Microcredit/Microfinance
Today is the start of Global Entrepreneurship Week, a celebration of the innovators who help drive economic growth and expand human welfare. Rupert Scofield, president and CEO of FINCA International and author of “The Social Entrepreneurs Handbook,” talks about his experiences as a social entrepreneur and microfinance pioneer.
President and CEO Rupert Scofield visits a FINCA Afghanistan Village Bank Group in Kabul. Photo credit: FINCA staff.
ONE members are among the most committed and energetic advocates on the front lines of the fight against global poverty that I’ve seen in my 40 years. You read the ONE Blog, you write your friends, you visit your elected officials, you sign petitions, you raise your voices -– all because you believe in social justice and you want a future where every child has a chance to break the chains of poverty and disease. I feel the same way, and in a world where there is less and less focus on the challenges facing the world’s poorest people, I urge you to ask yourself a question: What if I took the next step and became a social entrepreneur, applying my energy to start a new business, organization, or campaign to bring about the change I wish to see in the world?
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S. Mohiuddin, a Bangladeshi citizen living in the US, shares her viewpoint on Muhammad Yunus.
The world is stupefied by the Bangladeshi government’s malevolent campaign against microcredit pioneer Nobel Laureate Muhammad Yunus and the government’s attempts to take control of the Grameen Bank. Bangladeshis speak of a well-known grudge harbored by the country’s Prime Minister, Sheikh Hasina, pointing to her own lobby for the Nobel Peace Prize, as well as to her ill-concealed acrimony towards Yunus after his short-lived effort to build an alternative political party in 2007.
Sheikh Hasina’s government has charged Yunus with everything but the kitchen sink. There are claims that Yunus is “too old” to run the bank, that his post is “illegal” and that Grameen Bank has not eradicated poverty in Bangladesh. So obvious is the culmination of PM Hasina’s longstanding personal hostility towards Yunus, that any attempts to attach “good governance” justifications behind her persecution appear to be disingenuous. Grameen Bank has appealed the government’s move to oust Yunus from his leadership post and Yunus’ position at the bank now hangs on the March 15 verdict of the Bangladeshi Supreme Court.
World leaders, development organizations, and opinion leaders have spoken out in support of Yunus. Bangladeshis, too, are vocal about their support as well as their embarrassment of the government’s 180 degree swivel away from liberal traditions and respect for civil society organizations. But no words or actions are persuading the government to relent.
Whatever schadenfreude PM Hasina seems to be feeling from tarnishing Bangladesh’s reputation, it cannot be enough to offset the misery that could befall the poorest people in her own country. Grameen Bank is 95 percent owned by approximately 8.3 million borrowers, primarily consisting of low-income Bangladeshi women. The Bangladesh government holds a 5 percent stake. The abrupt dismissal of Muhammad Yunus could create a crisis of confidence at the bank. Grameen borrowers are already anxious. According to Romila Khatun, 53, “Grameen Bank was established by Yunus for the poor people like us, not by the government. He brought attention of the world to Bangladesh through his activities and the government now is trying to destroy it.” Another borrower, Fazilatunnesa, 52, from Khulna who built a poultry farm with the money from the Grameen says: “I am really stunned to know about the removal of Yunus. Grameen loans helped me come out of extreme poverty.”
Sir Fazle Hasan Abed, the chair of the world’s largest NGO, BRAC has said: “A big capital of such organizations is the intrinsic community level trust that they have earned. This trust element must not be underestimated. If this trust is lost, then there may be delinquencies, intentional refusal to repay loans, or large-scale withdrawal of savings by the members.”
An organization of Grameen’s size and stature should definitely develop a succession plan for its sustainability. Yunus himself has expressed a desire to hand over his duties to a successor. What we find disturbing is the politically motivated and personal nature of the attacks that have been set in motion to remove Yunus without proper consideration of the impact of those actions. This week, the world’s leading microfinance institutions warned: “Forced removal [of Dr. Yunus] creates unnecessary risk for the more than 8 million borrowers-owners of the bank.”
Indeed, the poor have been the main beneficiaries of Yunus’ diligence and hard work in building up Grameen Bank over the last three decades. Aside from providing small loans to the poor through the bank, Yunus has created several additional initiatives which have lifted living standards for the poor, including rural telecommunications, food security and sustainable livelihoods through aquaculture and dairy resources, as well as renewable energy access in remote areas. It would be a shame to see even the smallest negative impact on such initiatives in a country where about 60 million people live below the poverty line.
Anyone who cares about global poverty should care about what is happening with Yunus and contribute in whatever way they can to preserve the integrity of a great man and the institution he has built. Yunus’ contribution to poverty reduction is indisputable. He has recast poor people from being seen as passive recipients of aid to entrepreneurial and reliable people, and has provided hope to millions of under-served women. Today, there are some 7,000 microfinance institutions serving 16 million poor people worldwide. Just as importantly, Yunus’ influence and words have moved thousands of business leaders, academics, and social entrepreneurs into further activities on behalf of the poor. It is time that advocates of the poor all around the world – irrespective of their views on the impact of microfinance –- stand together with Yunus against this gross injustice.
Here’s a great blog post from Jeffrey Lee, the CEO of Urwego Opportunity Bank in Rwanda. The majority of the bank’s clients and employees are women. Read the original blog post here.
In Rwanda, gender equality is real. For example, more than 50 percent of the Rwandan senators are women. The chief justice is a woman. Approximately 40 percent of the state ministers are women, including the ministers of agriculture, of trade, of foreign affairs. Indeed, women are empowered in Rwanda.
