Leveraging microfinance in unexpected ways

By Malaika Maphalala

Alex Counts, founder of Grameen Foundation, delivered a great speech at Portland’s ReVisioning Value conference this year that gave new insight on the remarkable and unexpected side effects of microfinance in poor communities around the world. Grameen Bank was founded by Muhammad Yunus in 1976 to meet the real financing needs of the poor in Bangladesh. The model Yunus developed was spread around the world through a global movement that now reaches over 150 million of the world poorest people. Besides the very real positive influence that access to credit provides individuals trying to build thriving businesses, create savings, and move out of poverty, the microfinance movement has built a global infrastructure that links millions of disadvantaged families to each other and integrates them into the global economy. It is the largest mobilization of the world’s poor in history, and represents a new cutting edge for possibilities in groundbreaking social innovation.To offer just a few examples, Grameen has leveraged its infrastructure of relationships to develop innovations in health care, information technology, and clean energy. Health crises are by far the biggest reason that small entrepreneurs fail in their businesses. The problem is complex: not only do the poor lack the money to pay for health care, but there is limited knowledge and access to information about preventative health care, combined with a lack of facilities and services due to the inability of a local economy to support clinics. Grameen and many of its microfinance partners like ProMujer and Freedom from Hunger now include healthcare education as part of the weekly meetings held with borrowers. Recently, Grameen has developed a health insurance program that provides its customers access to partnering health care clinics. Small monthly premiums are automatically deducted from participating Grameen customer savings accounts, supplying sustaining income for a local partnering clinic to keep its door open, with healthcare workers on salary and supplies stocked.

Grameen has led the way in combining the opportunities of microfinance with breakthroughs in technology to bring small businesses to new levels within poor communities. One of Grameens’ projects, the Village Phone Project, used a microloan program to provide rural women with cell phones that became the center of small pay phone businesses within their villages. Starting with 25 women initially, the project quickly grew to include 80,000 village-based entrepreneurs. The enormous success of these businesses woke telephone companies up to the fact that there is a great market for cell phones amongst populations they had never considered before, and companies have been driven to create cheaper phones with features geared to the real needs of the rural poor. Recently, Grameen partnered with Google to develop phone applications specifically to deliver access to vital information about health care, agriculture, or care of livestock. This development has fueled the creation of a new job in rural communities: the Community Knowledge Worker, who keeps abreast of developing technology and links local farmers and families to the information they need.

Solar energy is another rapidly growing sector within rural communities where there has never been access to electricity. Grameen Shakti provides microloans to purchase solar home systems and trains local women to install and maintain them. Today, Grameen Shakti has installed over 320,000 solar systems in rural areas and averages about 15,000 new installations per month; it is the largest, fastest growing, rural based renewable energy company in the world.

Perhaps my favorite story of Grameen’s unexpected positive social impact is its influence on the culture of democracy in Bangladesh. Prior to 1996, voter turnout was about 50%, with far fewer women represented than men. That year, Mohammad Yunus encouraged Grameen borrowers, most of whom are women, to get together, discuss their opinions about the elections, and place their votes. The Grameen borrowers also reached out to friends and their communities, and on voting day women paraded to polling sites together. Countrywide, 75% of women cast their votes in 1996, turning the tide of the elections and wiping out the fundamentalist party in the country. Today, 8000 Grameen borrowers or family members serve on the local governing bodies of rural Bangladesh.

The Grameen Bank and the hundreds of microfinance institutions around the world using the Grameen model are a vital part of creating an ecosystem that is supporting the growth of a vibrant new part of the economy. Through thirty-two years of building relationships and trust within poor communities globally, this growing infrastructure is enabling people, communities, and organizations to do amazing things that would not otherwise have been possible.

This article first appeared in the Fall 2010 edition of the Natural Investing newsletter.

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Malaika Maphalala

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