volume 2, issue 1 grameen connections spring 1999billbenac.com/data/gfall.pdf · advancing the work...

Advancing the Work and Phi losophy o f Grameen Bank

Grameen ConnectionsVolume 2 , Issue 1 Spr ing 1999

Susan Davis, a board member ofGrameen Foundation USA, recent-ly visited South Africa. She gives

this report of her experiences withTschomisano, a Grameen replica-tion program there.

I visited South Africa in Octoberat the invitation of the govern-

ment and the United NationsDevelopment Program. I met BenNkuma, who was the SmallEnterprise Foundation (SEF) rep-resentative at an InternationalRoundtable on Microcredit inPretoria. From the moment I methim I knew Ben was an extraordi-nary individ-ual. He is thefounder anddirector ofTshomisano(which roughlymeans "work-ing together"),SEF's Grameen-like program forthe poorest. Meeting Ben was awonderful surprise. This is thestory of an African, a real son ofthe soil, a social entrepreneur, apoor boy who grew up (cont. p. 10)

Ben's Story: Hope for the Poorestin South Africa by Susan Davis

SEF member Kate Makaku (photo credit: Katie Butler de Wit)

T h e N e w s l e t t e r o f G r a m e e n F o u n d a t i o n U S A

Grameen FoundationBenefit Dinner:June 16, 1999

See article on p 15

I n s i d e t h i s I s s u e :

Message from the Chairman . . .2Yunus’ Autobiography . . . . . . .4Microcredit on Film . . . . . . . . .5Haas Business School . . . . . . . .5News & Updates . . . . . . . . . . .6Grameen Fund . . . . . . . . . . . . .7Evaluating Impact . . . . . . . . . .9Microcredit in New

York City . . . . . . . . . . . . .12CASHPOR Expands

its Reach . . . . . . . . . . . . .13GF-USA Benefit Dinner . . . . .15People’s Fund Update . . . . . . .15Thanks to Our Donors . . . . . .15Handloom Weaving in

Banlagdesh . . . . . . . . . . . .16

Southeast Asia has always beenfertile soil for Grameen BankReplication Programs (GBRs).The first GBR, Amanah IkhtiarMalaysia, was established inMalaysia in 1986 and now serves40,000 poor families, which is halfof all the rural poor in peninsularMalaysia. Citigroup Foundationrecently announced at a news con-ference in Jakarta its commitmentto give $1 million to GrameenFoundation USA and GrameenTrust to provide support for repli-

cation programs in five Asiancountries.

A grant for U.S. $1 millionfrom Citigroup Foundation

will give thousands of poor entre-preneurs in Asia a life-line to self-employment by providing themwith 'micro-loans' to start smallbusinesses.

The grant to GrameenFoundation USA enables Grameento extend its successful (cont. p. 8)

Citigroup Commits $1 Million to Grameen Replication in Asia

Grameen Connect ionsGrameen Connect ions

Advanc ing the Work and Phi losophy o f Grameen Bank

I have recently returned from atrip to Bangladesh with Alex

Counts, GF-USA's President, whoprovided invaluable guidancethroughout the visit.The hospitality andcountless courtesiesextended to us bythe entire Grameenfamily−managers,staff, and borrowers−all contributed toan unforgettableexperience. I appre-ciate this opportuni-ty to share someimpressions andinsights with thereaders of GrameenConnections.

The application of the philoso-phy and methodologies ofGrameen Bank and its many repli-cations are enabling millions inBangladesh and throughout theworld to begin to take control oftheir lives and futures. The inge-nuity underlying the Grameenmethodology lies in its practicali-ty, its simplicity, and its under-standing of basic human nature.Grameen borrowers are notapproached as "victims" of pover-ty requiring charity, but as poten-tially productive human beingswho, when provided with accessto credit on terms they can afford−and without the requirement ofcollateral−will far more often thannot take advantage of that oppor-tunity to lift themselves out ofpoverty by utilizing their own tal-ent and labor.

A two day visit to GrameenZonal and Area offices outside ofDhaka for briefings on the struc-ture and operations of Grameen,

and the addedopportunity tospend a night atthe Grameen BankBranch of BareraChandina (about60 miles south ofDhaka) to meetdirectly with bankborrowers, wereparticularly illu-minating. Barerais a small marketat the center ofseveral dozen vil-

lages of small one or two roomtin-roofed houses and narrow dirtroads. No electricity, public utili-ties or other public services areavailable, yet the village is neatand clean. The local economy isbased essentially on unmechan-ized subsistence agriculture. Somevillagers operate handlooms intheir homes and produce basicmaterial sold in the large town ofComilla nearby. The people werecheerful and friendly, and the sur-rounding area was quite beautifulwith many trees and ponds, ricepaddies, green fields planted withvarious vegetables. The houses,roads and a few larger one-storybuildings are elevated to providesome protection from annualfloods. However, they are all toofrequently damaged or washedaway when the monsoon season isparticularly severe−such as thedisastrous flooding last (cont. p. 3)

Grameen ConnectionsThe Newsletter of

Grameen Foundation USA

President/CEOAlex Counts

ChairmanJames F. Sams

Vice-ChairYvette Neier

SecretaryLynn McMullen

DirectorsClifford Alexander, Jr.Michael CallenA.K. ChowdhurySusan DavisRichard S. GuntherPaul F. KaneRobert OttenhofD. Wayne SilbyClare Brett SmithMuhammad Yunus

StaffChitra AiyarM. Nural AlamGeoff DavisJacki DruckerLeslie EnrightRuth HoffmanJoseph Kotun

InternsMaitri MorarjiSteele Hendershot

Grameen Connections Staff

Executive EditorAlex Counts

Layout EditorBill Benac

Grameen Foundation USA1709 New York Avenue NW Suite 101Washington, DC 20006 USAPhone: (202) 628-3560Fax: (202) 628-3880

www.grameenfoundation.org

22

Message from the Chairmanby James Sams

James SamsChairman of the Board

Advancing the Work and Phi losophy of Grameen Bank 33

(Chairman, from p. 2) year that set a100 year record. The poorest inthat village−and thousands like itin Bangladesh−lived without ade-quate shelter, clean water, stablesources of food, and many of thebasic requirements for human sub-sistence prior to becoming mem-bers of Grameen.

