In early 2008 when Grameen America opened its first branch in Queens, New York, many people asked, “Why bother with microfinance in America?” Since then the Queens branch has lent more than $1.6 million to over 600 poor women in a neighborhood with a distinctive immigrant community, and the organization is now expanding to Omaha, Nebraska.
Areas of high poverty are usually very well-defined parts of town. While some areas of Nebraska have poverty rates as low as 4%, in other parts the rate reaches as high as 25%. With this in mind, Grameen America is starting in South Omaha, with plans to expand to North Omaha later. Branch Manager Habibur (Habib) Chowdhury has just hired his first associate, Patrick Laird, who formerly worked at the Phoenix House domestic violence shelter.
“I would like to have more staff recruited by now,” Chowdhury says, “But this is a good start. Patrick is very interested in Grameen and I have started staff orientation with him. We are also telling people that we are ready to start making loans.”
The Grameen lending model relies on community- and relationship-building rather than just handing over a check. Unlike a traditional American banker, a Grameen America banker goes to the borrowers. This connection between banker and borrowers helps to ensure the remarkable 98% repayment rate—before a borrower gets into trouble, her peers and her banker know about the problem and can offer ways to help.
The average size of first time loans from Grameen America are about $1,500 to $2,000. With a successful repayment history a woman can borrow more. But to start a woman must find four peers or friends who also want to borrow money to support a small business. The group of five meets weekly and gives each other mutual support as they use their microloans for entrepreneurial, income-generating activities. Each Grameen America Bank Branch is led by an experienced senior manager such as Chowdhury. The manager starts by immersing him or herself in the local culture rather than current interest rates.
Chowdhury began his journey to Omaha by spending 1 month observing the Grameen America branch in the Jackson Heights neighborhood in Queens. Then in April he traveled to Omaha.
Chowdhury has been managing Grameen microcredit programs since 1985. In 2000, he launched and managed a Grameen microcredit program in Kosovo to provide credit to war victims, widows, and displaced women. When Chowdhury arrived in Kosovo in 2000, local people were skeptical about microfinance. Today the program has over 6,500 borrowers and is growing.
While he encountered many challenges bringing the Grameen microlending model to Kosovo, there were also advantages. “In Kosovo, we could go directly to the village elder, and he would introduce us to the rest of the village,” Chowdhury says.
In Omaha there are no elders, which means more travel and more networking. “Omaha is very spread out and there is no public transportation,” Chowdhury says. As a result, Grameen America is renting a car that he and Laird will share. Local resident and United Way employee Julie Kalkowski has also been helping Chowdhury find his way around the city and connecting him to useful organization and churches.
Besides the United Way, Chowdhury and Laird have already reached out to local community-based organizations the Latino Development Corporation, Catholic Charities, the South Omaha Community Care Council, the Center for Women Entrepreneurs, among others in order to understand the community and to build support for Grameen. Chowdhury hopes to build a panel with representatives from these different groups in order to make it easier to recruit new staff and borrowers.
“Our message is always very simple,” Chowdhury says. “We give examples from Grameen and its success all over the world. We explain that Grameen America is new for Omaha, but has already had success in New York.” When they find willing listeners, Chowdhury and Laird can also assure them that they won’t need to find their way to Grameen America’s offices to get things started. “We give them our business cards and our flyers and we tell them we will come to their community,” he says.
In his first year, Chowdhury hopes the group will hire six more staff, reach 700 borrowers, and disperse $1.3 million in small loans. “Then, we will try to open a new branch in North Omaha,” he says.
Grameen America has arrived in the Cornhusker State—and at a critical moment in the economic crisis. As state budgets are cut, and lawmakers quibble over how to help those in need, there is more need and fewer resources. According to the blog Poverty in America : “now more than ever we need people who see a problem, roll up their sleeves, and get to work. If we can't count on government... then we'll have to help each other."
