Grameen Bank, Bangladesh

        Los Angeles exploded the day Ava Jackson was supposec to get over. She
had been nursing along her little cleaning-services company, taking odd jobs
here and there is South-Central, and now she was about to sign her first real
contract- to do regular maintenance on a dental-clinic building on Vermont
Avenue. "It was gone before I could sign," she reacalls, "and so was about 70
percent of the rest of my business. We got caught in the middle of it in our
car- stores getting robbed, people pulled out of cars, fire everywhere. It
looked like the hell you had nightmares about when you were a little kid. I
can't understand why people would act like that. I kept asking, why? People 
would say, 'there's a reason.' I think the reason has to do with how people are
raised. "

        Despite the riots, Jackson wanted to keep hjer modest dream- Quality
Building Maintenance Services. Both she and her husband had always worked.
She'd been a clerk in hospitals, but she couldn't imagine going back to that
after the freedom of owning a business.  And so she started going to meetings-
there were all kinds of meetings for people with small businesses after the riot. 
"We're gonna help you,' they said," Ava recalls. A lot of talk. A lot of
nothing.

        With one exception: an exotic and remarkable program -based on
principles developed in the early 1980s by Mohammed Yunus for the Grameen
Bank in Bangladesh- that loaned small ammounts of money to poor women
starting their own businesses, even those without any collatoral. The
program was run by the Coalition for Women's Economic Development (CWRED) and
it is part of what is becoming an international entrepreneurial brush fire.
"We have 107 loans out, an average of about $1,500 per loan [with 15 percent
interest], to people who couldn't dream of getting money any other way," says
Forescee Hogan Rowles, CWED's director. "And we have a repayment rate of 95
percent."

        The results are  not unusual. "This is an idea that actually work,"
says Jack Litzenberg of the Charles Stewart Mott Foundation, which has provided
seed money for CWED and 28 other micro-enterprise loan programs across the
country. (Hillary Clinton served on the board of one of them in Arkansas.)
"Most social programs can't deliver at what they promise. This doesn't promise
the sky. It promises a ladder." And it isn't very expensive: the Mott Foundation
has launched 1,166 small businesses on an investment of about $5 million.

        The secret of the Grameen system- which is also proving successful in
other parts of the world, especially in Latin America- is reciprocal
responsibility. To get her loan, Ava Jackson had to become part of a "solidarity
circle" with four other women. They had to meet regularly, scrutinize each
other's business plans- "We're like the board of directors for five companies,"
Ava says - and ultimately agree to become jointly resposnsible for the
repayment of all five loans. "The rules are very strict," says Delphine Pruitt,
who supervises solidarity curcles for CWED. "No member of the circle gets a loan
untill all five are ready. They have to meet reagularly for 8 to 12 weeks to be
certified. If any one of them doesn't show up, the meeting is cancelled an the
loans are delayed. Same thing if you show up more than 15 minutes late without
an excuse. I'm tough on that. Some circles go on for months, trying out new
members, untill they have five who are trustworthy. They learn from each other,
find out they have a lot of the same problems. I tell them: 'You're on a
mission, keep going.' We're proving that we can do it for ourselves- and
despite what you hear, these people are good business people. If you can teach
them how to do it, they can do it."

Return to the Grameen Bank Page

Hari Srinivas - hsrinivas@gdrc.org
Return to the Virtual Library on Microcredit