At Urwego Opportunity Bank (UOB) we are also empowering women in several ways. To name a couple, more than 90 percent of our clients are women and 55 percent of our staff are women.
Recently, Alice Gasatura (pictured at left), director of credit support, was on a three-week tour to the US as part of the fund raising team of Opportunity International-US. She shared her life story as well as the client transformation stories. She visited Washington, D.C.; Chicago; Seattle; Los Angeles; Dallas; Atlanta and more. She is one of the most senior women on staff at UOB and she was the first female staff member to travel to the U.S. as an ambassador of UOB.
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Here’s a great blog post from our friends over at Opportunity International. They’re providing their loan officers in Africa with environmentally friendly electronic bikes. Read the original blog post here.
Opportunity International’s loan officers are going green. They are traveling to loan client locations with the assistance of electric bicycles. If electric cars are the epitome of a culture that is constantly trying to reduce its carbon footprint, then electric bicycles (e-bikes) rank in the same category. That’s why Daryl Skoog, Opportunity International’s SVP of technology, is so enthused about deploying e-bikes to the field.
According to Skoog, “With our rural expansions, we recognized that transportation would become a challenge in getting our loan officers to their customers. We were seeking a low-cost mode of transportation with a target of 5 cents per mile, versus the 50 cents per mile it costs us per officer today. Bicycles are a common mode of transport throughout the world, so finding a way to use bicycles that would transport our loan officers and leave them with energy to do their job all day long led us to this innovation.”
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Our friends from Opportunity International are hosting a great event on microfinance this weekend. Read on to learn more about it:
For people looking to learn more about microfinance and global development, network and meet microfinance experts from all over the world, as well as find out how to fight global poverty, our conference is the event to attend.
Opportunity’s 2010 Fall Microfinance Conference is happening this weekend, from Friday, Oct. 8 to Saturday, Oct. 9, in Washington, D.C.
If you can’t come to D.C., you don’t have to miss out. We’ll be streaming live video from each of our four plenary sessions at the conference. Tune in to watch live video of speakers such as:
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When Nassaka Maria Kasujja noticed a need for schools in her community of Kampala, Uganda, the widowed mother of two decided to take action.
To help build a local primary school, Maria took out her first $101 loan from Opportunity International. Today (four loans later), that school teaches 500 students.
But that’s not all. Maria now runs a catering business and a poultry farm that raises 400 chicks. She’s built a house for her children—and she’s been able to send them both to school. Maria’s hard work and dedication is ensuring brighter futures not only for her two children, but for all the children in her community.
I met Maria on my first trip to Uganda. Her hard work and success is an inspiration to me, and hopefully to mothers everywhere who struggle to provide for their families and to lift themselves out of poverty.
I encourage you to take just a few moments and be inspired by the tributes posted on the Global Opportunity Quilt, honoring mothers like Maria and many more significant women who have shaped our lives. Help us build the Global Opportunity Quilt and help a mother in the developing world work her way out of poverty. Your contribution will touch one mother’s heart and change another woman’s life this Mother’s Day.
-Ruth-Anne Renaud, The Women’s Opportunity Network, Opportunity International
A couple weeks ago, the Tanzania Women’s Bank opened its doors for business in the Tanzanian capital, Dar es Salaam. According to the East African, the bank is the first of its kind in sub-Saharan Africa, where the World Bank estimates that women own 48 percent of enterprises but have the hardest time accessing finance.
Although anyone is welcome to open accounts at the new bank, it targets women who have inadequate capital to grow their businesses. While traditional banks require title deeds or other proof of wealth to open account, the Women’s Bank only asks for an ID and $2 in savings, making it much more accessible to women in a country where a third of the population earns less than $1.25 a day. There are also no monthly fees.
Bank officials say that the opening was the result of years of campaigning by women’s groups. From the East African:
“Women’s groups called for the establishment of this type of bank way back in 1999. They wanted a place where they would be listened to and where their needs would be taken into account,” said Ms Chacha [Margareth Mattabi Chacha, the bank’s executive director].
“It took them 10 years to collect the necessary funds. Their biggest challenge was to satisfy all the conditions needed to be recognised as a bank. So far, the initiative is a success,” she said.
Once the bank is firmly entrenched, the founders plan to expand regionally and, eventually, across the continent.
Although the bank is just a few days old, plans are at advanced stages to open branches in other Tanzanian towns.
“Many women live in the countryside,” said Ms Chacha. “Trips to ATM machines are long and costly. We will make banking available through mobile phones, a service provided by a number of banks in Africa,” she said.
Two weeks after it opened, the Women’s Bank now has over 500 customers, 70% of whom are women. In addition to helping women open accounts, bank staff also teach them basic business skills and money management. Officials hope that the availability of staff to walk women through the various steps and procedures will help make the process less intimidating for Tanzanian women, who like most African women are unlikely or unable to take advantage of formal banks. According to a 2006 World Bank survey, only 5% of Tanzanian women use banking services, compared to 11% of men.
Helping women overcome barriers to accessing credit and controlling their own finances is widely accepted as a key step in transforming communities in the world’s poorest countries. For years, microfinance institutions have targeted women as the recipients of small, low-interest loans on the premise that money invested in women is money invested in families and communities. A study in Brazil, for example, found that a child’s survival probability increases by about 20% when income is in the hands of the mother.
When matched with social and political opportunities, economic empowerment for women can have a multiplier effect on families and communities. So watch Tanzania over the next few years. It’s a country that has made significant progress in areas like health and education in the past decade, but this recent development might be the first step towards a new era.
-Nora Coghlan