The Branch supervises 51Centers, which are comprised ofup to eight groups of borrowers,each with five members. These arelocated in villages within a radiusof about ten kilometers from theBranch. Members are required toattend weekly Center meetings todiscuss issues or problems, and tomake loan payments and savingsdeposits to the bank worker. Wehad the opportunity to attend twosuch Center meet-ings whose mem-bers were allwomen. It is notpossible in thisbrief report tooffer a detaileddescription of themeetings and ourdiscussions, but Ido want to offer afew generalimpressions.

The dignity and self-confi-dence of the members of the twogroups was impressive, as was theconstructive way they interactedwith each other during the meet-ing. Most were repeat Grameenborrowers for up to as many aseleven years. In response to ourquestions, they described the pro-gression of the amounts and pur-poses of their loans, and how theirlives had changed for the better−and they outlined their plans for

future loans. They spoke of howtheir children were now able toattend school, how they had builtnew houses or improved theirexisting homes, had healthier

diets, and of manyother positive bene-fits for their fami-lies. We askedsome how manychildren they had.The younger mem-bers typically hadno more than two,and they spokefrankly and knowl-edgeably about theimportance of fam-ily planning. After

the meeting, some borrowers invit-ed us to visit their homes so theycould show us with justifiablepride what they had been able toaccomplish as Grameen borrow-ers.

As a consequence of my visit,I gained a much deeper apprecia-tion and understanding of the rele-vance of Grameen principles andmethodologies to the global effortto alleviate poverty. To be sure,

cultural, political and economicdifferences between countries andregions may require adaptations,but the core principles are applica-ble virtually everywhere povertyexists.

Micro-credit should not beconsidered as a form of charity orsocial welfare program. It is acredible and self-sustaining invest-ment activity offering a reasonableeconomic return over the longterm−as well as a multitude ofsocietal benefits that in themselvesmore than justify the requiredinvestment. Grameen Bank hasdemonstrated that micro-creditinstitutions can be sustainable andprofitable when well managed andcapitalized.

Grameen Foundation USAwas established to advance theprinciples and goals of GrameenBank. The high level of supportand encouragement that we arereceiving is immensely gratifying,and is enabling GF USA to initiatea number of promising programsand to build for the future. v

Grameen Foundat ion USA

Grameenborrowerstogether

at a center

meeting

(photo credit:Nazral)

GrameenBank is

enabling mil-lions to takecontrol of

their lives andfutures

Advanc ing the Work and Ph i losophy o f Grameen Bank


On June 16, at GF-USA's annualawards banquet, Dr. MuhammadYunus's autobiography, "Bankerto the Poor: Micro-lending and theBattle Against World Poverty"(PublicAffairs, $24) will bereleased. It is a stirring, anddeeply personal, story of Dr.Yunus's life and work. It starts inhis childhood, and moves on to histime in the United States, where heearned his PhD, and finally to hisreturn to Bangladesh in 1972.From there it moves to the estab-lishment of the Grameen BankProject in 1976, its transformationinto an independent bank in 1983,

the replication of Grameen inother countries, including theUnited States, and the creation ofGrameen Foundation USA. Thefollowing excerpt from the prefacegives a flavor of the book.

T he university where I taughtand served as the head of the

Economics Department [in 1974]was located in the southeasternextremity of the country, and atfirst we did not pay much attentionto the newspaper stories of deathand starvation in the remote vil-lages of the north. But then skele-ton-like people began showing upin the railway stations and busstations of the capital, Dhaka.Soon, a trickle became a flood.Hungry people were everywhere.Often they sat so still that onecould not be sure whether theywere alive or dead. They alllooked alike: men, women andchildren. Old people looked likechildren, and children looked likeold people….

The starving people did notchant slogans. They did notdemand anything from us well-fed folk. They simply laid downon our doorsteps very quietly andwaited to die….

I used to feel a thrill at teach-ing my students the elegant eco-nomic theories that could suppos-edly cure societal problems of alltypes. But in 1974, I started todread my lectures. What goodwere all my complex theorieswhen people were dying of star-

vation … across from my lecturehall?

[I decided that] I needed to runaway from these theories andfrom my textbooks and discoverthe real life economics of a poorperson's existence…. My repeatedtrips to the villages around theChittagong University campus ledme to discoveries that were essen-tial to establishing the GrameenBank. The poor taught me anentirely new economics. I learnedabout the problems that they havefrom their own perspective. I trieda great many things. Someworked. Some did not. One thatworked well was to offer peopletiny loans for self-employment.These loans provided a startingpoint for cottage industries andother income-generating (cont. p. 5)

44

Grameen Founder's Autobiogra-phy to be Published in June

Yunus celebrates with borrowers(photo credit: Nurjahan Chaklader)



(Autobiography, from p. 4) activitiesthat used the skills the borrowersalready had.

I never imagined that mymicro-lending program would bethe basis for a nationwide "bankfor the poor" serving 2.5 millionpeople or that it would be adaptedin more than fifty countries span-ning five continents. I was onlytrying to relieve my guilt and sat-isfy my desire to be useful to afew starving human beings. But itdid not stop with a few people.Those who borrowed and survivedwould not let it. And after awhile, neither would I.