Hi everybody, my name’s Abeer, and I go to the Stern School of Business at New York University. Over the next 2 and a half months I will be interning at Grameen America, an organization that will be bringing the microcredit revolution pioneered by its Nobel prize winning sister organization, Grameen Bank, from Bangladesh to the United States. Over the next few weeks, the other interns—Julia, Mollie, Malessa, Michelle and I—will be updating this page with interesting information straight from the cutting edge of social business, important updates to the Grameen America cause, as well as any other tidbits that come our way while working here.
IOM Report Sets Goals for U.S. Global Development Role
Written by Malorye Allison
on Friday, 22 May 2009
Global development is at a crucial crossroads, where the world economy is struggling and the poor are in danger of being left even further behind. There has been much debate about the U.S.'s role in helping the developing world, so it is with interest that we saw The Institute of Medicine has just released a report articulating its vision for this:
increase the utilization of existing interventions to achieve significant health gains;
generate and share knowledge to address prevalent health problems in disadvantaged countries;
invest in people, institutions, and capacity building with global partners;
increase the quantity and quality of U.S. financial commitments to global health;
and engage in respectful partnerships to improve global health
This report springs from the Institute of Medicine's expert Committee on the
U.S. Commitment to Global Health, which was organized to look at the current situation and articulate a vision for going forward. It addresses the involvement of the U.S. government and U.S.-based
foundations, universities, nongovernmental organizations, and
commercial entities.
Committee member Ruth Levin summed up the report's conclusions this way in a recent blog post : "The IOM reinforces others’ focus on living up to commitments, balancing
the portfolio to include more than AIDS, and making better use of the
U.S. assets in the area of science and technology and global leadership."
The U.S. has raised its commitment to global health over the last few years, according to the report: "Between 2001 and 2008, global health programming through the United States Agency for International Development (USAID) and the State Department grew by nearly 350 percent. As a result, health now makes up a significantly larger portion of both the U.S. foreign affairs budget and the overall overseas development assistance (ODA) budget." This rise mainly involved special programs to fight specific diseases including, AIDS, malaria, and tuberculosis.
While the Committee commended this increase in aid, they also point out that in terms of overall giving, the U.S.: "is below the efforts of other high-
income countries in relative terms and is among the lowest levels of net ODA as a percentage of gross national income (GNI). Even when private giving is included, per capita spending by the United States does not approach the level of most other wealthy nations."
To meet the Millennium Development Goals (MDG)s that were adopted by the United Nations' Member States in 2000, the Committee estimates that the U.S. contribution should be $13 billion per year by 2012. President Barack Obama's funding request in May 2009 was for $8.645 billion by 2010. That's a modest increase over current levels and still below the Committee's estimate.
Written by Malorye Allison
on Wednesday, 29 April 2009
Despite the global downturn, Grameen's poor borrowers in Bangladesh and elsewhere are still repaying their microloans at the same high rates, according to a recent interview of Grameen Bank founder Muhammud Yunus by Bloomberg. Yunus says the bank has maintained its 98% to 99% repayment rate.
"There is an amazing contrast between what conventional banks are experiencing and the rate at which Grameen bank's borrowers are repaying their loans," Yunus said. "We have not experienced any movement, and are still showing strength even in the crisis period." This is particularly important, Yunus noted, because "at a time people are losing jobs they can create their own jobs."
The average loan to a borrower is about $200, but these figures seem huge to the borrowers. "Imagine a woman who is receiving a loan of $35 and trembling as she takes the money," Yunus said.
Pressed by the interviewer to explain why these particular borrowers are working so hard to repay their loans, Yunus explained that the Grameen Bank lending process, "Creates a system that prides itself on timely repayment. Microfinance creates its own culture and we see it in Bangladesh, South America, Eastern Europe, anywhere in the world."
Grameen America, located in Queens New York, is the first U.S.-based lending organization that uses the Grameen Bank approach. The bank has lent $1.5 million to nearly 600 women in Queens over the last year. Loans range from a few hundred dollars to the low thousands.
Yunus and the Grameen Bank shared the 2006 Nobel Peace Prize for "..their efforts to create economic and social development from below."
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