GA Blog HomeGA Blog Grameen in Omaha Part II: Poverty Affects More Women
Grameen in Omaha Part II: Poverty Affects More Women
Written by Jenene Allison
on Monday, 15 June 2009
Omaha may be known as the home of one of the world’s richest men, Warren Buffet, but now poor women in that city are getting access to something that might just help them work their way out of poverty – microloans from Grameen America.
Poverty strikes households headed by women to a greater degree than any other family unit. According to the Omaha Chamber of commerce 58% of households headed by women lived below the poverty level in 2006. Sadly, but understandably, single women with young children are the most likely to be poor.
But poor women in Omaha will soon have the chance to get a hand up from a non-profit organization with a record of helping women work their way out of poverty. Grameen America, a microfinance institution headquartered in New York and founded by Nobel Peace Prize winner Muhammad Yunus, has launched its next U.S. branch in Omaha.
Omaha is a typical American city in that the poorest households are single-mother families. With only one worker in the family, income is necessarily lower than in two-income families, but as the statistics show, more than half these women are also living in poverty. For a family of 4 that would mean they have less than $460/week to pay for shelter, food, clothing and any other necessities. Since owning a car is a necessity for getting around in Omaha, the decision to work and pay for child care or to not work and just stay home to care for their children is especially hard one to make.
Running a small business from the home is one solution. But such businesses have start-up costs, and how can a poor woman, perhaps someone who speaks English as a second language and may be a recent immigrant, find the funds to start her own business?
Now, she can borrow it, and with no collateral or credit history as long as she and four friends agree to form a borrowers group with Grameen America in Omaha, Nebraska.
Grameen Bank was started in Bangladesh in 1976 when Muhammed Yunus loaned the equivalent of $27 to 42 Bangladeshi villagers to start and run their own businesses. Today Grameen Bank has nearly 8 million borrowers and disburses more than $100 million each month while maintaining a remarkable 98% repayment rate. Grameen America’s loans are necessarily larger (about $1,500 to $2,000 on average for 1st time loans) because the costs of doing business here are also higher. But the basic model is still remarkably similar: small loans at reasonable low interest, and a close communication with other borrowers and their “banker” lead to remarkably high repayment rates, usually topping 98%.
While the loans are small, the women get the experience of starting and running a business, and who knows where it could lead? Warren Buffet started his first business in Omaha when he was just 13. The Grameen America lending model incorporates building a savings account into the loan process, so borrowers not only have what it takes to start a business, they can also start growing a financial safety net for emergencies. For a single mother with children living in poverty, that means a step out of poverty.