"Banker To the Poor" will beavailable in bookstores every-where in June. For informationon ordering a copy, visitwww.grameenfoundation.org. v

D uring the fall of 1998, a twopart series on micro-credit

was aired on more than 80% of thePBS stations across the UnitedStates. The first, "To Our Credit:Bootstrap Banking and theWorld," told the story of themicro-lending movement in devel-oping countries by focusing onfour programs and one borrowerfrom each program. GrameenBank and the Small EnterpriseFoundation (see related article,page 1) were two of the four insti-tutions featured. The second was"To Our Credit: Bootstrap Bankingin America," which coveredmicro-lending in the United States.These videos were produced bythe Access to Credit Media Project

of Rooy Media. They were fund-ed by the Citibank (nowCitigroup) Foundation, the C. S.Mott Foundation (both GF-USAsupporters), The Ford Foundation,and others. "To Our Credit" edu-cated millions about the potentialof micro-lending and is availablefor purchase by any individual orinstitution interested in using it topromote greater public awarenessof this issue. Tapes can normallybe purchased for $39.95 each, or$69.95 for both, but GF-USA sup-porters can purchase them at a dis-counted rate of $29.95 each or$49.95 for both. To place anorder, please call Rooy Media at(301) 473-8797. v

Haas Business School Studentsto Grameen to Help Programs

Micro-lending on Film: "To Our Credit"

T he International BusinessDevelopment Program (IBD)

of the Haas School of Business atthe University of California,Berkeley will send four teams ofgraduate students to Bangladeshthis summer to work with mem-bers of the Grameen Family ofCompanies. This is the third yearof the Haas - Grameen partnership.The IBD teams will research theprospects and problems of sociallyconscious venture capital financ-ing in Bangladesh for GrameenFund, evaluate marketing strate-gies for the sale of cellular hand-sets and for the operation of vil-lage pay phones as business cen-

ters in rural areas for GrameenTelecom, assist in the developmentof a strategic plan for GrameenKalyan in providing for the med-ical and educational needs ofGrameen Bank borrowers, andwork on ways to reduce the cost ofproduction of hand-woven textileswith Grameen Uddog.

For more information about theIBD’s work with Grameen, contactRuth Hoffman at GrameenFoundation USA by email at [email protected] IBD on the web atwww.haas.berkeley.edu/groups/HaasGlobal/IBDindex.htm. v

Advanc ing the Work and Ph i losophy o f Grameen Bank66

T he GF-USA Board ofDirectors has been expanded

to 15 individuals. Those newlyelected at the December Directorsmeeting were Clifford Alexander,Jr., Michael Callen, RobertOttenhof, and D. Wayne Silby.…On March 24, the SorosEconomic Development Fund dis-bursed a $10.6 million loan toGrameen Telecom. An article willfeature this in next quarter’snewsletter. GF-USA PresidentAlex Counts played a key role innegotiating this loan, as didSteven Graubart of CalvertVentures and Paul Dwyer andJennifer Drogula, our pro-bonoattorneys from the law firmWilmer, Cutler and Pickering….Grameen Telecom, Grameen's cel-lular telephone company, recentlysurpassed 35,000 subscribers, andreceived media coverage in Marchon ABC-TV's "World NewsTonight" and in The WashingtonPost.... The GF-USA websitewww.grameenfoundation.org cannow accept donations and publica-tion orders online through a secureserver. This was made possible bystar intern Adrian Zenz…. JaneGriffiths, a consultant from AidTo Artisans, spent three weeks inBangladesh in January andFebruary 1999, on an assignmentfor GF-USA to design finishedproducts to sell in the UnitedStates, particularly through cata-logues. The American ExpressFoundation provided the fundingto make her work possible…. OnMarch 26-27, the Second AnnualMicroEnterprise Conference washeld at Brigham Young

University. The GrameenSupport Group organized the con-ference collaboratively with theMarriot School of Managementat BYU.... Be on the lookout for a

segment on Dr. MuhammadYunus on an upcoming edition of"60 Minutes II," which airsWednesday nights…. One ormore GF-USA staff are planningon representing GF-USA at theMicrocredit Summit Meeting ofCouncils in the Ivory Coast, at theend of June. For more informa-tion on the campaign and meeting,visit www.microcreditsummit.org…. Grameen supporters in theU.S.A. contributedmore than $12,000 tothe FloodRehabilitation effortsof Grameen Bankborrowers. As aresult of that assis-tance, as well as thehard work ofGrameen borrowersand staff, we arepleased to report thatthe rehabilitationeffort is ahead ofschedule. Loanrecovery rebounded

to pre-flood levels by mid-December…. Dr. MuhammadYunus responded to an inaccuratearticle about the effects of theflood on Grameen published by

the Financial Times on October 1.His response, "Grameen Bank isable to cope with disasters," waspublished by the Financial Timeson October 22. In it he wrote,"For Grameen a natural disasterprovides an opportunity to demon-strate how effective the micro-credit system is in helping affectedpeople to get back on their feet.Grameen Bank's survival is neverthe issue here.”


News & Updates

GrameenBank workers

distributingfood after the

flood to itsmembers atone of itsbranches

(photo credit:Harun Al-Rashid)

G r a m e e n B a n k U p d a t e :

No. of branches . . . . . . . . . . . . . . . .1138No. of members . . . . . . . . . . . .2,367,503Cumulative disbursement . . . .$2.7 billionCumulative savings . . . . . . .$202 million

G r a m e e n T r u s t U p d a t e :

No. of projects . . . . . . . . . . . . . . . . . . .81No. of project borrowers . . . . . . .329,943No. of countries . . . . . . . . . . . . . . . . . .28Cumulative disbursement . . . .$94 million



In each issue of GrameenConnections we feature aGrameen Company in Bangladesh.In this issue we feature GrameenFund, which provides finance (orsocial venture capital) to enter-prises that work on a commercialbasis to achieve social goals−orsocial consciousness driven (asopposed to profit driven) enter-prises. In 1998, GrameenFoundation USA launched a pro-gram called Grameen Investmentsthat enables U.S. individuals,foundations and other institutionsto invest in Grameen Fund andearn a rate of return of up to 3%−better than many savingsaccounts. To date, more than$140,000 has been mobilized.

