Micro-credits – a blessing… or a curse? Part 5
“Whenever I see a Problem, I start a business to solve it.” – Muhammad Yunus, founder of the Grameen Bank, and poster-boy for all who believe that doing good and getting rich in the process is not a paradox.
Just like in the last chapter, my fingers are itching to rewrite this quote a little, maybe like this: “Whenever I start a business, I cause new problems that need to be solved.”
I have noticed several problems arising from Dr. Yunus’ various business ideas.
Among others, there is:
– massive stress to the point of illness from being in an all-consuming never-ending debt cycle,
– over-indebtedness due to too short repayment periods and excessive interest rates,
– even greater power to credit sharks, who happily step in to ‘’fill” debt holes,
– patronizing of women, now not only by their own husband, but also by the mostly male employees of the MFI (microfinance-institutes) etc
I wonder, is there an alternative that can free the microfinance victims from their misery and stop top-down control?
As announced in an earlier blog post, in this last chapter, I would like to present a possible alternative: Table-banking, a special type of entrepreneurial empowerment which has been developed from the grass roots and which leaves micro bankers and investors standing in the rain.
7. The bank around one’s own table – Table-Banking
Whenever investors in the microfinance industry mention BOP (bottom of the pyramid), they mean economic support for the poorest of the poor. If the economists, the micro-bankers and other investors really care about alleviating poverty, then it seems that their imagination only goes as far as to promote women, but not a step further.
The worldwide one billion people with disabilities are generally left out when it comes to financial inclusion. Does this mean business as a cure for all problems has its limitations? Is it a sheer lack of confidence in the skills of the disabled? Or just a lack of inventiveness?
In the kanthari Institute, we are completely convinced of the possibilities of those who have been forced to see the world from a different perspective. Of course, we do see disability as an “obstacle” to achieve a goal by conventional means, but we have also learned that groundbreaking opportunities are found precisely in these “obstacles”. Often ideas can only develop due to a deficiency.
In 2014, Paul and I traveled to Kenya to visit some projects of kanthari graduates.
In Kitale, a small town in the northern Rift Valley, located in the shadow of the 4,300-meter-high Mount Elgon, we met Joseck Otongo. Joseck was already well over 50 when he joined us at the kanthari Institute in 2010. He had worked as an accountant all his life. But then he became blind and lost his job. Together with other unemployed blind people they tried to start a business. But although MFIs usually try to talk self-help groups into accepting micro-credits, no one had trust in the business skills of blind entrepreneurs. Banks as well as MFIs refused to provide a loan.
Joseck and his team did not give up. In a crisis meeting they put everything they had to the table. One had some chickens, the other had a small Cornfield, the third knew how to bake and Joseck had knowledge of financial management. And so, they got started: harvesting, cooking, baking, selling. The profit was reinvested.
Born out of necessity, Joseck and his blind friends, like many other MFI victims, developed a dignified alternative to handing out microcredits, a method nowadays referred to as “table-banking”.
It was only after many years that a local MFI became aware of Joseck’s organisation Mbusie, and they offered a loan. Joseck and his friends refused. They wanted to be independent. A donation of 10,000 shillings, which did not have to be returned, was however gladly accepted. Most of the group members who started together are now freelance entrepreneurs. For me this is an interesting example, how business without external influence, but with the appropriate basic “equipment” passion, perseverance, ideas and knowledge, can bring a business quite far.
Teh Francis, kanthari graduate of 2016, is a pastor of a large congregation in the war-torn west of Cameroon. He was one of the first to bring microcredit to women in his country. For his commitment he gained national and international fame. From the viewpoint of the investors, his action was a great success. But Teh felt the pressure and self-sacrifice of the women and was desperately looking for an alternative. I told him about Joseck and his table-banking concept and he was amazed. Together, we developed a business curriculum for illiterate women, women who had dreams that can be realized with talent, passion and initiative. For Teh and his women’s self-help groups a lot has changed since then.
Women are no longer assigned to the so-called solidarity groups. Instead, they are selecting their own business-partners. Also, the type of business is no longer prescribed to them. Previously, they were advised to getting involved in the palm oil business. But Teh got to understand that solely focusing on palm oil is ecologically problematic and he feared that the women’s groups were pushed into a profit-making activity without it being their real Interest.
In order to counteract possible patronization, his organization initially acts only in an advising role. Women are encouraged to follow their own dreams and learn the methods for implementing their ideas, as Teh himself experienced in the kanthari Institute.
Possible additional funding only plays a role later, when the women put a common idea on the table, which can also consist of several business models that are related to one another.
What is important for Teh is that the business idea is initiated through an intrinsic interest. Only then, according to him, the concept develops organically. Like in the case of Joseck and his team, the members of each group first bring to the table all own available resources such as food items, animals, but also utensils, knowledge and time.
And only once the small business has overcome the start-up phase, when the idea has matured, has been tested and the female entrepreneurs are even more encouraged and motivated, the group can receive a grant from Teh’s organization “Enkindle Cameroon”. This grant is not a loan that needs to be returned. So, there is no external pressure, which significantly eases the power dynamics of the whole process.
Of course, disputes and quarrels in the groups cannot be ruled out in any team. But the stakes remain in the group. Either profit or loss is shared.
These examples show that economic support for the poor can be a whole different ball game. It is no longer a matter of investors putting their money through a high profit generating cycle. The important point is that all involved have the right to decide for themselves how to use the available means, whether money, materials, knowledge or labor. The assets remain in the ownership of the entrepreneurs. They do not owe anyone outside the circle. So, when the level of dedication is high, every additional business training falls on fertile ground.
And yet I think it is naive, perhaps even negligent to believe that business can provide a universal cure for every problem in this world.
Now, Muhammad Yunus’ dream has been implemented in the most remote areas for more than 30 years.
However, poverty has not been solved. What remains is a small thought game: What if the hundreds of billions of U.S. dollars that were invested in microfinance programs had gone into high-quality skill training and into sustainable environmental projects?
“A beautiful dream!”, the micro banker would say. Then he would smile and with a condescending pat on my back, say: “And where is my profit?”