Banker to the Poor (18 page)

We have come a long way from the days when we did not know whether Grameen could function outside of Bangladesh. Dozens of projects in countries with very different cultures, climates, and levels of development have shown how versatile our micro-credit methodology really is. We have tried our best to spread the word about the power of micro-credit and help people who want to start or expand their own projects abroad. To conserve our energy, we have concentrated on projects with a strong poverty focus, but we are convinced that our model can work among nonpoor populations as well. Despite these successes, we have only begun to scratch the surface. Millions of families around the world are still victims of unjust economies that do not recognize their right to credit and relegate them to lives of virtual slavery. These are people with untapped potential who suffer the pain of hunger and poverty even though it is avoidable.

Micro-credit is not a miracle cure that can eliminate poverty in one fell swoop. But it can end poverty for many and reduce its severity for others. Combined with other innovative programs that unleash people's potential, micro-credit is an essential tool in our search for a poverty-free world.

Whenever I am asked if Grameen can work in other countries, I respond emphatically that it can work wherever there is poverty, including in wealthy countries. Poor people throughout the world are worthy of credit. The initial interest of many American individuals and organizations in Grameen led me to believe they might try to replicate our program for the benefit of the poor, the homeless, and the unemployed in the United States. I was not prepared for the amount of skepticism I encountered. What struck me was not so much people's doubt as to whether micro-credit would succeed in the United States but their pessimism about whether
anything
would actually raise people out of poverty rather than merely alleviating its symptoms. Many Americans argue that their welfare state has created a lazy underclass of dysfunctional individuals who would never be interested in or capable of starting their own businesses or supporting themselves. I knew Americans—not just wealthy or educated Americans, but Americans generally—to be remarkably resourceful people and I was surprised by their skepticism. I decided to keep my eyes open for anyone interested in giving micro-credit a try.

It was not until the mid-1980s that people in the United States began showing real interest in applying Grameen principles to their own poverty problems. I suppose it all began in 1985, when Bill Clinton, then governor of Arkansas, was looking for ways to create new economic opportunities for the low-income people of his state. Hillary Rodham Clinton's college roommate, Jan Piercy, had just returned from working in Bangladesh with an American organization and was at the South Shore Bank of Chicago. She introduced the Clintons to Ron Grzywinski and Mary Houghton, Chicago-area bankers who had done much to convince the Ford Foundation to support Grameen.

Ron and Mary advised Governor Clinton that a Grameen-type program could be an answer to the poverty problem in his state. They suggested that he set up a bank designed specifically for the poor in Arkansas. The governor was intrigued and he invited me to Arkansas. On my next trip to the United States, in February 1986, Ron and Mary arranged for us to meet. Governor Clinton was attending the annual Governor's Conference in Washington, D.C., and so we met in the Four Seasons Hotel—Governor Clinton, Hillary Rodham Clinton, Ron, Mary, and myself.

Bill Clinton is a man of voracious curiosity. He wanted to know everything about Grameen—how it got started, how it works, and why nobody had tried it in the United States. As I spoke, both the governor and his wife were drawn into my story. After half an hour, Mrs. Clinton declared, "We want it. Can we have it in Arkansas?"
*

"Why not?" I said. "If the governor is committed to it, how can it not happen?"

Clinton turned to Ron and asked him how long it would take to get the program started. Ron explained the steps necessary—all the legal clearances and permissions—concluding that it would certainly take at least six months.

The governor was impatient. "That's too long," he said. "Can't this be done any faster?" He turned to me as if seeking my help.

"If you want me to, I can start it tomorrow morning," I said.

Clinton gave me a broad smile. "Can you really do it? That's what I want. I want you to do it."

I explained my plan. To avoid the legal complications, we would set the bank up as a simple credit program. Ron and Mary would then buy the bank as one of their projects. In the meantime, we would start organizing the borrowers. I promised Mrs. Clinton and the governor that I would visit Arkansas to present an outline of the project after meeting with state officials, potential borrowers, bankers, academics, and business people.