T hrough its highly successfulcredit program for the rural

poor, Grameen Bank has come torealize that its long-term develop-mental objectives require estab-lishing mechanisms to provideventure capital. The Bank hasencountered many ideas, technolo-gies and investment proposals thatare economically compelling andsocially progressive. These oppor-tunities, however, do not fit neatlyinto the regular lending programof the Bank, which is targeted atthe rural poor in need of micro-credit. Grameen Fund, a not forprofit company established inJanuary 1994, was created to pro-vide finance to businesses that areuntested but have the promise ofbeing commercially successful andyielding benefits to the poor.

Grameen Fund uses variousmethods of financing that dependon the needs of the proposed com-pany. GF provides assistance inthe forms of direct equity, equity-cum-loan, bridge finance or man-agement buy-in or buy-out. Threeexamples of businesses assisted byGrameen Fund are given below:

Grameen Babsha Sheba:

Grameen Babsha Sheba (Pvt.) Ltd.was formed on March 12, 1996 tosupply consumer goods to smalltraders/shops in rural areas on acommission basis to enable smallshops to avoid exploitation bylocal wholesalers and improveprofitability. The company wasgiven both equity (90%) and aloan by Grameen Fund. This com-pany became profitable within sixmonths.

Grameen Bio Center:

Grameen Bio Center was formedwith 70% equity from GrameenFund to provide loans to women topurchase cows in the rural areas.The milk is collected for market-ing in urban areas by the companyto ensure a fair price for the pro-ducers. The objectives are toincrease the economic activities ofthe poor and to enhance proteinsupply and consumption.

Grameen CyberNet:

Grameen Cybernet is a companyformed with 51% equity byGrameen Fund; it has (cont. p. 14)

Grameen Fund: Financing Social-Consciousness Driven Enterprises

The major objectives ofGrameen Fund are:

w to provide majority equi-ty in companies trying toinnovate in sectors thathold promise for growththat would have direct orindirect impact on pover-ty alleviation, with prefer-ence for businesses spe-cializing in informationand communicationstechnologies;

w to provide loans, equityor both to risky venturesusing untested technologyand/or producing untestedproducts, either to newcompanies or existingcompanies for balancing,modernization or expan-sion;

w to assist in managementbuy-ins or buy-outs ofexisting companies need-ing finance and manage-ment support, providedthat such companies'activities/products bringdirect and/or indirect ben-efits to the poor; and

w to promote or developenterprises havingprospects for increasingexports or import substi-tution using indigenousraw materials, providingextensive employment tothe rural poor and/orhelping to upgrade theskills of the rural or urbanpoor.

(Citigroup, from p. 1) global micro-credit program to five countries hithardest by the Asian financial cri-sis: Indonesia, Malaysia, thePhilippines, South Korea andThailand.

The grant will allow impover-ished entrepreneurs to qualify forloans at or near commercial bankrates to establish and run "micro-businesses." Loans, whose recipi-ents are primarily women, typical-ly support small-scale businessessuch as the production of food andtextiles in rural areas, taxi servic-es, cleaning, gardening and day-care in cities.

"Simply put, microcredit pro-vides small business loans to peo-ple living in poverty," said PennyShone, Regional Communica-tions Director of Citigroup. "Itoffers them the financing theyneed to become self-sufficientmembers of society.

"We are very pleased toreceive this gift from Citigroup,"said Professor H.I. Latifee,Managing Director of GrameenTrust, said at a March news con-ference in Jakarta announcing thegrant. "It is an important step for-

ward in oureffort to pro-vide 100 mil-lion of theworld's poor-est familieswith themeans tosupportthemselvesby 2005."

GrameenFoundationUSA will useCitigroupfunds to sup-port GrameenTrust, found-ed 10 years

ago in Bangladesh to serve as thetraining and replication arm ofGrameen Bank. Grameen willfocus on four key activities in theselected Asian countries:

1. Providing seed capital of upto US$50,000 to new microcreditprograms.

2. Raising the capitalization ofexisting programs by US$100,000.

3. Providing scholarships tostaff of local non-governmentorganizations (NGOs) for trainingin the Grameen micro-lendingmethodology in Bangladesh.

4. Supplying on-site technicalassistance to microcredit programsreceiving funds.

To date, there are 81 Grameensupported programs in 28 coun-tries around the world. As ofFebruary 1999, Grameen-fundedmicrocredit programs have dis-bursed funds to more than 300,000borrowers and have maintainedrepayment rates between 96% and100%. Grameen Foundation USAsupports the replication of the suc-cessful Grameen Bank microcreditprogram which, since 1976, hasprovided more than US$2.6 billionin loans to more than 2.3 millionpeople living in poverty.

"Citibank is proud to supportthis initiative," said Ms. Shone."We have a continuing commit-ment to the progress and vitality ofthe communities where our cus-tomers live and work, and thisprogram allows us to express thatcommitment in a way that is botheconomically and socially useful.

"We also believe that withCitigroup's leadership in financialmanagement and Grameen's lead-ership in poverty-focused micro-credit, there will be ample scopefor our staff to collaborate andlearn from each other."

To qualify to receive funding,NGOs must first complete a 12-day orientation course on micro-lending in Bangladesh. TheCitigroup grant provides for schol-arships to this course.

