Microfinance and social business are quickly growing concepts as the world requires business to do more than adopt corporate social responsibility practices. I am lucky enough to have the opportunity to explore the mother of microfinance during an internship at the Grameen Bank in Bangladesh. I received this internship through the Students for Development program, which is run by the International Student Services Office at Carleton and the Association of Universities and Colleges of Canada. It is funded by the Canadian International Development Agency.
To give a short overview, Grameen was instituted in 1983 as a bank that lends to the poor by giving microloans to primarily women in Bangladeshi rural villages. Professor Muhammad Yunus, the founder of microfinance and Grameen, faced many cultural challenges when first starting the bank as Islamic Bangladeshi culture is typically quite traditional and women are seen as homemakers while men are the breadwinners. Yunus and Grameen shared the Nobel Peace Prize in 2006 for their efforts in creating opportunities for impoverished people. Today, the Grameen Bank has about 8.3 million borrowers in villages across Bangladesh. For more information, I highly recommend Yunus’ book “Banker to the Poor.”
I landed in Dhaka (the capital city of Bangladesh) 10 days ago after a ridiculous 38 hours of travel time. My cockroach count is in double digits already and my mosquito count is out the window.
My first impression of Bangladesh involves colorful rickshaws and curious eyes everywhere. Foreigners are rare but welcome. The other interns and I consistently get stares and groups of interested people form around us whenever we leave our hotel. We constantly have children in rags tapping on our legs and asking for money while we walk quickly and avoid getting hit by rickshaws or falling into the open sewers.
I have completed the first week of my internship, during which we had sessions to learn about the theoretical practice of the bank. It focuses on lending money to landless and assetless people. Landless involves anyone who owns less than a half acre of cultivatable land, whereas assetless is someone who isn’t able to buy land. These people don’t have collateral; therefore, will not be touched by conventional banks. Before Grameen, they would usually get money from moneylenders in order to make goods or run their own business. These moneylenders would charge insanely high amounts of interest and maintain the poverty cycle while doing so.
Amongst the theoretical part, I also took a day trip to a branch in order to attend a centre meeting and meet some of the borrowers. It was truly inspiring to hear some of the stories of the women. We interviewed one specifically. She was unsure of her exact age, as most of them are, but said she was between 20 and 25 and got married 11 years ago. Her husband is a rickshaw mechanic so she used a loan from Grameen to invest in buying a rickshaw to rent out to drivers. Her business has been prosperous and she now owns 12 rickshaws and uses her husband’s skills to maintain them. This business idea was her own and when asked who would pay her repayments if she couldn’t, she said nobody. The whole congregation of women then repeated her response. Everything is done formally and based on the ideas of motivation, trust and a life-changing opportunity. Many of the borrowers are also shareholders in the bank, so there is extra social pressure from the community beyond that already created. This is one of the main criticisms of the Grameen Bank.
I willing be living at a branch in a village for the entire next week and am excited to explore the system further and get to know some of the field employees and the borrowers.
Thanks for reading and please feel free to contact me with any questions or comments that you may have!
Take care, Kendra