The following week I got my first taste of Arkansas. State government officials made elaborate preparations for me to meet with small business owners. Ron and Mary accompanied me. I was introduced to a local radio station owner, a fast-food operator, a retail outlet manager, and a drugstore worker. But at each successive stop, I became more and more withdrawn. These were not the people I needed to meet. The Clintons had told me about the widespread poverty in their home state, but I was not seeing any of the poor people I was supposed to help. None of these people were really poor. I was looking for poor people.

I expressed my frustration to the state officials. "These are the smallest businesses in the area," they explained. "We don't have any poorer businesspeople."

"No, no," I said. "I don't want to meet poor businesspeople. I want to meet just plain poor people."

They looked at me as if I had spoken to them in Bengali. Obviously they did not quite know what to do or where to take me.

"Do you have welfare recipients in this state?" I asked. "Perhaps there is an office that administers your welfare program with lists of people who receive benefits?"

"Yes, we do have such an office," they answered.

"O.K.," I said. "Let's get the welfare list and start visiting the people who are on it."

My hosts made a few quick phone calls.

It was at this point that our trip began to get interesting. I was taken to meet with welfare recipients. I asked one group, "Suppose that your bank were to lend you money to start a business. How much money would you ask for?"

The room was silent. No one seemed to understand the question. Finally, one person said, "I don't have no bank account."

"But what if you did have a bank account?" I said.

Again, silence.

"What if you had a bank account, and your bank were to lend you money. What would you do with it? Can anyone tell me? Doesn't anyone dream of starting a new business? Doesn't anyone have a hobby that might help earn some cash if done full time?"

I went around the room asking each person individually. I wanted to gauge the interest of the American poor in self-help and self-employment. Critics had predicted that micro-credit would have trouble in the United States because, whereas Bangladesh has a long tradition of self-employment, less than 10 percent of Americans work for themselves. They argued that Americans typically required lengthy and intensive training before they were ready to go into their own business. This sounded contrary to the "can-do" spirit I had always witnessed in the United States, among rich and poor, black and white, Asian and Latino alike. In my gut, I believed such criticisms underestimated the average American. Every day I read about white-collar and blue-collar workers being fired by their longtime employers. It seemed clear to me that future generations would grow accustomed to having two or three different careers in the span of one lifetime and that self-employment would become more common. So I was eager to see how Americans trapped in poverty, some for two and three generations, would react to our offer of credit.

The fear and incomprehension on the faces of those poor people in the community center of a small town in Arkansas was the same as I had seen countless times in Bangladesh. So I spoke as calmly and naturally as I could.

"Look, I run a bank in Bangladesh that lends money to poor people," I said. "And last week, I had a meeting with your governor. He asked me to bring my bank to your community. I am considering starting a new bank right here in your town. I have come today to find out if any of you would be interested in borrowing money from me."

I heard some chuckles in the crowd. It was obvious the people in the room did not really believe me. I went on: "My bank is a special bank for the poor. It requires no collateral and no credit check. All I need is someone unemployed or on welfare who has an idea of what he or she would do with the money. But if there is no business for such a program, why would I open my bank here? I could go somewhere else and give loans to poor people in some other community. That is why I am asking if any of you have any ideas of what you might do with a loan."

One woman, who had been listening carefully, raised her hand. Afraid that I might not notice her, she called out, "Hey, I'd like to borrow from your bank!"

"O.K." I smiled. "Now we are in business. How much would you like?"

"I would like $375."

Everyone laughed.

"What do you want this for?" I asked.

"I am a beautician and my business is limited because I don't have the right supplies. If I could get a nail-sculpting box that costs $375, I am sure I could pay you back with the extra income I'd earn."

"Would you like to borrow more than that?" I asked.

"No, I wouldn't want to take a penny more than what the box actually costs."

Another woman raised her hand and said, "I've been unemployed ever since the garment factory closed and moved to Taiwan. I need a few hundred dollars so I can buy myself a used sewing machine. I want to make clothes and sell them to my neighbors."

Another woman raised her hand. "I want $600 to buy a pushcart so I can sell my hot tamales in the street. My tamales are famous in my neighborhood. If I had a pushcart I could sell them better."

Every suggestion gave me reason to hope. These business plans and aspirations of really poor Americans had a great deal in common with the poor of Bangladesh, Malaysia, and Togo.