For information on how to applyfor funding under this grant, con-tact Chitra Aiyar at GrameenFoundation USA, at [email protected] or LamiyaMorshed at Grameen Trust [email protected]. v


Advanc ing the Work and Ph i losophy o f Grameen Bank88

Citibank presents Grameen with $1 million for microcredit programs in Asian countries



Rigorous impact evaluations ofmicro-credit programs, like theone on the Filipino organizationCARD summarized in the first edi-tion of Grameen Connections, aresurprisingly rare given theincreasing popularity of this strat-egy. Yet they are essential in mak-ing the case that supporting a dra-matic expansion of micro-credit sothat 100 million families can bene-fit by 2005 is a good investment.Late last year, Oxford UniversityPress published "Fighting Povertywith Microcredit: Experience inBangladesh," which presented thefindings of multi-year researcheffort on Grameen Bank and twoother Bangladeshi micro-creditprograms.

F ighting Poverty withMicrocredit (Oxford

University Press: Oxford, 1998,228 pages, $35) is a tremendouscontribution to the field of micro-credit, as it presents, in a highlyreadable form, independentresearch that supports many of thearguments that micro-credit advo-cates have been making for years.World Bank economist ShahidurR. Khandker and his team are tobe congratulated for their work.

Some of the most compellingfindings are:

w Extreme poverty amongGrameen borrowers was cut bymore than 70% within 5 years.

w In a typical year,five percent ofGrameen borrow-ers−representing125,000 families−rise above pover-ty. In otherwords, an estimat-ed 10,000Grameen familiesescape povertyevery month.

w Per capitaexpenditure ofborrowers rose0.43% for every10% increase inborrowing (despitetheir having to paya commercialinterest rate onloans).

w Household net worth increasedby 0.14% for every 10%increase in borrowing.

w Every Tk. 100 ($2) lent to afemale Grameen borrowerincreases her assets (excludingland) by Tk. 27.

w For every 1% increase in bor-rowing by a Grameen member,the probability their daughterenrolling in school wasincreased 1.9%.

w A 10% increase in female bor-rowing increased the arm cir-cumference of girls (a commonmeasure of nutritional status)by 6%. (Borrowing by men,however, did not have anyobservable impact on childnutrition.)

In almost every case, theobserved impact on the borrowersof BRAC and RD-12, the twoother programs studied, was simi-lar. They reach an additional 1.5million Bangladeshi families.

Hopefully, these findings willserve as a wind at the sails of peo-ple and institutions worldwide thatare mobilizing support for theMicrocredit Summit's goal, andput to rest the idea that the poorestof the poor are unable to effective-ly use credit to empower them-selves and to make progresstoward overcoming their poverty.

For more information on this andother evaluation studies conductedon micro-credit, please contactGrameen Foundation USA byemail at [email protected]. v

Evaluating Micro-credit's Impact:A Report on the World Bank’s Research



(Ben’s Story, from p.1) with the deter-mination to change the world sothat no one else would endure thesame.

From Pretoria, I flew to thepoorest district in South Africa anddrove several hours to reach SEF.Ben took me to attend a couple ofCenter meetings. I was amazed.If the women had been wearing

saris, I wouldhave thoughtI was back inruralBangladeshat one of thehundreds ofGrameenBank Centermeetings Ihaveobservedover the pastdecade.

These women had never beforeinteracted with a foreign visitor sothey looked at me with shy curios-ity. They looked poor to me basedon their clothes, jewelry and shoes(or lack thereof). Certainly com-pared to other women and men

that I met in other parts of thecountry, these women appeared tobe the poorest.

Ben explained to me, "Ourmethod of finding the poor iscalled Participatory WealthRanking. We ask the village tocome together, draw a map of theirvillage section by section, andidentify the people living in eachhousehold and then rank themaccording to categories of poverty.Different reference groups do theranking. Mostly there is consistentagreement from the groups as towho is poor, less poor, middle,rich and very rich."

Ben's voice then trembled a bitand his tone lowered as he said,"Poor in South African termsmeans those people who are barelysurviving. They struggle to havemeals, no one in the house isemployed, the housing is poor,their children cannot attendschool.

"I got involved with TheSmall Enterprise Foundation in1993," Ben explained. "At thattime I was running my own cornershop. I was involved in communi-ty development as a volunteerlocally during my spare time. Iwas poor when I was growing up,my parents could not afford any-thing and thus I told myself Iwanted to do something for thepoor. Nevertheless, I was forced tofind a job before being able tostudy development. When I lostmy job in 1992 I decided to lookfor development work. Because itis painful to grow up being poor, Itold myself that I wanted to dosomething for the poor in the com-munity. I know how it is to go to

bed without a meal, what it feelslike to walk 5 kilometers to schooluphill and without shoes. Theround house I slept in had no fur-niture except one traditional carpetand one old blanket. Before Ijoined SEF, I worked in manyplaces. I joined SEF purelybecause I needed money immedi-ately, but I knew I wanted to servethe poor. Now that I made it, I feelgreat."

I quickly learned that SEF isdifferent from its new experimen-tal program. I asked Ben why hecreated Tshomisano. He said"When I joined SEF, I worked forthe SEF micro-credit project as aBranch Manager. What worriedme was that our mission empha-sized the fact that we must helpthe very poor to overcome poverty.But we did not really reach thevery poor. An evaluation in 1995showed that only 30 to 40% ofSEF's clients were very poor. Itold everyone we should make aneffort to reach our target group andwas supported by (SEF ManagingDirector) John de Wit.Transforming SEF's micro-creditproject would have been very dif-ficult, so it was suggested that Ibecome in charge of designing aproject for the very poor. So westarted Tshomisano Credit Project(TCP) in 1995."

