Overnight Village Visit Recap (with video footage!)

One of the highlights of the Grameen internship is certainly the chance to spend four to five days in a rural Bangladesh village and having the opportunity to observe many Grameen operations. I had three others accompany me on this trip, Salam, our translater, Rahil, a good friend of mine and student at NYU, and Tim, another buddy who goes to UNC-Chapel Hill. We were going to be visiting Maghera, a branch office of Grameen Bank.

One of the questions that I was always preoccupied with on my trip is the net impact of microfinance. Does it work? The Western education system is predicated on possessing a certain zeal for cynical paranoia, playing that so-called devil’s advocate role. A lot of pundits in development like to over scrutinize microfinance, and make unwarranted claims that go along the lines of “it doesn’t work”, “people don’t need loans, they need jobs”, “what empirical evidence is present to show that it works?”, “debt puts a burden on borrowers and puts them in a worse situation than before”, “microloans are not being used for productive, income generating activities. I don’t disagree with some of these claims, I’m not overly quixotic to fail to recognize some of the shortcomings of the field. However, I am firm in my assessment that on the whole, when applied correctly, microfinance is a tool that works. Development is a slow process, we’re not going to see the rural Bangladeshis driving Bentleys on ocean front properties anytime soon. The bottom line is that it has been proven by many researchers that microfinance clients do in fact, increase their incomes as opposed to non-borrowers. To me, that in itself is sufficient to validate the field. How could increasing incomes (after debt repayment) ever be a bad thing? And of course, let’s even assume that microfinance directly has a zero net financial impact on borrowers, and focus solely on the second hand effects. Women’s empowerment through inclusion in family economic decision making, lower fertility rates, better family planning, and the hope and awareness of a better future are just some of the second hand effects (that does not assume higher incomes as a result of MF). Microfinance, in many cases, is the linchpin to improving the lives of the poor, and leads to an endless, perpetual cycle of improved living conditions.

Below are just a few case studies I have selected to include:

Ms. Akhtar (Student Loan Borrower)

Age 23

Major: Islamic History, 3^rd year

National University, Women’s College

Having the chance to meet Ms. Akhtar was an inspiring encounter. She is a passionate, motivated and driven student studying Islamic history. She has utilized Grameen Bank’s education loan program and has taken a loan of 77,000 Taka per year. She aspires to be a teacher one day in her village and chose her major because she wanted to learn more about her religion and background. She places the utmost value on education and being educated to her means that she is self-reliant, and has the empowerment to choose right versus wrong, and to not be a burden on her parents (based on her definition, I’m not educated!). She has tried to be a proponent of education in her village and has stressed the importance of education to her brother who is just completing 12^th grade. When we asked her, as an educated female in her village on ways to improve her community, she promptly said that it was essential for her fellow village members to be educated!  The government funding for scholarships is limited in her eyes, and only a select few ever get the chance to engage in higher studies. She estimates the literacy rate in her village to be between 60 to 70 percent. She is grateful to her parents for the opportunity to obtain an education; many of her counterparts were not so lucky and were married off as young as the age of 18. She openly lambasted  some of the conservatives in her village, who marry off their daughters at very young ages without ever giving them a proper education. She opposes these dogmatic principles, and believes for her society to progress, they must adapt to changing times. When asked if she ever wanted to go abroad, she smiled, and said of course, everyone wants to go abroad!

Ms. Akhtar is an excellent example of the liberating effect education can have on people. The doors in her life have swung wide open, and the possibilities are much more vast for her with her educational background. Grameen Bank is engaged in awarding higher education scholarships as well as providing financing for higher education. Basic tenets of their student loans include: student loans will only be awarded to children of Grameen Bank borrowers, they must begin to repay the loan one year after graduating, and they can be used for undergraduate or Master’s Degrees.

Ms. Mamtas Begum (microenterprise loan borrower)

Ms. Begum has been a Grameen borrower for 16 years, and has taken a larger microenterprise loan to finance her successful clothing business. Her initial loan was for 3,000 Taka, and her loan now is for one lakh Taka (100,000 BDT). Her family operates a store in Dhaka selling saris and lungis (traditional outfits). One of the few crafts she knew well was sewing and knitting so she chose to purchase a sewing machine and start this business. Her business has grown immensely over the last two years, and her customers seem to like her product. She employs 8 people, many of whom are salesman. Her microenterprise loan has allowed her to expand her business, and exploit economies of scale in procurement with wholesalers. Because she is purchasing such large quantities, she is able to get reduced rates on inventory, and this cost advantage is ultimately passed on to her customers. She serves various functions in the family business including human resources, management, and procurement, while her husband runs many of the other operations of the business in the city as she tends to her family in the village.  She has not faced any difficulties paying back her loan, and hopes to build a home and educate her young son. Because of her thriving business, she has seen her status in her community improve.

Struggling Member Borrower

Grameen Bank initiated a Struggling Members Program, a microlending program for beggars in 2003. The program focuses on distributing very small loans, at times less than ten dollars, to beggars to help them in any way to create an income generating activity. To date, there are over 92,000 struggling members and nearly $2 Million have been disbursed to the members, of which nearly $1.5 Million has already been paid back. Ms. Begum explained that her installments were a meager 20 Taka per week, and that she had paid back her entire loan off. Why did she choose to payback her loan? For her, she felt as if it were duty. She wanted the opportunity to be able to take another loan so she felt it necessary to pay back and on time. This goes to show that even the poorest of the poor are bankable. Their lives are their collateral and they more often than not, will ;pay back their loans. Ms. Begum was able to buy a few chickens and goats with her loan. She has taken the revenues generated from her batch of chickens and goats and reinvested them, and has continued to cycle the money back into the business. Previously she was begging, but now she has found a way to make a modest living, for which she is extremely proud of. The Struggling Members Program is a case study that even the poor can advance their lives, however long it may take.

Check out the following video (coming soon, experiencing technical difficulties) of interaction with a Grameen borrower. In the backdrop is her home with no electricity and no running water. Believe it or not, these are the circumstances of many in the developed world… If you are reading this, consider yourself lucky, you are a winner of the “Ovarian lottery”. Begin today by appreciating everything your life has to offer, many in the world are not so lucky.