Investing in Dignity
Yang Guinua, age 29, lives with her husband and two children in a tiny, dusty village in Yixian County near Beijing, China. Until two years ago, she was a farmer eking out a bare living with no prospects of a better life. When I visited her in September 2000, she told me that in 1998 she borrowed 1,000 yuan ($122), bought two pigs and raised their piglets, which she sold in her own neighboring villages. With her profits, Yang repaid her first loan, borrowed again and bought more animals. In this manner, she has lifted her family above the poverty line. Yang’s is one of the many remarkable entrepreneurial stories I heard on my recent trip to China. Where did she get the loan? Who would lend money to a dirt-poor woman with no collateral and little hope?
This is the work of the Grameen Bank, a Bangladeshi institution that was started with the sole focus of lending to the poorest of the poor in order to allow millions to raise themselves out of poverty. Today, 24 years later, Grameen Bank has more than 2 million outstanding loans in over 38,000 villages throughout Bangladesh. Grameen-style microcredit programs are operating in some 50 countries around the world and serving an additional 600,000 poor individuals struggling to climb out of impoverished lives to a brighter future. With minor variations to accommodate customs in each nation, loans are made to individuals who form a five-member borrowing group. If one member of the group is delinquent, the others may not be eligible to receive additional loans. No collateral is needed, and the loans are based on character and socioeconomic needs of the group — just the opposite of loans in our Western world where net worth is the primary requirement. The history of loan repayments everywhere is remarkable. In China, for example, 95 percent of loans are repaid.
In the 1980s, the Chinese government initiated large-scale efforts to assist the poor, but its focus on regional development was not moving aggressively towards the stated goal of alleviating poverty, so a shift towards providing funding directly to the poor was needed. Under a communist society, how can you stimulate the individual to take economic risks? Starting in 1995, the Chinese Academy of Social Sciences created a project patterned on the Grameen Bank. Under the Chinese plan, loans start with 1,000 yuan are one year in length and amortized weekly, as is the case with most Grameen programs. The Chinese model states that if you have a net worth of more than 2,000 yuan ($244) you are too wealthy to qualify for these programs, thus keeping the focus on the poorest of the poor. In China, as elsewhere, the loans are made mostly to women.
Women invest their profits into the family by educating their children, improving their household and their community. A wonderful byproduct of lending to women has been their radically improved status both in their families and their communities.
As a part of this commitment, in each country where the Grameen program operates, borrowers pledge to live by certain major principles that will enhance their lives. Some of these 14 principles demanded of Chinese borrowers:
Change your outlook on life, be open to change, new ways to learn.
Be brave and united, strive to develop yourself, help each other.
Get education and training, be creative in marketing.
Adopt family planning, keep families small, educate your children.
Focus on personal health care, clean toilets, clean water supply.
At weekly meetings borrowers reaffirm their agreement to live by these (and other) life-enhancing principles that may seem obvious to our sophisticated society, but offer a giant leap towards a more productive, healthy life for the rural borrowers.
If we Jews live by the philosophy of tikkun olam, I cannot imagine any effort to “repair the world” more worthwhile than microlending to the poorest of the poor and I feel privileged to be a part of this program.
There is now a worldwide Microcredit Summit Campaign underway that has enlisted several thousand microlenders and hundreds of international development agencies, all working toward a goal of reaching 100 million of the world’s poorest families with microloans by the year 2005. If the goal of the Microcredit Summit Campaign is even approached, it would help hundreds of millions of people raise themselves from lives of despair to the hope of living with some dignity and the ability to provide a decent life for themselves and their children.
In Los Angeles, a Grameen style microenterprise loan program is commencing at a 475-unit apartment project in North Hollywood owned by Volunteers of America. This program will focus on women borrowers, using basically the same lending techniques Grameen has pioneered elsewhere, and we feel confident it will offer the same creative opportunities for many, many families to significantly increase the quality of their daily lives.