Ben and a colleague went toBangladesh in March 1997 forabout 3 weeks. He said, "It was avery interesting experience. Tome, understanding poverty in aglobal perspective was one thing Iwanted to experience in my life.When we started TCP we knewabout Grameen. But all the infor-mation we used to (cont. p. 11)

BenNkuma,

TCPDirector

1010

T C P a t a G l a n c e :

Number of active members . . . . . . . . .1303

Groups . . . . . . . . . . . .305

Repayment rate . . . .100%

Loan write offs (except write offs due to death) .0

Cumulative savings (Dec. 1998) . . . . .$17,892

Advancing the Work and Phi losophy of Grameen Bank 1 11 1


(Ben’s Story, from p. 10) designTshomisano was from the readingmaterial we had. Getting to see itfirst hand changed a lot in ourthinking and methodology. Ishould mention I knew we wantedto alleviate poverty through aGrameen type of approach, butthere were lots of questions we didnot have answers for. Being inBangladesh, we had the opportuni-ty to question everything.

“Poverty in Bangladesh is real.Staying in a Grameen BankBranch at the village level wecould see the day to day operation

of Grameen, especially the closecontact the staff had with themembers. There are a variety ofcultural differences betweenBangladesh and South Africa butone interesting thing I learned isthat the Grameen approach isadaptable to all situations especial-ly when dealing with the very

poor. I saw changes in the lives ofthe poor. But it was more thanjust a loan with poor women. Itwas their participation in real life.Society in Bangladesh does notallow women to interact freelywith men in particular. So theycould not even sell before."

SEF has received quite a bit ofpublicity outside the country, butwithin South Africa it is hardlyknown. In spite of the robust civilsociety, very few organizations areworking with the poorest. Bentried to explain this anomaly tome. "I think it is because there area lot of conceptualizations takingplace outside South Africa aboutpoverty and micro-credit for thevery poor. SEF has been mostlyfunded by outside donors so is bet-ter known to the funders and peo-ple in their countries and otherorganizations funded by the samedonors as SEF."

I asked Ben what were thebiggest problems he now facedand his most important successesso far. His answer again revealshis commitment to making multi-ple changes in the lives of realpeople, not just getting loans outand repaid. "Working with themost vulnerable is a problemitself. They do not want to join theprogram until you do intensivemotivation. When they join, theyare easily affected by disasters thatsubject them to circumstances thatare difficult for our staff to han-dle."

"However," Ben explained,"we established an ongoing impactassessment which is done by thefield staff and we realized we arehaving a lot of success. For exam-

ple, many members are able to suc-cessfully run businesses, they areincreasing their household incomes,there is increased interaction of thevery poor with other people in theircommunities, and members arebeing able to assist one another insolving problems. These successesare again verified by the fact thatmany members do not leave TCPafter repaying their loans, our100% repayment rate, membersbuilding proper houses, and so on."Ben looked at me with an intensestare trying to read my face. Hewanted to make certain that Iunderstand the full import of hismessage. He added, "Fightingpoverty is not child's play. It is awar. Poverty is perhapshumankind's worst enemy."

To contact Ben directly and getinvolved in supporting SEF’sefforts, contact the Small Enter-prise Foundation, P.O. Box 212,Tzaneen 0850, South Africa, tel:(27 15) 307 5837, fax: 27-15-3072977, email: [email protected]. v

Susan Davis, a board member ofGrameen Foundation USA

Tshomisano's main goals are:

w Identifying the very poor.

w Motivating only the very poor to jointhe program.

w Giving support that will help the verypoor to succeed.

w Mobilizing a savings scheme for thevery poor.

w Helping the very poor to cross thepoverty line.

w Helping the very poor to regain self-esteem and for them to feel part oftheir community.

Last year, Grameen FoundationUSA made a major commitment tobuilding the capacity of ProjectEnterprise (PE), a micro-creditprogram in New York City, to pro-vide loans starting at $500 to low-income people for business start-up and expansion. What follows isa report from GF-USA PresidentAlex Counts who, along with GF-USA Director Susan Davis, joinedthe Board of Directors of ProjectEnterprise late last year.

S ince 1988, I have witnessedand participated in hundreds

of group recognition tests (GRTs)in nearly ten countries. In theGrameen micro-credit methodolo-gy, the GRT is conducted by a sen-ior official in order to certify thatthe borrowing group has success-fully completed their compulsorygroup training (CGT). It teststheir knowledge of the lendingprogram policies, of each other'smicro-enterprises, and of soundbusiness practices. I had seenmany groups pass, and others fail.There is usually a sense of nervous

anticipation, occasionally border-ing on terror, when the officer whoconducts this oral test arrives.Still, I was unsure what to expecton March 10 when I arrived at theProject Enterprise office in CentralHarlem to conduct my first GRTin the UnitedStates.

The men, allstreet vendorswho sell cloth-ing, generalhousehold mer-chandise andother productson LenoxAvenue, and who had named theirgroup the "Lenox Six," were clear-ly nervous. I asked them a feweasy questions on PE policies tostart, but they stumbled throughtheir answers. I looked at VanessaRudin, PE's Executive Director, asif to ask, "Are they unprepared, orjust anxious?" Vanessa, who hadtrained them, smiled uneasily andlooked away.

Slowly, the men relaxed.They recited, from memory, longlists of program policies anddescribed each other's currentbusinesses and business plans in

detail. In a Grameen micro-creditprogram, each borrower plays arole not unlike a board member ineach of the businesses of their fel-low group members. If even oneborrower appears to be unfamiliarwith any of the business ventures

being contemplat-ed, the groupdoes not receiverecognition andmust re-take thetest at a laterdate.

After 50 min-utes of grilling,the time had

come to decide whether to pass theLenox Six. I paused, explainedwhere I thought they were strong(group solidarity), where I thoughtthey were weak (knowledge ofsome program policies), and final-ly declared, "Based on your per-formance tonight, I hereby recog-nize you as a certified ProjectEnterprise group. If all goes well,in a few days you will be receiv-ing loans. Good luck." The room

was full of gasps, and then highfives and hugs. Clearly, thismattered a lot to these men.

