From student to international banker in one easy step
Posted by Página do Microcrédito em 21 junho, 2007
By Sarah Merchlewitz
One feature of a recent graduate’s life is a heightened sensitivity to all of those “How to Manage a Small Budget” and “Saving on a Shoestring” type articles. Those are the ones that recommend starting an early habit of putting money in a 401k and skipping that daily coffee shop latte. Even though I just graduated from college and don’t yet have a 401k, my own benefit package or two-week paid vacation, I just made an important decision that allows me to count my name among those in a respectable profession. I am a banker.
OK, technically I am a microfinancier, and even then, I am just one of 16 people who lent $25 or more to a Mrs. Chorn Rann of Cambodia. Rann had requested a loan of $600 so she could buy fertilizer and more seeds to expand her small vegetable farm and buy a motorcycle to transport her goods to the local market. What may seem like a small amount to my 16 banking partners and I will make a huge difference to Rann’s family, who lives in a country where more than a third of the population is below the poverty line.
Microfinance is the practice of making small loans available to the sector of the population who otherwise would not receive assistance from a traditional bank or moneylender. If a poor farmer in Guatemala were to go to a bank and apply for a loan, and he did not have any collateral to offer nor any substantial savings, would he even be considered? Probably not. And if it were not a Guatemalan man but a woman without property to her name or any claim to valuables? That’s even a longer shot.
Mohammed Yunus of Bangladesh sought an answer to the inaccessibility of credit among the poor when he saw his country crippled by famine back in the 1970s. He believed that making small loans to families and entrepreneurs would be a sustainable and practical way to alleviate poverty. Another prominent feature of microcredit is that some institutions focus on loaning to women in order to give them more status and opportunities in their communities. Yunus and his credit union, the Grameen Bank, won the Nobel Peace Prize in 2006 for this progressive idea that small actions can sometimes be just as meaningful as exorbitant gestures and sums of money.
From Yunus’ book, “Banker to the Poor,” he writes, “Poverty is not created by the poor. It is created by the structures of society and the policies pursued by society. Change the structure as we are doing in Bangladesh, and you will see that the poor change their own lives. Grameen’s experience demonstrates that, given the support of financial capital, however small, the poor are fully capable of improving their lives.”
With last week’s G-8 summit in Heiligendamm, Germany, making headlines where wealthy, industrialized nations pledged billions of dollars and Euros worth of aid, it is easy to forget that the small pledges can have a impact.
Inspired by New York Times reporter Nicholas Kristof, I visited the Web site Kiva.org. There I could view a list of eligible borrowers from around the world who have applied to local microcredit institutions. They rarely request more than $1,000.
At first, I scanned through Kiva’s eight pages of eligible borrowers, and I was overwhelmed. Should I lend to a woman’s small business, or should I lend to the man trying to repair the roof of his house? To the person in the Ukraine, Mexico, Azerbaijan, Turkmenistan or Samoa? Where is my help most needed? In the face of overwhelming need, where can I make the most difference?
Finally, with the same ease with which I bought a pair of shoes off the Internet the week before, I became Mrs. Rann’s banker. It was that simple. When I checked back the next day, all of Mrs. Rann’s request had been raised, and in another day, Kiva e-mailed me to say that the loan had been dispersed to its partner in Cambodia.
Microcredit is different from a donation in that my contribution will be repaid in a year to 15 months. In the meantime, Kiva will keep me updated with e-mails, photos and journal entries on how Rann’s business is growing. This is a participatory approach to aid that places the lender and the borrower in a relationship. This reminds me of the words of Aboriginal activist Lila Watson, “If you have come to help me you are wasting your time. But if you recognize that your liberation and mine are bound up together, we can work together.”
A recent figure reports that 1 percent of the world’s population owns 80 percent of the world’s wealth. Is starting to save now for my retirement more important than putting food on the table for a family in Ghana? I am entering a new phase of my life where I am more independent than ever before, and now have to carefully manage my own finances in the face of student debt and apartment rent. However, I also have the potential to improve the state of the world, and that I think is the greater responsibility.
A former Winona Winhawk, Sarah Merchlewitz is a recent graduate from Sarah Lawrence College in New York, where she studied literature and writing. She currently lives and works in Minnesota.