One final thing I wanted to share with you from the FreedomFestconvention in Las Vegas a few weeks ago was the program that has spawned an upcoming movie, "To Catch a Dollar." This program provides small loans to people who otherwise would not qualify for any financing, so that they can start their own small businesses and break out of the cycle of poverty.
There are several similar programs around the world that focus upon this activity, such as Technoserve and the Heifer Project, but the one that was presented at FreedomFest was started in Bangladesh by the an economist named Muhammad Yunus. He observed that many people on the bottom rungs of the economic ladder had feasible ideas for starting businesses, but were totally unable to borrow any money to get started. So, 30 years ago, Yunus loaned a total of $27 of his own money to 42 different people for that purpose.
Of course that amount of money went a lot farther back then and in that country, but it still was a truly modest amount. Nevertheless, Yunus was amazed at the results. Within six months all of the women he had loaned money to had paid it back, and all of them had a new business started of some kind.
So over time he put together the Grameen Bank that made similar small business starter loans – but just to women. No collateral was required, but the loans had to be paid back within a year, complete with interest at 7.5% per year. The program also required that groups of at least five potential borrowers get together and approve each borrower's individual "business plan," as well as a plan for repayment before any of the loans would be made. Then that group would be required to meet together for an hour each week, at which time they would make payments of 2%of the principal and also compare notes about how they were progressing. In a world in which there are more than 4 billion cell phones, there are only 1.5 billion bank accounts. So the Grameen Bank became a bank for the unbankable, and it has been successful.
One of the truly noteworthy features of this program is that if one woman in the group does not make her payments in a timely fashion, not only is she forced to leave the group, none of the other women in the group will ever be qualified to receive another loan. So that really brings home the concepts of accountability, participation, teamwork and problem-solving. Knowing this, the group members unfailingly screen out women from the program whom they believe to be unreliable. And once the program gets started, frequently many of the group members have such an incentive for their colleagues to succeed that they often become each other's customers.
All of this has also resulted generally in giving women a higher status in their communities, which has in turn reduced the abuse of women and allowed them to succeed in their desires to implement better education and nutrition of children in their communities.
In the last 30 years, the Grameen Bank has implemented its program in many other countries in the developing world, with the result that literally millions of women have improved their lives by developing their own businesses, such as catering, cake baking, hair dressing, sewing, food and ice cream sales carts, and many more. Thus at this time the bank has more than seven million borrowers and $1 billion in outstanding loans, at an average of $200 per loan, in countries like Zambia, Nicaragua, Guatemala, the Dominican Republic, and Mexico — and they also have a 98% repayment rate! And for all of these successes, Muhammad Yunus has been rightfully awarded a Nobel Prize.
Now Yunus has begun a similar program with the Grameen Bank on the streets of Queens, the New York City borough, and has plans to expand it to at least five additional states in our country. The differences in our programs are that the borrowers cannot be on welfare, and, given our economy, the minimum loan is $500 and the maximum is $3,000.
I find this not only to be amazing, but also embarrassing. A bank from Bangladesh comes to New York City — the financial capital of the world — to give people the opportunity to show their innovation and entrepreneurship and create thousands of small businesses. I thought that America led the world in innovation and entrepreneurship, but in this area it seems to be Bangladesh!
As they say in the movie, "Microcredit ignites the tiny economic engines of the rejected underclass of society. Once a large number of tiny engines start working, the stage can be set for bigger things."
Last week I talked about Greg Mortenson going to small villages in impoverished parts of Afghanistan and Pakistan and building schools with the commitment and assistance of the villagers themselves. And now we see a program from Bangladesh that empowers the lowest economic classes of women to get them on the road to financial solvency. Where are the headlines? Why can't our foreign aid system implement programs like those started by people like Mortenson and Yunus?
Instead, our government throws lots of money at foreign problems that, since there is seldom much accountability in where it goes, often result in foreign government officials driving fancy cars and their Swiss bank accounts getting fatter. But for about 1% of what our government now spends, these programs actually achieve positive and lasting results. So why are we not insisting upon a fundamental change in approach?
If you agree that we must change our approach, please use every opportunity to contact your representatives in Washington, and encourage them to implement these changes. And if you want more information about Muhammad Yunus' program with Grameen Bank, you can find it at http://www.tocatchadollar.com.
JAMES P. GRAY is a retired judge of the Orange County Superior Court, and the author of "A Voter's Handbook: Effective Solutions to America's Problems" (The Forum Press, 2010). He can be contacted at JimPGray@sbcglobal.net, or through his website at http://www.JudgeJimGray.com.