From Central HarlemVanessa, Dina Levi and I trav-eled to East New York, one ofNew York's most economicallydepressed neighborhoods.(Dina was training on micro-credit program operation as sheprepared to launch the Dallas-based PLAN Fund in April.) Ifanything, the (cont. p. 13)



Recognition & Creditby Alex Counts

For the secondtime, the room

erupted in cheersand hugs

1212

AlexCounts,President

of GF-USA,with a

memberof the

“LenoxSix”

C ASHPOR, or Credit andSavings for the Hard-Core

Poor of Asia-Pacific, is a vibrantassociation of Grameen BankReplications in Asia. In 1998, the16 CASHPOR member organiza-tions expanded their outreach from157,000 to 208,000 borrowers.SHARE (India) increased its out-reach from 5,815 to 12,713 bor-rowers, while CARD (Philippines)and Nirdhan (Nepal) both morethan doubled their number of ben-eficiaries. The weighted averageof the organizations' "portfolio atrisk" (one measure of likelydefault in the future) was a very

low 1.11%−despite the financialturmoil in Asia which had manywealthy people and corporationsdefaulting on their loans. ManyCASHPOR members havereceived funding from GrameenTrust, and some will likely qualifyfor funding from the CitigroupFoundation grant. To learn moreabout CASHPOR, you can visittheir new websitewww.cashpor.com. The CASH-POR newsletter, an excellentsource of information on the fieldof micro-credit, can be subscribedto in the United States by contact-ing Rae Madson at telephone/fax

(619) 435-5857 or mailing $25 to710 Glorietta Boulevard,Coronado, California 92118.Marshall Saunders, a GF-USAFounder's Circle (Lifetime) mem-ber, is the U.S. contact person forCASHPOR. He can be reached byemail at [email protected]. v

Advancing the Work and Phi losophy of Grameen Bank 1 31 3


(Recognition, from p.12) "FaithfulPioneers," a group of five African-American women, were moreapprehensive than their male coun-terparts in Harlem. The first fewquestions elicited strained respons-es bordering on non-responses.But once they got their footing,these pioneers (they are the firstPE group outside of Harlem, thefifth overall) demonstrated an evenbetter command of program poli-cies than the Lenox Six. After 90minutes of quizzing, I declaredthem a certified group. For thesecond time that night, Vanessa,Dina and I saw a room erupt incheers and hugs.

During the trip back toManhattan, I asked Vanessa howmany more groups were in thepipeline (i.e., in some stage ofpreparation for their recognitiontest). "At least six more," she

replied.Vanessa wasexhausted fromdays of prepar-ing the LenoxSix and FaithfulPioneers−shehad been upuntil past mid-night with thePioneers the night before Iarrived−but the prospect of train-ing six more groups did not phaseher. Rather, I sensed that itthrilled her. The longing for busi-ness credit and recognition ascredit-worthy entrepreneurs thatwe had satisfied that night for 10hard-working individuals made ushungry for more. Much more.

For information about how to sup-port Project Enterprise, contactVanessa Rudin at 2303 7thAvenue, New York, NY, 10030, tel:

212-690-2024, email: [email protected]. For informa-tion on GF-USA PractitionerSupport Project, which is support-ed by a grant from the C. S. MottFoundation and others, email GF-USA Program Associate LeslieEnright at [email protected]. For information onthe PLAN Fund in Dallas, whichwill be featured in the next issue ofour newsletter, contact Dina Leviat [email protected] or visitwww.grameenfoundation.org/dch.html. v

The “Faithful Pioneers” celebrate after being approved as a bor-rowering group of Project Enterprise

CASHPOR Expands its Reach in 1998

ProfessorDavid

Gibbons,Executive

Trusteeof CAS-HPOR

(Handloom, from p.16) isreplete with stories ofmuslin fabric, whichwas so fine it could bepulled through a smallfinger ring and having'the softness of mist'and 'the weight of afeather'.

When officials atGrameen Bank realizedthat 95% of the fabricused in the ready-madegarment industry inDhaka was imported, they organ-ized rural weavers to produce tex-tiles that could reduce the demandfor imported fabric. Handloom

weavers areeager towork withGrameenUddog toproduce tex-tiles thatwill increaseorders andgenerateincome fortheir fami-lies.GrameenUddog elim-inates theneed ofhandloomweavers to

use moneylenders and middlemenby being a reliable agent in linkingscattered cottage industry artistswith global markets.

Grameen Foundation USA isworking to create new hand-woven textiles and finished prod-ucts made of Grameen textiles thatwill be eco-friendly, international-ly competitive and of high quality

for the export market. By combin-ing textiles produced at a fairwage to the weavers, care of theenvironment, and sophisticateddesigns and colors to produce newfabrics, Grameen products willprovide the consumer a way tosupport responsible business

development by pur-chasing high qualityproducts.

A recent bookentitled Tanti (theBangla word forweaver), tells of thecraft and lives of thehandloom weavers.The following excerptcaptures the commit-ment of GF-USA tothe weavers ofBangladesh. "This

book is dedicated to the hundredsof thousands of weavers inBangladesh who, through theirperseverance and skills, havemaintained a great tradition anddeserve the encouragement andsupport to enable them to developtheir craft to the excellence ofdays gone by." v

(Grameen Fund, from p. 7) also takenloans from Grameen Fund toacquire computers, servers andother equipment. It was one of thefirst Internet service providers inBangladesh, and today it is thelargest. Having paid back its loanto Grameen Fund, GrameenCyberNet is now setting it sightson expanding to the rural areas,where it hopes to create highvalue added technology jobs forunemployed college graduates,especially young women.

