesting ideas about social business - business whose bottom line is change, rather than profit - and has been influential in the move towards social entrepreneurship - business with the poor/society in mind (focusing on a double bottom line: profit and community change/development). The paradigm shift required to see every problem as an opportunity, to make change your bottom line, to look at people as an opportunity to invest in as instead of a resource to extract...that's no small paradigm shift. Yunus summed it up practically when he talked about young people in Bangladesh, recipients of scholarships and educational loans for academic excellence looking for work post-graduation. There are few jobs available in Bangladesh, but when they asked Yunus for solutions he told them not to be job seekers but job makers. That is quite a paradigm shift.
I thoroughly enjoyed listening to Yunus speak. He had a very humble, even unassuming manner about him and was very engaging. He's done some incredible work in Bangladesh (and has even started a microcredit program in Queens, NYC, giving an average loan of $2,200 to 600 clients - and they've seen a consistent 99.6% repayment rate!) and is a man to be respected.
However, his motivation for ending poverty seemed less than attainable. He seems to believe wholeheartedly that if we could only change our current system (for it's our system, in his perspective, that makes people impoverished), we could iradicate poverty. If we could only recognize that people are not just selfish but also have the capacity to be selfless, to act on behalf of others, and if we could hold these two desires in a proper tension, then we can create a better world, a world without poverty. It's a compelling vision, but what's the motivation to be selfless? I don't think human beings are capable of ending poverty - we're certainly capable of all kinds of beautiful, incredible, powerful things, but we're also capable of all kinds of terrible, destructive, horrific things, like creating systems where the wealthy feed off the poor. I don't think we'll ever overcome that capacity on our own.
I wonder, though, what makes things like the Grameen Bank succeed. And, will it continue to succeed in the coming decades? Will it be a sustainable institution? Will it be a force of transformation in Bangladesh? Will it truly "change the world"? Only time will tell...
2 comments:
I, too, wonder what makes the Grameen Bank model successful. While most cost-analyst studies report that the Grameen Bank's micro-lending program is a worthwhile social investment, it seems like the replication of this model is not as sure-fire.
For example, I had the opportunity to observe another Micro Credit loan program in Namibia (Project Hope -- they work in several countries using the Village Health Model), which really struggled. They targeted young women (as opposed to mothers or older women, who seem to be more responsible groups in terms of repayment) and paired loans with health education. The logic made sense: it's not enough to just provide health education and expect that to positively influence behavior choices, if the recipient does not have a livelihood (therefore, is more dependent on males). In order to show this, Project Hope was doing their own internal study with one group of girls only receiving health sessions and the other receiving both loans and health sessions. This is valuable research that needs to be done, I believe.
Several challenges faced this program, though:
1. little money management education was offered to the girls. Imagine giving any 17 year old girl $50 dollars and telling them to go make a business -- what are they going to do? Often times, spend it.
2. The loans weren't really enough to actually start a business, leading to a lot of small scale re-selling (buying candies in town and reselling them in the village). Not a highly profitable endeavor.
3. Many businesses still depended on men, instead of truly providing women an opportunity to be less financially dependent on male family members. Two of the more successful businesses were selling fish and selling wood. In order to get fish or wood, the girls needed to rely on men for transport (to the river), while chopping wood is "mens' work."
4. Because the money was often "eaten" without a business actually being created, therefore no profit, girls were often MORE dependent on their parents to help repay their loans...OR, (and this is the scary thing) reliant on sugar-daddies -- hence increasing their risk of being exposed to sexually transmitted diseases like HIV. A study done in Zimbabwe of micro credit groups targeting younger women, showed that these girls were more likely to engage in high risk behaviors (prostitution, sugar daddies) being in a micro lending group than not being in an effort to repay their loan. To me, this is the exact opposite of what these programs seek to achieve.
Given these challenges, you can imagine that the repayment rates weren't anything to brag about. These are some of the pitfalls that I noticed from attending the group in my village and talking with the two volunteers I knew who were directly working with this organization. On discouraging days, they would call it "Project Hopeless."
Clearly, as the Grameen Bank shows, micro-lending can be an effective way to empower women and be worthwhile business wise. I'd be interested in reading/learning more about their model to see how they address/avoid these challenges that face other micro-finance spin-offs.
I didn't mean to give a lecture on micro-credit lending...just share my experience as a fellow development student/worker.
Thea - thanks for sharing! It makes me think of the micro-credit lending groups I met in Haiti when visiting there with World Relief two years ago. In Haiti, we used to give loans to groups of women - the idea was that there would be a higher level of accountability for paying back loans. Haiti has been so unstable that any model is difficult, but the thing I remember is sitting with a group of women and hearing them tell stories of how they would give input to each other's business plans. One women said she planned to start a bakery and everyone told her, "No way! You're a terrible cook!" On a certain level the model fostered community, group accountability & ownership, and allowed us to lend to some poorer groups of women.
I don't know if the Grameen Bank model is more replicable than this one - I have yet to read Banker to the Poor, but I definitely want to! Regardless, your comment points out the incredible importance of things like proper training and a nuanced understanding of context before beginning such a program.
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