The Grameen pilot project in Pine Bluff, Arkansas, was put in the hands of Julia Vindasius, an MIT graduate and second-generation American of Lithuanian descent. Julia was working at the South Shore Bank when I met her. She was young, but extremely able, and I suggested she be put in charge of the pilot project. Everybody was surprised by my recommendation. Julia had never been to the South in her life.

The project was originally named the Grameen Fund, but we soon discovered that the name Grameen complicated matters and made Ron and Mary waste a lot of time explaining the history of Grameen and Bangladesh. One day in my office in Dhaka, I received a call from Mary in Chicago. She recommended that the project be renamed the Good Faith Fund, suggesting that the bank does not rely on collateral but rather on the good faith of its borrowers. Of course, Good Faith Fund made a lot more sense. It was simpler and easier to understand.

The Good Faith Fund slowly grew to reach hundreds of low-income people in Arkansas. When Clinton ran for president, he often used it as an example of a successful, innovative means to fight poverty. At one point Clinton announced his intention to start a nationwide network of micro-credit programs modeled on the Good Faith Fund. This prompted many telephone calls and letters from the United States.

During a 1992 interview with the editors of
Rolling Stone
magazine, Clinton spoke particularly fondly of Grameen. In a separate article, two of the editors ridiculed him for being too ready to promote micro-credit in the United States. I was disappointed, but an American friend explained that
Rolling Stone'
s reaction was hardly surprising. He argued that Grameen was a "Third World technology transfer" and that the American elite might not be ready for it. Given the reluctance of Americans to adopt successful policies from countries as close to them as Canada, Germany, or England, it would prove very difficult for Clinton to convince his fellow Americans to follow a Bengali model.

As president, Clinton continued to take a personal interest in the Good Faith Fund in Arkansas and to support micro-credit. But unfortunately, since the election of a Republican Congress in 1994, he did not spend much political capital placing micro-credit on his national agenda. Nevertheless, he continued to visit micro-credit borrowers on his international trips during and after his presidency and his vocal support has spurred the creation and expansion of many micro-credit programs.

My experience in Arkansas was repeated in many parts of the United States. In South Dakota, I stayed with Gerald Sherman, director of the Lakota Fund, and his wife and two children. Gerald trained at Grameen in Bangladesh in 1988. He and the rest of the staff of the Lakota Fund, a leading micro-credit program assisting Native Americans, are members of the Sioux Nation. They showed me the beautiful quilts made by Native American women who used to have no economic opportunity but now receive microloans, hold their meetings in churches and community centers, and sell their goods themselves.

In Oklahoma, a most impressive tribal leader, Chief Wilma Mankiller, also took an active interest in the Grameen program. When I visited the Cherokee territory, I met with a group of about twenty poor Cherokee women. Their faces were absolutely expressionless. I told them about Grameen, and they just sat there stoney faced and silent.

I said, "Well, your reaction here is far more encouraging than anything I have ever encountered in Bangladesh. There, women actively try to avoid me. They would run away from me, saying, 'No no, we do not want or need your money.' We would run after them, but still they refused to listen. At least you are seated here and are listening to me. That is extremely encouraging."

No one laughed.

"Does anyone in this room need money?" I asked.

No answer. No hand lifted. No eyes moved.

"If you don't need any money, would you happen to know of a neighbor or a friend who might need some?"

After a long silence, a hand was raised. "Yes, I have a neighbor who I think could use some money," said one woman.

"To do what?"

"To buy himself a little stove on wheels so he can sell tacos."

"And is he good at that? Does he know how to make tacos?"

"Oh, yes," said the little woman. "He is the best taco maker in the area. Everyone loves his spicy meat and crispy tortillas."

"Well, send him around. I am certain we could give him money. Does anyone else have a neighbor or a friend who needs money?"

The Cherokee women in the room all thought for a while, then another hand was raised. "I know that people in this area love puppies."

"Yes?"

"Could I get a loan to raise and sell puppies?"

"Well, if you think you could succeed economically and that you could earn enough to pay back a loan, why yes, of course we could lend you the money. How much would you need?"