Grameen Fund providesfinance to other member of theGrameen family of companies,such as Grameen Knitwear Ltd.,Gonoshasthaya Grameen TextileMill and Grameen Telecom. Themanaging director of GrameenFund is Mr. A. A. Qureshi, whocan be contacted [email protected].

To find out more about GrameenInvestments, contact Geoff Davisat (202) 628-3560 or visitwww.grameenfoundation.org/gi.html. v



Sarker Shafee, Marketing Executive with GrameenUddog in Dhaka, handles international orders.

A woman uses a GrameenTelecom telephone financed in

part by Grameen Fund

SkyMall, the in-flightcatalog, will featureGrameen Quilts in theOctober-December issue.The new patchworkquilts, designed by aproduct developmentspecialist from Aid-to-Artisans, will be avail-able in double, twin, andcrib sizes. Product devel-opment was funded bythe American ExpressFoundation.

1414


Advancing the Work and Phi losophy of Grameen Bank

T he People's Fund Campaigncontinues to raising funds,

$100 at a time from individuals, toreach its goal of helping10 millionextremely poor families with

micro-credit by 2005. To date,almost $70,000 has been raised.More is coming in every day.Now donations can be taken on-line through through GF-USA’swebsite, www.grameenfounda-tion.org. For those who want to

spread the word about the People'sFund in their community, the newPeople's Fund brochure is a greattool. Please contact MaitriMorarji at [email protected] have copies of the brochure sentto you. v

1 51 5

Laura BlumenthalMarc Blumenthal Donald Boucher

Alistair Cassels-Brown Cynthia Burns

Calvert Foundation Ceskoslovenska Obchodni

Banka Bill & Paula Clapp

Alex Counts

Susan Davis Rodger Desai Peggy Dulany Chad Evans

Kristna EvansMark Gillis

Kathleen Gordon Andrew Gunther

Gary Hattem Casey Kasem Mary Kelly

John Krzywicki

Gary Lippman Robert & Norma Lippman

Michael Lubic Nancy Matela

Kathy McManusCaroline Merriam

Lynne Murguia Aryeh & Yvette Neier

Pascucci Family FoundationIsabelle Peterson

PublicAffairs Michael Rauenhorst

Scott ReardonAsoka Roy

Della & Rustom Roy Don Russell

Shorebank CorporationWayne Silby Clare Smith

Synergos InstituteTruettner Family Foundation

TTF FoundationUnited Nations Foundation

Charles Stewart Mott FoundationCitigroup Foundation

Grameen Uddog

Richard S. GuntherHumana Group Health Plan

James and Betty Sams Family FoundationMarshall SaundersMuhammad Yunus

Grameen Foundation USA Thanks its Generous Supporters

American Express FoundationBankers Trust Foundation

Brande FoundationChase Manhattan FoundationThe Craig McCaw Foundation

The Frederick A. DeLuca FoundationThe Jules and Doris Stein Foundation

Paul F. Kane

Microsoft CorporationMonsanto Company

Open Society InstituteRick and Bonnie Rule

The S. H. and Helen R. ScheuerFamily Foundation

Wilmer, Cutler, and Pickering

Bankers Trust Private BankingBerlin Ramos & Company

Michael ChiaramonteHillary Rodham Clinton

Alan GleitsmanHarbinger Communications, Corp.

Esther HewlettLekha Singh

Donors

Benefactors

Grameen Founders Circle (Lifetime)

Patrons

G rameen Foundation USAwill host its second annual

awards dinner and benefit onWednesday, June 16th, 1999 in theDelegates Dining Room of theUnited Nations in New York City.Ted Turner and ABC News anchorPeter Jennings will co-chair andattend the event. In addition,Professor Muhammad Yunus will

speak on what's happening atGrameen Bank, and UNICEFGoodwill Ambassador andmodel/actress VendelaThommessen will speak about hernew role with the GrameenTextiles Project.

Grameen Foundation's inaugu-ral "Humanitarian" Award will be

presented to King Carl XVIGustave and Queen Sylvia, whowill accept on behalf of the peopleof Sweden. Grameen Foundation'sinaugural "Lifetime Achievement"Award will be presented to IsmailSerageldin, Vice President forSpecial Programs at the WorldBank. For information on attend-ing, please contact Jacki Druckerat 202-628-3560. v

People’s Fund Update

GF-USA Hosts Awards Dinner & Benefit

Advancing the Work and Phi losophy of Grameen Bank


G rameen Uddog, a member ofthe Grameen Family of

Companies, promotes the hand-loom heritage of Bangladesh byproviding credit to rural weavers,assuring quality production of thehand-woven fabric and creatingnew export markets to increasedemand for hand-woven textiles.Over one million handloomweavers and half a million hand-looms are part of the rich, livingculture of Bangladesh. Thedepressed status and the limitedopportunities of the weavers makethem one of the poorest groups inBangladesh today.

For centuries, the artistry oftextiles produced by handloomweavers inBangladeshhasreceivedinternation-al acclaim.Handloomweaving ispart of therich cultur-al heritageof hundredsof thou-sands offamilies inrural

Bangladesh. Prior to the emer-gence of machine spinning andweaving in the18th century,exports from Bangladeshi weaversprovided cotton and silk textiles tothe global community. The oralhistory of Bangladesh (cont. p. 14)

Handloom Weaving: A Rich, Living Culture in Bangladesh

Ruth Hoffman, GF-USA Textile Project Manager, withweaving families near Araihazar, Bangladesh

Grameen Foundation USA1709 New York Avenue, NWSuite 101Washington, DC 20006 USA

Tel: (202) 628-3560(888) 76-GFUSA

Fax: (202) 628-3880

E-mail: [email protected]

Don’t miss the information aboutGrameen on the Internet:

w www.grameenfoundation.org

w www.peoplesfund.org

volume 2, issue 1 grameen connections spring 1999billbenac.com/data/gfall.pdf · advancing the work...

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